One reason somebody becomes a wholesaler is because it makes sense in an economy like this. People do not have money to pay full price for a house, hence any deal they can get is good. Building Construction Process Real Estate agents have trouble selling in this economy due to stringent bank financing criteria, and a wholesaler can offer a lower price without the use of bank financing.
However, let’s be honest – when you get discounted prices, the property generally isn’t in the greatest condition. But this is what gives people opportunity – contractors and handymen can fix up the property and sell it at a profit. There are probate and estate sales, where the properties cannot be held onto for long because the family doesn’t have the money, and they may be in great condition. But, Commercial Electrician Apprentice Salary once again, the ones in good condition are the exception. For the most part, at least some work needs to be done on the property. For example, if the family was running low on money, they were not able to repair the broken furnace. There’s a good chance the house needs a paint job and some of the rugs are worn out and need replacing. Possibly the roof needs to be replaced – just to name a few.
Wholesaling properties also involves buying properties to rent/lease out to people. This works well because, in this economy, many people have trouble getting a bank loan because they do not have a large enough down payment or their credit took a tumble due to bad situations encountered. Wholesalers use seller financing to do the deal (along with other types), and as a result, they can get a better interest rate. If a lease option is used, the person buying the house can purchase the house after, say, five years.
Here’s how it works – the person selling does not want it anymore. However, they have trouble selling through a real estate agent. So they go to a wholesaler, who says that he will do a lease option, using the seller’s existing financing. The wholesaler then finds somebody to lease the house. The tenant/buyer then makes the monthly payments to the wholesaler. At the end of the agreement, the tenant/buyer says he/she will buy the house, and the option is exercised by the wholesaler. The wholesaler sells at the agreed upon price to the buyer, which is most likely a lower price than the current market value of the house. How did this help the buyer? The buyer’s credit may have been tarnished due to a period of time with no job or lower than expected income. So the wholesaler will check his credit report (maybe), but will not have the stringent requirements of a bank to get a loan to buy the house. After the term of the lease, say five years, hopefully the buyer’s credit has been rebuilt. If not (or if the buyer simply decides he doesn’t want to buy for whatever reason), the buyer can choose not to exercise the option. In turn, the Wholesaler can either choose not to exercise the option or find another tenant/buyer.
These are some of the key benefits to wholesaling. There’s much more to it than this, but this provides a general idea.
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