The Proven 7 Step Process to Wholesaling Real Estate

The best part about real estate investing is that there’s many ways to do it: you can flip houses. You can landlord. You can add an ADU to your property.

Or, you can wholesale real estate!

Maybe you’re brand new to real estate investing and you’ve never heard of wholesaling before. 

Or maybe you’ve done a few wholesale deals and you’re looking to improve your growing skill and make it more even more profitable. 

Regardless of where you’re at in your real estate investing journey, wholesaling comes with its share of advantages, including that it can be a part time or full time endeavor. 

If you’re ready to learn everything you need to know about wholesaling real estate, let’s get started! 

What is Wholesale Real Estate?

First things first: what is wholesaling real estate? 

Wholesaling real estate is when an investor, like yourself, enters into a contract with a homeowner and then markets that property to other potential buyers. Once a new buyer is found, you as a wholesaler will assign their rights under the contract to the new buyer.

That’s what makes wholesaling different: you’re not buying and selling the property; you’re acting as a middleman, selling the contract and bringing together a seller and a buyer.

That’s why a real estate wholesaler is thought of as an unconventional property seller. 

A wholesale property is generally one that requires extensive repairs, is in a distressed state, or is in mortgage or tax default. 

The thought process behind approaching owners of distressed properties is that they will sell for much lower than market value.  

Wholesaling real estate is finding these distressed properties at discounted prices and, after that, assigning the contract to a buyer who will purchase the property for a higher price. 

So, how much is a wholesaler paid?

The wholesaler is typically paid a fee, usually 5-10% of the purchase price.

You should know that wholesaling varies state to state as well. For example, what works in Texas may not work in California, Florida or Ohio. This is why it’s important to brush up on local laws and regulations based on where you live.

There are many benefits to wholesaling real estate, including:

Wholesaling Real Estate Requires a Low or Even No Investment. 

Compared to other forms of real estate investing, like flipping, wholesaling requires a much lower initial investment. Since you're creating a contract and finding a buyer, you may not need to invest any of your money — just your time.

Wholesaling Real Estate has a Quick Turnaround Time.

Unlike other forms of real estate investing, wholesaling real estate often sees a fast turn around time.

Why is this the case?

As soon as you have secured the property under contract, the goal is to find a buyer as soon as possible — so that you can get paid as fast as possible. 

Wholesaling Real Estate is Great for Beginners.

If you're a beginner real estate investor, you may be worried about signing your name to a property. Or, you may not have the capital to put down for an investment property.

That's why wholesaling real estate is great for beginners — it requires none of this.

Wholesaling real estate is a great way to kick of your real estate investing journey.

How to Wholesale Real Estate Step by Step

Let’s take a look at how you can wholesale real estate step by step. 

Step 1: Locate Properties to Buy

The first step is to find motivated sellers who may be in a distressed situation.

There are many ways to do this, including using bird dogs, knocking on doors, mailers, connecting and networking with other real estate professionals.

If you're looking for an affordable and efficient way, use Propwire.

Propwire allows you to search 157+ million MLS and off market properties, 100% free.

Simply choose the area you're interested in, and filter by one of 20+ lead types, including off market properties, expired listings, zombie properties, vacant properties and more.

Step 2: Contact the Owner

The next step is to contact the owner of the property.

With Propwire, once you've found a distressed property that you think may be interested in doing a wholesale deal, you can use the skip trace feature to help you find contact information for property owners for just 10 cents per skip trace. 

When you speak with the owner, it's important to be transparent: communicate that you're a wholesaler, and your mission is to find another buyer and assign the contract to them in order to make a profit on the sale.

Step 3: Determine the Property Value and Estimate Repairs

The next step in wholesaling real estate is to determine the true value of the property.

You can do this by calucluating the comps in the local area.

If this is your first deal and you've never done comps before, you can find out how to do it step by step with this Propwire comp guide.

As you do the comps, ask yourself if there are any repairs that need to be taken into account. If the property is in a distressed state, repairs may be needed. We recommend asking a contractor to tour the property with you. While you won't be doing the repairs yourself, this expense will reduce the amount that you can sell the contract for.  

Step 4: Negotiate a Price with the Home Owner

The next step is to negotiate and choose a final price with the current owner of the home.

You can do this using comps.

Step 5: Get the property under contract

Once a price is agreed upon, the next step is to get the property under contract.

If you're wondering what's in a wholesale real estate contract, you can find everything you need to know in this Propwire guide.

Step 6: Locate a buyer for the property

Once the property is under contract, you'll want to find a buyer as fast as possible. Remember: you're offering the contract, and not the property itself,

If you do the opposite, you can actually be penalized in some states.

Tap your local real estate network to find someone who may be interested in the property.

Step 7: Close the property 

Once you’ve found your buyer, you'll work with a title company to ensure the new owner receives a clean title, and complete the contract. The previous homeowner will receive his or her funds, and you'll receive your pay for the deal.

The Bottom Line: Wholesaling Real Estate

There you have it: wholesaling real estate. 

It can be profitable as a part time or full time venture. Plus, you don't need a ton — or any — capital to get started. It's a great way for beginners to get started, and it can supplement your current income if you're an experienced real estate investor looking for some extra cash outside of your fix and flip or rental business.

Above all, the best way to reduce your risk and maximize profit on your next deal is to grow your education. 

Use the resources in this guide so that you wholesale real estate the right way, step by step towards a profit.

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