Don't understand wholesale and the purpose of it

[moveright]

so correct me if I am wrong but "wholesale" is just another term for "reassigning contract" which would roughly equate to "middle man profit".

It's always been my experience that middlemen are pointless and unnecessary.  if you are going to find a house, talk the price down and leave a $10 deposit on the contract, then just sell the contract to someone who is going to rehab it and resale for profit, why doesn't that rehabber just find the property themselves?  Cut you right out of the deal?

I'm sure there is a valid explanation for this so that's why I am asking.  Also, what's the downside to doing this?

[bashir]

In any market can you name the amount of times with any product that you went straight to the source to buy it?  Almost anything you buy you are paying a middle man a profit.

No different with houses.  I'd gladly pay someone that bought me a great deal even if they marked it up.  Finding deals on your own takes a lot of driving around and marketing and other time consuming things.  If you can easily look up a wholesaler who has several deals and you don't have to compete with a whole bunch of other buyers like buying straight from the bank, then why not?

The bottom line is it a good deal or not?  As long as it meets an investors standard then why would he not buy?

If someone came to you with a deal in a part of town you haven't been able to get a price like that then why would you pass?

[WeSellHomes2Fix]

Marketing for good deals is a business in itself.  I would tell any of my rehabbers that if they can find the deals we bring them on their own, be my guest and best wishes.   It is much harder than most think

[moveright]

so then how do the wholesale people find the deals?  This sounds like it's not a bad way to begin in investing, I mean in terms of relatively fast income, little risk and little money to startup no?

[bashir]

To keep it quite simple, Motivated Sellers.

Right now in this market mostly from Bank Foreclosures

If FSBO you have to find a seller who is motivated for whatever life situation to sell for half the value.  Usually these will be ugly houses that they want to get rid of for cash and move on.  IF it is ugly then the only buyer who will want to buy something like that will be an investor.

[REITVShow]

In wholesaling you have to talk to around 20 sellers to get 1 deal. So we are providing a service to the investors. Instead of having to talk to 20 sellers they can just get the good deals from a wholesaler.

I agree with the person that also said that the rehabber and landlord would have to market for the deals the we are finding as well.

The last thing is if we are getting a property that fits that investors formula it should not matter if they are paying us an assignment fee because the bulk of the profit is in the deal. Also if we have it under contract they have no choice but to buy it from us or not at all.

[WeSellHomes2Fix]

To find the deals, do a lot of marketing

[WholesaleKid]

 Seeeeeeeee.. investors/rehabber don't have the time finding this deals,,, their busy in their rehabs etc. .... you get the ( . ) ?

[xpandergt]

It is all about the deal period!! Think about it for a minute. Investors buy homes from FSBO's, at foreclosure auctions, from Realtors and Wholesalers. The source of the deal doesn't matter, what matters is whether the numbers work for the investor buyer or not. Wholesalers are nothing more then "deal finders for investors". Our job is the find, negotiate and tie up properties for investors.  The investors makes their money on the equity they'll have thanks to the wholesaler's negotiating skills. Thanks to the wholesaler, they don't have to do marketing, field calls from sellers, screen then out, and negotiate with the sellers. All they have to do is check out the property the wholesale has under contract and say yes or no. Those are the key benefits to using wholesalers. Every investor knows that they can make more money using their mind rather then wasting time. It's all about "time management". Landlords want to simply get a property rehabbed rented and cash flowing. Rehabbers want to simply get a property renovated and resold.

[moveright]

great information.  I was trying to find a book on wholesale and couldn't find one.  So, I'll just burden you all with questions lol!  seriously though let me run this through...

I put up bandit signs, ads in craigslist, whatever...  something to the toon of "we buy houses cash - fast closing" etc...

then I get a mass of calls, most of which will not turn into anything.  but, one of them is a good deal so I put it under contract and gaurantee a closing in 45 days.  Then I run down a list of buyers I know of and attempt to strike a deal. If I make a deal, I can expect something modest like $2500 or so (just making that up for argument).

but...  Here is a good question.  what happens if I fail to re-assign/sell/whatever the contract?

[xpandergt]

In your contract, you should have an inspections clause stating that the contract is subject to the buyers approval of the inspections. . That allows you access to the property to have your buyers check it out. If you can't find a buyer before the contract close. you can get out of the contract by merely stating the the inspection wasn't satisfactory to your approval.

[Jeff Corpuz]

so correct me if I am wrong but "wholesale" is just another term for "reassigning contract" which would roughly equate to "middle man profit".

It's always been my experience that middlemen are pointless and unnecessary.  if you are going to find a house, talk the price down and leave a $10 deposit on the contract, then just sell the contract to someone who is going to rehab it and resale for profit, why doesn't that rehabber just find the property themselves?  Cut you right out of the deal?

I'm sure there is a valid explanation for this so that's why I am asking.  Also, what's the downside to doing this?

Nothing wrong with being a middleman! You can build a 6 and 7 figure, or more business just by being a "middle man"! If you can be in the middle of the action, you WILL profit! If buyers and sellers have to go through you, because you're the one that has, the buyers and the sellers, then you WILL profit, and people will need you, or at least what you have (buyers and sellers!)