And one of the biggest questions we see is "How do you find real estate wholesaling deals?"
As a wholesaler who "flips real estate contracts", your #1 job is to find distressed properties to wholesale. Without those, you really don't have much of a business.
Real Estate Wholesaling Definitions
Before we dive into how to find real estate wholesaling deals, it's a good idea to start with some of the basic definitions of real estate wholesaling.
What is "a distressed property?"
A distressed property is less a real estate property than it is a reflection on the owner's situation. Many times it is the homeowners financial, mental or physical condition and not the property itself that is "distressed". Under these circumstances, the house may be in great condition, but the homeowners are struggling to pay their mortgage payments - and as is still prevalent in many cities in the USA - the house may be in foreclosure status.
This may not be the classic "distressed property" you may hear about, or even see in your own neighborhood. A "distressed property" involves a distressed situation with the owner and not the property itself. Although in most cases, the property is a victim of neglected maintenance largely because the homeowners have just given up.
When you are real estate wholesaling, trying to help a homeowner in foreclosure to get out of foreclosure is a very successful marketing strategy for many real estate wholesalers.
To be successful wholesaling real estate, you have to find motivated sellers. Unmotivated sellers tend to wait around, to try to get the best deal, whereas a motivated seller just wants to get the deal done.
Not all sellers are "motivated" - and in my opinion "motivated sellers" is a term that is overused by many real estate brokers. Some sellers are desperate for sure, but others are just motivated to unload a house and are willing to deal.
When you hear the term "motivated seller" it could mean a couple of different things:
- The price of the property has room for further price reductions.
- The seller likes the "cat-and-mouse" negotiation game.
- The seller is willing to make some major or minor concessions for the buyer.
- They may have financial burdens which are overbearing, and they are looking to get out from under their obligations.
Sources For Real Estate Wholesale Deals
There are multiple ways to find real estate wholesaling deals. some are obvious and some take a bit more work. Here is an initial list to work off of:
- Online Sources: Most people looking to buy real estate try to find deals by using any MLS online look up such as Realtor.com, Zillow.com, Trulia.com and Craigslist. Although using these websites can lead to many good deals, these websites are public and anyone can find the same deal you can. Although you should definitely use those sites to start sourcing your wholesale deals, chances are you'll need to dig a bit deeper to make it in the wholesaling world.
- Mobile Networks: Just like when house flipping, another great way to find wholesale deals are through mobile network groups such as your local Real Estate Investors Association, chamber of commerce, and business networking international groups.
- Real Estate Auctions: Auctions are another way to find good real estate wholesaling deals. However helpful they may be, personally I have never been a big fan of these for multiple reasons. Most of the time when you attend an auction it gets canceled two minutes before it's supposed to start. When they do begin, the bidding is fierce and many wholesalers forget to keep their emotions out of the bidding and end up over bidding and losing money. How to bid at real estate auctions is an art unto itself. Yet when done properly, you can get some really good deals here.
- Estate and Probate: Estate and probate sales are two more ways to track down wholesale deals. Many times probate deals go awry because there are a lot of emotions, with family members involved and the highly charged emotions of the loss of a loved one. If you can work through the emotions that often accompany these kinds of sales, you can uncover many good real estate wholesale opportunities.
Additional great sources of wholesale deals include:
- Abandoned homes
- Condemned homes
- Tired landlords
- Bank owned properties
With Real Estate Wholesaling, Education Is The Key to It All
Just like with traditional house flipping, to get really good at real estate wholesaling, it's essential to continue to educate yourself . And as a fix and flip investor, one of the best pathways to getting into a career flipping houses is through real estate wholesaling.
Whether you're just starting your real estate investing career or have been investing for years many rules, guidelines, codes and techniques change. Networking with local groups is a great way to begin, as well as maintain your education.
Help People First...And You'll Succeed at Wholesaling
So how do you find a good wholesaling deal?
You don't...you make a good deal.
If you can find situations where you can help others out of their troubles, you are doing it right.
I recently got a call from a couple getting divorced and it was the easiest deal I ever put together. Not because I took advantage of them, but because I helped them out of their unhappy situation. They both were fed up with each other and basically told me to take the house.
Neither of them wanted to work together nor did they care about making money. They were both just exhausted from the divorce process and just wanted out.
If you help people and get them out of situations that are just beyond fixing, then you are doing a very good job wholesaling. And if you can do that consistently, you'll hae a very long wholesaling career indeed.