How Property Wholesalers Make Money

Finding wholesale real estate deals requires quite a lot of hustle and hard labor.

Ideally, you have to find properties that have enough allowance between acquisition price and enhanced value to make a profit out of it.

Moreover, you also have to come up with effective strategies to reach out, communicate and negotiate with the owners of distressed properties.

Real estate wholesaling is an entirely new level of real estate business. It does not involve exchange of money between the wholesaler and the home seller. Instead, the wholesaler gets the property in contract and then sells it to a buyer who is willing to pay for its price.

Earning Money from Real Estate Wholesaling

The question is; how does a real estate wholesaler earn money? How much money can you earn out of this venture?

Here’s an example for you to gain a better picture about the advantages of wholesaling real estate properties;

For instance, a homeowner (home sellers) wants to sell his property that he thinks is not salable due to its distressed condition.

The homeowner may also have insufficient funds and resources for the necessary repair which is the main reason why he refuses to sell it.

He thinks that he will not get a fair price for it. Then, entering the scenario is the real estate wholesaler who talks to the homeowner about an offer to sell the property.

They would agree to put the property under contract for a price of say, $80,000.

The real estate wholesaler will then explore his network of investors, realtors and property buyers to sell the contract for $90,000.

He then assigns the contract to the buyer with the most favorable offer – usually one with a fixer-upper project to gain profit.

Property wholesalers sell the contract to another party who usually has a fixer-upper project to gain profit. Examples are investors who are into flipping houses.

The wholesaler then earns $10,000 without even buying or closing the property but for just selling the contract and assigning it to an investor who’s willing to pay the price.

How a wholesaler claims his profit

Based on this scenario, it is apparent that there was never an exchange of money between the homeowner and the wholesaler.

There was no sales transaction between the two parties at all. All it takes was a good negotiation and an even better strategy.

The homeowner got into an agreement with a wholesaler to put the house on contract to an interested party.

Under the contract, it is stipulated that the buyer pays $90,000 to the wholesaler who then pays the homeowner $80,000.

This is the amount they have agreed on and then keeping the difference to himself as his profit from the sales transaction.