Is it a genuine website?
Has anybody else seen late-night television adverts that claim you can earn money in real estate without investing your own money? What they’re intending to tell you is how to make money by wholesaling property.
What is the definition of wholesaling?
You look for a determined seller, get a contract on the property, and then sell the “rights” to that agreement to another party in exchange for a commission. Typically, the charge is referred to as an assignment fee, and it may be anywhere from $2,000 and $15,000 per job. The fee is determined by the specific transaction, the market, and the amount for which the wholesaler was able to place the property under contract.
The signages which often state something along the lines of “ we buy houses Sacramento, quick, cash, any condition, contact xxx-xxx-xxxxxx,” are one of the most effective methods to promote to motivated sellers.
In most cases, when you phone one of these lines, you will be dealing with a wholesaler who will not really “buy” the property, but instead will locate someone else who will purchase the property. This may not be a dreadful situation for the homeowner, who may be in a position where they just need to move out of the home for whatever reason, and they don’t care who ends up buying it.
Aspects to Be Concerned About
Because the wholesaler intends to turn around and promote his interest in the property to a list of cash purchasers, there is a chance that the home will not be purchased by the buyer. This occurs often, and it has badly tarnished the reputation of wholesalers.
This is often the outcome of a large number of newcomers joining the “no money down” real estate investment game who are completely uninformed of their options. So they negotiate a deal with a seller, but are unable to locate a cash buyer since the arrangement was not very attractive in the first place. Or, alternatively, their estimate for repairs is significantly overestimated by a significant margin.
There are a few things you may take to safeguard yourself.
If you find yourself in a scenario where you really need to sell your property quickly and decide to work with a wholesaler, there are a few precautions you can take to ensure your safety.
Request a reasonable earnest money deposit as a down payment. Generally speaking, most wholesalers will attempt to acquire the property under contract for $10 or less, so in the event that they are unable to locate a cash buyer, they will only be out $10. If it’s a good bargain for them, why wouldn’t they put up at least as much money to show their support?
Inquire about the number of transactions they have completed. A smart wholesaler understands his or her figures and knows how many transactions he or she has completed. They take satisfaction in not backing out of any transaction.
Inquire about recommendations. Hopefully, you now have a better understanding of what to anticipate when responding to one of those “we buy homes Sacramento” advertisements. There are excellent wholesalers and poor wholesalers in the same way as there are excellent and terrible retailers. When selling your home, make sure you perform your due research and ask questions. If you have a gut sense that someone is lying to you or doing anything shady, don’t deal with them.