What is Real Estate Wholesaling?

What is Real Estate Wholesaling?

Imagine you contacted a Real Estate Investor to sell your house.  The Investor tours your property, makes a cash offer, sets a closing date, and you think all is made in the shade.  Closing date is here, but you go to the closing to find a DIFFERENT Investor is buying your property????  What just happened????  Real Estate Investor #1 did Real Estate Wholesaling to Investor #2.  Reel Property Solutions, LLC has done Real Estate Wholesaling and will outline the process of a specific property.  (No personal information will be noted.)  For more specific information, read this article from Real Estate Flipper: https://reflipper.net/wholesaling-houses/

Reel Property Solutions, LLC had Bandit Signs set out.  A homeowner, Person G, found the bandit signs information to contact us to express interest in selling their property so they could relocate to another state.  Person G thought selling their house to an Investor would be an easier process than listing with a Real Estate Agent on the MLS (Multiple Listing Services.)  Here’s the basic outline of how this Real Estate Wholesaling transaction happened:

1. I gathered property information in a phone interview. Person G told me this split-level house had an unfinished basement that could easily be refinished into a livable space along with new carpet and repaint the interior of the house.  Since this sounded like an easy renovation plus Person G was EXTREMELY motivated to sell, we set up a time to tour the property.
2. Before going to tour the property, we did basic neighborhood comparables and obtained county tax assessor information to determine the ARV (After Repair Value). Based on what Person G stated would be needed to repair the property, we did a rough estimate of repairs.
3. A few days later, we met Person G along with the other household members. The house was in the exact condition that Person G described on the phone along with the pictures that were on Zillow.  While touring the property and reviewing the information we collected, we noted a couple other items that may need attention, such as the possibility of replacing 2 windows.
4. We took many pictures of the home, both up close and far away. Person G was very happy to answer any questions about the property and gave more information about the cost of utilities, etc.
5. Person G told us about neighbors who had sold their homes for much higher values that what this particular property could be worth. Later we did research to discover those homes had one more bedroom, one more bathroom, and about 800 square feet bigger.  These properties were NOT appropriate comparables.
6. During the tour, we realized this property was something we were very interested in pursuing. The community was growing due to nearby urban expansion, the property itself was livable, and there was potential for reselling quickly.  To reiterate what I was initially informed, the basement was unfinished, but could be fixed up with a few things such as carpet.  A big perk was the basement had a separate entrance from the other part of the house.  We thought this would be perfect for a family member who wanted their own space.
7. We gave Person G a timeframe of when we would get back to them. During this time, we crunched the numbers: house value, Person G’s selling price, repair costs, holding costs, ARV, and other costs.  We determined this house would be better as a rental property as opposed to our initial thinking of a buy, flip, and resell.
8. Unfortunately, Reel Property Solutions, LLC has a budget that could not support this transaction. This is where Real Estate Wholesaling happened.  I marketed Person G’s property to other Real Estate Investors.  Ultimately, Investor P was the most interested.
9. I made an offer that Person G accepted. Then I contacted Investor P to state Person G’s property was under contract at a certain price.  Would Investor P be willing to buy the contract for that price PLUS the Real Estate Wholesaling fee?  Investor P agreed.
10. Closing date came and Investor P bought the property from Person G. At first Person G was confused as to why Reel Property Solutions, LLC did not purchase, but, in the end, Person G was thrilled Investor P was able to complete the transaction.

Many WIN-WIN scenarios happened.  First, Person G was THRILLED to have a cash payment with a close date within a week of the offer date.  Second, Investor P could add this property to their business portfolio.  Third, Reel Property Solutions, LLC was the reason why Person G and Investor P came out ahead!  As mentioned, the exit strategy of purchasing this property, renovating the basement and holding for a rental was not something Reel Property Solutions, LLC’s budget could support.  Thus, the Real Estate Wholesaling transaction happened.  Another WIN was the experience of a smooth Wholesale!

The biggest WIN-WIN piece for Reel Property Solutions, LLC: Investor P was someone that we had met through Fortune Builders training classes!  This was a huge plus for everyone since we were on the same page with the knowledge and training.  Also a WIN: meeting other cash buyers during this process that can be networks for future Real Estate Wholesaling.

If you or another Investor are interested in Real Estate Wholesaling to us or from us, contact info@reelpropertysolutionsllc.com or 507-218-8788!  We would be interested in knowing what is in the neighborhood!