It’s as easy as that. You look for a motivated seller, get the property under contract, and then sell the contract’s “rights” to another person for a fee. The fee is usually an assignment fee, and it varies from $2,000 to $15,000. Do you want to learn more? Visit we buy houses fast for cash. The fee is determined by the nature of the transaction, the market, and the sum for which the wholesaler obtained the property under contract.
Bandit signs, which usually say something like “we buy houses, fast, cash, any condition, call xxx-xxx-xxxx,” are one way to market for motivated sellers.
In general, when you call one of these numbers, you will be dealing with a wholesaler who will not necessarily “buy” the house, but will find someone who will. This might not be a bad thing for the property owner, who is in a position where they just need to get out of the house for some reason and don’t care who buys it.
There’s a chance the house won’t sell because the wholesaler is going to advertise his interest in it to a cash buyers list. This happens frequently, and it has unfortunately given wholesalers a bad reputation.
This is often the product of many newcomers to the “no money down” real estate investment game having no idea what they’re doing. So they get an offer from a seller, but they can’t find a cash buyer because the deal wasn’t even that good to begin with. Either they didn’t pay the right price for it, or their repair estimate is way off.
There are a few things you can do to safeguard yourself.
There are a few precautions you can take to protect yourself if you find yourself in a position where you need to sell your house quickly and call a wholesaler.
Request a fair earnest money deposit. The majority of wholesalers will try to get the property under contract for $10 or less, even if they can’t find a cash buyer, they can just lose $10. I’d ask for a $1000 deposit as an earnest money deposit. Why wouldn’t they put up at least that much if it’s a decent deal for them?
Inquire about the number of transactions they’ve completed. A successful wholesaler knows their numbers and how many transactions they’ve completed, and they take pride in never walking away from a contract.
Request a list of references.
Bringing all together.
So, if you answer to one of those “we buy houses” ads, you should know what to expect. There are good wholesalers and bad wholesalers in the same way as there are good wholesalers and bad wholesalers in every other industry. When selling your home, make sure you do your due diligence, ask questions, and if you have a gut feeling they are lying to you or doing anything shady, don’t do business with them.