Selling a house comes with its share of trials and tribulations, and it’s never really a walk in the park. So, it’s only natural to look for ways to make this process quicker and simpler. As a result, home sellers are usually intrigued by real estate wholesalers’ offers. Should you take the bait?
Real estate wholesale is a pretty common practice, but opinions on it are very split. Some people are all for it, while others would advise you to stay away from wholesalers. But why?
If you want to learn more about real estate wholesaling and whether or not it’s a good idea to sell your home to a wholesaler, you should keep reading – we’re about to explain everything.
What Is Real Estate Wholesale?
Let’s get the basics out of the way and explain what wholesale even means in real estate.
Simply put, a real estate wholesaler serves as a middleman in real estate transactions. These home-buying companies find properties and enter into purchase agreements with them. They typically have no intention of really purchasing the property. They will buy your contract and then sell it to investors, landlords, or other house flippers. That person will be the one actually purchasing your house, not the wholesaler.
How does the wholesaler profit in this process? That depends on how much they manage to charge the end customer for the contract. For instance, the wholesaler offers you $500,000 for your home, and you sign a contract with them. They then find an investor and sell the contract to them for $550,000, walking away with a $50,000 profit.
You can usually recognize real estate wholesalers by ‘’We buy homes’’ signs or by getting a letter in the mail.
The Pros of Real Estate Wholesale
Though it may not always be the best idea to sell your house to a wholesaler, it can come with certain benefits – let’s take a look.
Making the Home Selling Process Quicker
If you’re in a rush to sell your home, selling to a wholesaler can be incredibly appealing. A good and experienced wholesaler has a network of investors they can turn to and sell your house to. This means they can find an end buyer quickly, and you can close in your own timeline. Plus, they can give you enough time to move out since they won’t be moving into your house.
Selling Your House As-Is
When selling a house, people often worry about all the repairs and cleaning they need to do to be able to sell. Not only is this an extra chore, but it can also be a costly investment if there are a lot of repairs to be done to the property.
In case you’re one of the sellers worried about this, then selling to a wholesaler might be the right choice. Wholesalers will buy your property as-is, so you don’t have to spend time and money on repairs before listing your property. In fact, wholesalers usually look for properties that need fixing up in the first place, so it’s a good match.
Getting a Cash Offer
The majority of real estate wholesalers work with cash buyers, which means that they will give you a cash offer for your property. In that case, there’s no need to work with lenders, so the selling process will be much simpler and faster.
No Realtors and Listings
When listing your property the traditional way, you have to work with a realtor and organize open house showings of your home. This is usually tedious, time-consuming, and inconvenient, especially if you’re selling a house you’re still living in.
Well, if you choose to work with a wholesaler, you’ll be able to avoid that hassle. Get under contract with the wholesaler and let them handle things from there. When you put your house on the market, you are hoping for an offer. With a wholesaler, though, you need not be concerned about it – they’re the ones finding the end buyer.
The Cons of Selling to Real Estate Wholesalers
As we’ve mentioned, it’s not all fine and dandy when selling to a wholesaler, so let’s take a look at some disadvantages.
Getting Less Money for Your Home
If you’re selling a home in great shape and in a popular area, listing it through an agent will probably result in the highest price. Even if your home needs work, you might be able to earn more money by making the renovations yourself and listing it on the MLS (Multiple Listing Service).
On the other hand, wholesalers are known to be lowball sellers and offer a much lower price than what is realistic. Unscrupulous wholesalers target people who are rushing to sell their homes because of a bad financial situation, for example, because they know that they can get away with an unfair offer.
With that in mind, you should define your priorities when deciding how to go about the sale.
The Risk of the Wholesaler Backing out of the Contract
Yes, experienced wholesalers have a developed network of interested investors who are likely to buy your home. But not all wholesalers have years of experience under their belt. Working with a rookie wholesaler is a risk that is usually not worth taking.
Rookie wholesalers often have high ambitions and offer a lot of money for properties. While this might sound appealing, they will often back out of contracts when they realize they’ve given you an unrealistic offer. Another scenario is that they can’t find investors willing to buy your property. This leaves you back at square one.
You should make sure that the real estate wholesaler is knowledgeable and skilled before working with them.
Should You Work With a Wholesaler?
In the end, the final decision is up to you. Working with a wholesaler can be a good option if you’re in a rush to sell your home and don’t have the time or resources to handle repairs. Wholesaling companies are a good option for those facing foreclosure or people who need to get cash and fast.
On the other hand, you should consider the fact that selling to a wholesaler means getting less money for your property. Do the advantages outweigh this con? If you want to get the best possible deal for your home, then getting into business with a real estate wholesaler is not the greatest idea. Whatever you decide, make sure to do your research and make an informed decision.