THE WHOLESALING PROCESS
The good news is that anyone can be a wholesaler. There’s no license required, although knowing how real estate transactions work can be helpful. Another advantage involves working with a real estate agent or broker, since they can search the MLS for properties. I can also help you find a title company that’s open to the wholesaling process (not all are). And each company has different requirements for all the parties involved, so I can educate you on that.
Finding the Right Properties
When looking for properties to wholesale, there’s a specific number often kept in mind: 70. End buyers (think flippers) tend to want to pay 70% of what they can get once the house is fixed up. Different areas have different multipliers (% of ARV typical...or the max % an investor will pay)...which change depending on market conditions. You may have to make several offers to find the % that works best in an area. Gauge this against the maximum each of your buyers will pay.
Here’s the formula to use:
Fixed-up resale value – repairs – wholesale fee = max offer you should make Here’s an example if you want to make $7,000 on a home that should be worth $125,000: $125,000 (ultimate resale value) – $15,000 (repairs) – $7,000 (wholesale fee) = $103,000 (max offer)
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