Q:

How do you purchase wholesale properties?

A:

Quick Answer

To purchase wholesale properties, identify a potential distressed seller, and enter into a contract to purchase the property at a below-market rate. Generally, property wholesalers quickly sell these contracts to different buyers or investors.

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Full Answer

The concept of wholesaling a property is not fundamentally different from the concept of wholesaling a different type of product. Property wholesaling is legal in the United States as of 2015, although it is discouraged by some groups.

The reason properties can be sold wholesale is because the original sellers are offering the properties for substantially less than market value. This usually happens when a home or seller are under distress. The property may have fire, flood or hurricane damage, or the seller may be facing foreclosure or financial hardship. Wholesaling is often called distressed real estate investing.

The practice is common when housing prices consistently appreciate over time or when there has been a wave of foreclosures, as in the case leading up to and after the 2007 U.S. housing market bubble. Realtor.com suggests contacting an experienced real estate agent whenever considering the purchase of distressed property.

The website InvestFourMore.com gives advice about wholesaling property. It notes that the best opportunities for wholesaling are usually very inexpensive relative to their markets and they are not usually visible to normal real estate professionals through programs such as the Multiple Listing Service. Additionally, the website notes that it is a difficult process and there are some important legal elements to consider when working with wholesale contracts.

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