Wholesale Real Estate

Wholesale Real Estate Marketplace

When we launched OfferMarket in 2020, we set out to create a marketplace for wholesale real estate that connects verified wholesalers and verified off market listings with verified end investor buyers. OfferMarket is an entirely free service for wholesalers, and we even pay you up to $1,000 in referral commission each time you list a deal that is funded (purchase and/or eventual refinance) by OfferMarket Capital, our private lending division.

Today, there are over 10,000 POF-verified real estate investors active on our marketplace with hundreds of verified investors signing up every month. We invest in trust and safety, marketing and software development to provide you with a safe, efficient channel to sell your deals.

We don’t just want to help you grow your wholesaling business. We want to help you grow your own real estate portfolio by providing you with fast, reliable, cost-effective funding for your best deals.

Introducing OfferMarket for Wholesalers

Our mission is to help you build wealth through real estate. We provide the following services:

Our marketplace is entirely free. Take advantage of the most powerful suite of dispositions tools for wholesalers.

📣 Email and social media marketing
💬 Buyer messaging
🕵️ Buyer screening (proof of funds verification)
📄 Offer screening (proof of funds verification)
💰 Investment property loans for your buyers

Why do wholesalers use OfferMarket?

⚡ Assign deals faster
💰 Generate higher assignment fees
💰 Earn referral income when your deals are funded by OfferMarket
🧑‍💻 Reach more buyers and grow your buyers list

Get paid to list your wholesale deals on our marketplace

Earn referral income up to $1,000 every time OfferMarket Capital funds your deal. You are eligible for this referral bonus as long as the following conditions true:

✅ You post the listing on our marketplace
✅ The buyer uses a loan from OfferMarket to purchase AND/OR refinance the property

Referral scenario	Referral amount
OfferMarket funds the purchase	$500
OfferMarket funds the refinance	$500
OfferMarket funds purchase AND refinance	$1,000

How do I post my deals?

Click Sell in the main navigation menu. It takes less than 60 seconds to post your listing. If you don’t have an account or you are logged out, you will be prompted to create your account or sign in using our streamlined login.

How does OfferMarket compare to InvestorLift?

OfferMarket	InvestorLift
Free	✅	❌
Create listings	✅	✅
Email marketing	✅	✅
Social media marketing	✅	❌
Direct messaging	✅	❌
Proof of funds verification	✅	✅
Offer submission	✅	✅
Private lending	✅	❌
Lender referral income	✅	❌

Feedback, questions or ideas?

We’re about building long term relationships, and we consider you our partner. We’re actively building our wholesaler features based on feedback from our power users. We welcome your feedback and we are here to assist you. Create your free account or post a deal to get started!

What Is Real Estate Wholesaling? How It Works, Example, and Strategies

Troy Segal is an editor and writer. She has 20+ years of experience covering personal finance, wealth management, and business news.

Updated October 18, 2024
Reviewed by

Reviewed by Lea D. Uradu

Lea Uradu, J.D., is a Maryland state registered tax preparer, state-certified notary public, certified VITA tax preparer, IRS annual filing season program participant, and tax writer.

Fact checked by

Fact checked by Ryan Eichler

Ryan Eichler holds a B.S.B.A with a concentration in Finance from Boston University. He has held positions in, and has deep experience with, expense auditing, personal finance, real estate, as well as fact checking & editing.

What Is Real Estate Wholesaling?

Real estate wholesaling involves buying a property, then quickly selling it to another buyer without making any significant improvements or repairs. The point is to profit by finding a great deal on a property, then passing the deal on to another investor willing to pay more.

Investing in real estate is nothing like investing in stocks and bonds. With the latter two, depending on the type of investment, you may be able to dive right in with perhaps as little as $100. You can exit whenever you wish. It’s not that easy when you’re dealing with real estate. In fact, real estate transactions can be tricky to navigate and often come with a hefty price tag.

What’s more, it takes time to buy and sell homes. First, there’s the issue of the down payment. You also need financing for what your down payment doesn’t cover. You must fill out all kinds of paperwork. Then, there’s the closing, not to mention the time required to deal with tenants and collect rent.

If you really want to invest in real estate, but can’t bear the thought of all the money involved and going through the purchase process, you have options. Wholesale real estate is one of them. It’s a legal strategy concerning the purchase of real estate that you don’t commit to buying yourself or make a down payment on.

So, how does it work? Read on to find out about wholesale real estate and the profits available from it.

Key Takeaways

• In real estate wholesaling, a wholesaler puts a seller’s home under contract and then finds an interested investor to buy it.
• The wholesaler assigns their rights in the contract to the buyer at a higher price than the price contracted with the seller and keeps the difference.
• Real estate wholesalers generally deal in distressed properties.
• They take on the role of middleman to match investors/buyers with sellers.
• Unlike flipping real estate, a real estate wholesaler doesn’t make any renovations and carries no costs.

Understanding Real Estate Wholesaling

Wholesale real estate refers to a short-term business strategy that investors can use to make quick and steady income in the real estate market.

In wholesale real estate transactions, the wholesaler enters into a purchase contract for a home from a seller for a small earnest money deposit. The contract spells out the amount that the wholesaler will sell the property for and the required time period for the sale.

After the wholesale real estate contract is in place, the wholesaler attempts to find an interested investor. Once found, the wholesaler reassigns the contract to the investor at an agreed-upon higher price. The difference in prices is known as the wholesale fee and can be 5% to 10% of the property price. This goes to the wholesaler.

Usually, wholesalers look for a distressed property that the owner doesn’t want to spend time or money on. The owner is usually motivated to sell and often doesn’t want to work with a real estate agent.

Wholesale real estate may be well suited for people interested in real estate transactions but who don’t have the financial wherewithal to actually buy and sell properties.

You often don’t need a real estate license to become a wholesaler, but check your local laws to be sure. If you have great people skills and are industrious, wholesale real estate may be right for you.

Important

Instead of purchasing a home and selling it, a wholesaler contracts with a seller for the property, finds a party interested in buying it, and sells them their rights to the contract.

How to Wholesale Real Estate

While wholesaling real estate doesn’t require a large amount of money, it does require that a wholesaler do the necessary property research, the networking to find the right investors, and the work to craft a financial deal that the investor will accept.

Here are the steps involved in real estate wholesaling.

1. Conduct Research

Learn about the wholesaling laws in your jurisdiction. In addition, look into the locales and neighborhoods where you want to buy property.

2. Locate a Distressed Property

Look for properties that may be listed below market value and owners who are motivated to sell. Owners of homes that are being foreclosed or have liens may be open to selling for less than what the house is worth. These resources may help you find such properties:

• Multiple Listing Service (MLS)
• Networking organizations
• Online real estate auction sites
• Social media platforms
• Foreclosure sites

3. Do the Math and Due Diligence

Once you find a property that fits your criteria, make sure your wholesale real estate transaction will make financial sense. First, find out the property’s fair market value. Looking at comparable properties sold in the area, occupancy rates, and cash-on-cash returns can help. Then, determine what any required repairs will cost.

This information will allow you to calculate the after-repair value (the fair market value after repairs are done). With that, you can calculate a maximum allowable offer (the highest price you can offer for the distressed property and still make a profit).

4. Contact the Seller

Explain your role as a real estate wholesaler and how working together may be an ideal way to sell their property. Clearly describe how the wholesale real estate transaction would work. Wholesale real estate transactions are legitimate (as long as state laws are followed), and there’s nothing to hide.

5. Obtain a Property Contract

Present your offer to the seller and get the property under contract. Be sure your contract includes the right to assign the contract to another party. Also, include in your contract a contingency that allows you, as the wholesaler, to withdraw from the deal if you are unable to find a buyer before the contract expires. This limits your risk.

6. Find a Cash Buyer

Once you’ve found the right property and have a wholesale real estate contract with the seller in place, you need to market your contract to potential cash buyers.

Use your networking skills, both online and off, to connect with potential investors. You might also contact local real estate agents and ask about cash purchases made over the recent past.

7. Reassign the Contract to the Buyer

Now’s the time to close the deal with the investor who best fits your wholesale real estate transaction. Both of you have to agree to terms and conditions. Of course, as the real estate wholesaler, you want to be paid for the work you did to find the distressed property and to put the deal together.

Pros and Cons of Wholesale Real Estate

Pros

• Real estate wholesaling can school you in the real estate market and help you build high-value negotiating skills.
• It’s a low-risk money-making strategy because it requires little money upfront.
• Money is made quickly. Profits, when they come, are made in a relatively shorter time frame than other kinds of real estate investments. The fee is partially paid at the assignment of the purchase contract and the remainder at the closing of the property sale.
• No credit score (good or bad) is required.
• No property renovation experience or effort is necessary.
• If you have a good network of investors, you can sell the house fast.
• You may make a large profit in a relatively short time, depending on how many deals you put into play.

Cons

• To make reliable income quickly, you must develop (or already have) optimal networking skills and a solid pipeline of leads that can deliver investors.
• You won’t make any money until you find properties and investors, so a lot of sweat equity can be required as you master the process and build your book.
• Some states require a real estate license to wholesale real estate.
• Wholesale real estate transactions involve a profit margin that’s lower than other real estate investments.
• They can be unpredictable due to the dependency on suitable/available properties.
• Wholesalers who fail to find investors may lose their earnest money deposits.
• Property owners may not understand or be comfortable with the wholesale real estate strategy.

How to Succeed at Wholesale Real Estate

Real estate wholesaling isn’t for everyone. It requires a lot of work, time, commitment, and patience. You also need to have great communication and marketing skills.

You must build a network of investors who may be interested in buying the properties that you find.

Of course, finding the right kind of property is one of the keys to successful wholesaling. Homeowners who own distressed properties and are eager to sell make great prospects.

These are the kinds of properties that can attract potential investors. Before you make the seller an offer, you’ll want to review the types of repairs or additions that the home will need.

Here are some personal attributes that can help someone become a successful real estate wholesaler:

• A personality that focuses on goals and commits to achieving them
• An ability to organize and tackle tasks efficiently
• An ability to delegate tasks when useful
• A recognition that partnering with those with access to possible leads—e.g., the Multiple Listing Service—can be necessary
• An affinity for technology (such as customer relationship management software and mobile apps) that can make the entire wholesale real estate workflow easier and more effective
• An understanding of the power and value of a well-constructed website to market your services and dispense important information to potential sellers and investors
• A desire to learn more with each wholesaling experience and to make sure both seller and buyer are happy with the wholesale real estate transaction

Example of a Wholesale Real Estate Transaction

Real estate wholesaling may sound complicated, but it’s actually very simple.

Let’s say a homeowner has a property they don’t believe could sell because it’s fairly distressed. The owner doesn’t have the resources to fix it up and just continues to live in it, thinking they’ll never get a fair price for it.

Enter the wholesaler, who approaches the homeowner with an offer. Together, they agree to put the house under contract for a purchase price of $90,000. Using a network of investors, the wholesaler finds an eager buyer at $100,000.

The wholesaler assigns the contract to this investor, who then has a profitable fixer-upper project. The wholesaler makes a $10,000 profit without having to buy the home.

Essentially, the wholesaler contracted with the homeowner to find an interested party to buy the house. Under the contract, the buyer paid $10,000 to the wholesaler and then closed on the purchase with a payment of $90,000.

Wholesale Real Estate vs. Flipping

Real estate wholesaling is similar to flipping. Both use property as a means to invest and make a profit. Both require a contract and the sale of a home.

However, the time frame with wholesaling is much shorter than it may be with flipping. Also, the wholesaler does not make any repairs or modifications to the home.

Since the wholesaler never actually purchases a home, real estate wholesaling is much less risky than flipping. Flipping also often involves renovation and carrying costs such as a mortgage, property taxes, and insurance.

Real estate wholesaling requires much less capital than flipping. Earnest money payments on a few properties generally suffice. Success depends on the wholesaler’s knowledge of the market and connection to investors for quick sales.

What’s Involved in Running a Wholesale Real Estate Business?

Running a real estate wholesaling business requires that you be good at finding properties that can be sold for less than market value. You have to be comfortable and proficient at negotiating deals with both home sellers and cash buyers. In addition, you must work hard to build and manage a solid, reliable lead list of buyers. Usually, you’ll also have to invest a small amount of funds in the form of earnest money deposits.

Do You Need a License to Wholesale Real Estate?

You may need a real estate license in some states. An important aspect of wholesale real estate is that you must look into your state laws relating to it (or the laws of state(s) in which you’ll engage in it). Be sure to learn all you can, and abide by any rules and regulations. A real estate attorney can help explain the landscape for you.

What Is a Wholesale Real Estate Contract?

A wholesale real estate assignment contract is what the wholesaler and the homeowner sign to start the process of wholesale real estate. It doesn’t provide the wholesaler with title to the property, but it gives them some control over it while they try to find an investor to buy the seller’s house.

Once the wholesaler locates that investor, the wholesaler assigns their contractual rights to them. This involves a different contract—an Assignment of Real Estate Purchase and Sale Agreement. This second document states that the investor/buyer assumes the wholesaler’s responsibilities, including buying the property according to the terms in the first contract (made with the seller).

The Bottom Line

Real estate wholesalers are middlemen who bring together homeowners of distressed houses and investors who want a below-market real estate deal that they can make a profit on.

Wholesale real estate offers beginners the opportunity to start investing in real estate. It usually involves little or zero capital investment. With experience, wholesalers can get several deals working at the same time and make a sizable profit quickly.

Real estate wholesaling involves a certain amount of risk, especially if a wholesaler has to make earnest money deposits. However, the potential to make solid profits is there for those who commit to the time and effort required to build a wholesale real estate business.

A Complete Guide To Wholesaling Real Estate In California

Real estate investors often see California as an endless land of opportunity because of its high demand for housing. Properties can appreciate quickly in The Golden State because of this demand. This makes it a fertile ground for real estate investment, especially for wholesalers.

However, California’s state government has strict oversight and numerous laws to protect motivated sellers. With this being said, you need to learn how to color within the lines to wholesale real estate in California.

Is wholesaling real estate legal in California in 2024?

Wholesaling real estate in California is legal, but there are some caveats. The state laws and oversight from government agencies regarding licensing limit the ways you can operate as a wholesaler in California. If you can work within these limitations, there are a lot of real estate investment opportunities across the state. To get started as a wholesaler in California, investors must understand the three basic formats for wholesaling real estate.

For more details refer California Department of Real Estate Real Estate Law 2024
Do note, that the 2024 Real Estate Law does not contain all laws relevant to real estate. The 29 Codes which comprise California law are available in their entirety at the official website for California legislative information.

Contract assignment

Contract assignment occurs when an investor signs a contract with a motivated seller and then sells the contract to a cash buyer. The sale of the contract must occur before the agreed upon closing date. With a contract assignment, the wholesaler never actually purchases the property.

Buy and sell agreements

In a buy and sell agreement, the wholesaler buys a property and holds it for a period of time before reselling it. This is a common deal structure in situations where the buyer needs some time to secure the funds to buy the property.

Double closing deals

In a double close scenario, the wholesaler actually buys the property at closing, then sells it to a cash buyer immediately at a second closing. The main advantage of a double closing is that the wholesaler is able to keep their profit confidential. Double closings appeal to the seller because it frees the seller from having to wait for the wholesaler to find a buyer. Additionally, both the seller and the buyer are able to maintain their anonymity.

Working outside these deal structures could have legal consequences for unlicensed wholesalers. This is why many wholesalers in California choose to get a real estate license.

Do you need a license to wholesale real estate in California?

Wholesalers don’t need a license if they’re doing one of the three deal types listed above. They also must avoid marketing the properties if they’re unlicensed.

Alternatively, wholesalers who have a real estate license have the freedom to perform the duties of a traditional realtor or broker. This means that they can market the property to prospective buyers. They are also able to collect commissions if they choose to structure their payout that way. In addition, wholesalers who have a real estate license are able to market their properties.

California wholesale real estate legal tips

Wholesaling real estate in California can be difficult because state laws require licensing for those who market properties or advertise their wholesaling services. Wholesalers who don’t have a license but advertise their properties can incur penalties of up to $20,000 plus legal costs.

Given this restriction, wholesalers must depend on their network of private contacts and known buyers to make deals. While this may sound like a major hurdle, this is the typical buyer pool for most wholesalers. Even licensed wholesalers look to their professional networks first when looking for potential investors.

Wholesalers in California can ensure that they’re staying on the right side of the law by adhering to the three types of real estate wholesale deals because:

• Contract assignment deals without marketing are legal because you are simply securing a sales contract and offering it to a buyer privately.
• Buy and sell agreements work because you hold the property for an assigned period of time before reselling it as the owner.
• Double closings work for similar reasons, passing the property through your hands, so you’re selling it to the end owner.

How to profit from wholesale real estate in California

The key to profiting from wholesale real estate is understanding how to optimize each of the three wholesale deal types. Savvy wholesalers can also profit by partnering with real estate agents. Alternately, becoming licensed can help you simplify the process and increase profit margins by eliminating broker fees.

Making the most of a contract assignment

Legally assigning a contract in California means you have permission from the seller to contract the sale at a specific cost. You then find a buyer to accept assignment of the contract at the seller’s cost plus your assignment fee. Buyers must get full disclosure of your fees under this structure.

This form of wholesaling is most accessible when you have a network of cash buyers who have the capital to buy properties. If you are able to establish relationships with the right investors, you can profit from assignment fees without investing your own money.

Profiting from buy and sell agreements

This is probably the most straightforward method for wholesaling from a legal perspective. It is also the easiest path to profit, but it requires keen judgment and working capital.

In a buy and sell agreement, you buy the property from one party and hold it for a set period of time. At the end of this period, you sell it to an investor. As the property owner, you’re simply buying at one price and selling at another. The process resembles house flipping, although the wholesaler makes no improvements to the property.

The eventual buyer is determined before the holding period. The advantage of this arrangement is that it gives the buyer time to line up funding. In the event they’re unable to do so, the wholesaler can sell the property to a different investor.

This method works well if you work with investors who are interested in buying certain types of property but generally have to secure funding for new investments.

Lining up a double closing

In a double closing, the wholesaler closes twice on the same property. In a double close transaction, the wholesaler closes with two parties instead of one.

First, the wholesaler closes on the purchase with the seller, providing the property owner with the agreed upon amount for the sale. Then in the same meeting, the wholesaler sells the property to the buyer. In California, the transaction takes two days to finalize because of state laws governing title transfers.

With the right escrow arrangement, it’s possible to use the funds from the buyer’s purchase to cover the payment to the seller. This is a complex maneuver and we recommend hiring an attorney to execute it correctly.

Double closings work well when you have an experienced buyer who you’re confident will be able to complete the transaction.

Expenses in wholesaling

California is a unique market compared to the rest of the United States. The current median sale price for a home in California is $799,000, the highest in the country. As a result, some investors avoid California because of the expensive buy-in. Other investors are enticed by the high cost of housing because of the eventual payoff. This includes wholesalers based in California and those investing virtually.

If you’re a wholesaler and you choose to pursue contract assignment, you can get started without a significant financial commitment. Some wholesalers like to submit an earnest money deposit to demonstrate their commitment to the deal. Investors can choose to give homeowners a deposit of $500 to $2,000, but it is not required.

Wholesalers who do double closes must buy the property first, even though they sell it immediately to the buyer. In this situation, wholesalers can get transactional funding, which they repay to the lender within 48 hours to two weeks. Transactional funding can cost the borrower 1% to 2.5% of the loan principal, so wholesalers on a tight budget should take this into consideration.

Wholesalers can use transactional funding for buy and sell agreements, but only if they hold the property for less than two weeks.

Key Takeaways

Wholesaling is a great way to start or grow a real estate investing career in California. However, you need to be familiar with state laws before you start.

As we stated earlier, wholesaling real estate in California is perfectly legal but there are stringent regulations for unlicensed wholesalers. Wholesalers who follow California’s wholesaling regulations and limit their deals to the three deal types outlined above won’t encounter any problems.