I admit that I always used to be suspicious about wholesale properties. I used to envision wholesalers were stealing properties from unfortunate old people who did not know better. What I learned was that while there may be an unfortunate incident in the mix, for the most part a wholesaler is performing a great service for sellers.
There are dozens of reasons why a person must sell a property and is highly motivated to sell for a discounted price. Many sellers have problems that they need solved and the retail real estate market will not provide an outlet to sell these properties.
Let’s look at some challenges wholesalers help sellers with:
Not move in ready property:
Often properties are not move in ready. Sometimes there are code compliance issues, electrical or plumbing concerns, etc. When a seller needs to sell and the house is in disrepair, wholesalers are these sellers best friends. They can buy a property with cash and take care of these problems. Sellers at this point simply want a headache to go away. Win-Win situations must be adhered to.
A common problem is people inherit property and the estate winds up in probate. This can be an emotional and confusing time for anyone. Understanding how to navigate within probate properties and creating solutions to help alleviate headaches for sellers of properties that often they never even lived in can create mutual wins for buyer and seller.
Legal issues with property:
Properties may be move in ready but sometimes they have legal issues on the title or perhaps with code compliance issues. How do you sell a property like this to the retail market. As a seller if you do not have the know how or the finances to fix these issues you feel pretty trapped. This is where the wholesaler’s ability to remove the headache and often times put cash into the pocket of the seller generates a great win for both parties.
I have a friend who is a wholesaler that helped a divorced lady move on. She had full ownership rights to this home after a divorce case. The home did not have a mortgage on it and she desperately wanted to move back home (out of state). She listed the property with her cousin who was a realtor and her biggest desire was just to move on. Her motivation was not top dollar like her realtor cousin tried to get for her, but instead she wanted to be rid of the emotional headache. After 6 months of no home sale with her cousin she contacted my wholesale buddy who was able to pay cash for her property. He got the house cheap, fully disclosing he intended to by as an investor and buy for a profit. She got cash and moved on and they were both happy.
The past several years has spawned a number of accidental landlords. When the market was soft many people who could not sell opted to rent their homes. There were plenty of tenants and few sellers so the option to alleviate their headaches was to rent the property and have their mortgages covered. The tenant option was a great fix for many and simply a bandage for others. People who had no desire to become a landlord and did not know how to manage properties found a lot of headaches as they did not know how to be a landlord.
I know a wholesaler who helped a disgruntled landlord after a tenant who vacated the property trashed it first. The landlord wanted nothing to do with the property. He did not want to empty the truckloads of garbage out of it and he did not want to spend any money to do rehab work. He was emotionally drained and for him he just wanted the problem gone.
There a hundreds of stories out there where people want or need to sell quickly, they want their headaches gone and they want people to help with their problems. Because these homes most often have challenges attached to the house, such as disrepair or legal issues, they cannot sell on the retail outlet. When this happens who are you going to call? (no, I wasn’t going for ghostbusters here!) The regular outlet to sell homes is for ready willing and able home buyers and sellers to connect and make a deal. Wholesalers create this outlet for these distressed properties.
The examples above do not reflect ready willing and able buyer products. A wholesaler provides the service of turning them into ready willing and able to buy properties.
The key to being a great wholesaler is of course the desire to truly help solve these problems and create win win situations. Sellers need to feel like you truly helped them and were fair to them. If they do not feel like they were treated fairly that word will spread and you will not survive in the wholesale business.