Wholesaling in Real Estate
Wholesaling is a term used in real estate to describe the process of finding real estate deals and assigning those deals to potential buyers for a fee.
A wholesaler has a property under contract for $100,000. The executed contract states that the wholesaler (or someone else he sells the contract to) will buy the home for $100,000. The wholesaler then finds a local real estate investor to buy the property for $105,000. The wholesaler and the real estate investor signs an “assignment contract” where the wholesaler gives the real estate investor the right to buy the property. In the end, the seller receives $100,000, the price that was negotiated. The real estate investor pays $105,000 for the property. And, the wholesaler keeps $5,000 which is his wholesale fee.
The wholesaler never owned the property but made $5,000 for bringing the seller and the real estate investor together.