Wholesaling real estate is something that many people struggle with, but it doesn’t have to be complicated. In fact, once you have the basic process down, it can be repeated over and over again, in as many markets as you choose.
To help make grasping the concepts of wholesaling Real Estate as simple as possible, we’re going to be taking a close look at the individual steps required in order to consistently close deals at a high level.
With this guide, we'll be looking at the wholesaling process from a 5,000ft view so that the individual steps of the process can be easily understood.
Let’s get right into it…
Simple. Repeatable. Highly Profitable.
These steps are organized in chronological order, but keep in mind that once this process is running, you'll be jumping all over the place to manage deals that are in various stages of the process.
Okay - so here is the high-level overview of the steps required for you to close your first or next wholesale deal.
1: Design and implement a marketing plan to locate motivated sellers
Your goal here is to target people who NEED to sell their house and to build a steady stream of these incoming “motivated seller leads” so that you can you can pick and choose the best deals. Motivated sellers are 1 of the 2 most important elements required to successfully wholesale houses - the 2nd important element is next.
2: Build your cash buyers list
As a Real Estate wholesaler, your cash buyers list is the most valuable asset you have! Focus on building a QUALITY list over quantity, but also remember that there’s no such thing as a cash buyer’s list that is too big. You should always be on the lookout for more buyers to add to your list.
3: Pre-qualify your motivated seller calls
To effectively identify how motivated the sellers are, you must learn how to screen them and ask them qualifying questions. Build rapport with the seller and pull as much information from them as you can to determine if there is a deal to be made. Just be yourself and don’t come off as being pushy or desperate for a deal.
4: Determine your Maximum Allowable Offer (MAO)
You cannot begin to negotiate until you know your MAO. Always start by applying the formula so that you have a basis of what your maximum offer can be so that you know what your target number is once you begin negotiating the deal.
5: Determine if you and the seller are in the same ballpark
Long before you make plans to go visit the house in person, you should determine if the seller is willing to negotiate a deal that is in the same ballpark price range that you need to be in for a deal to work. Just focus on whether or not you’re CLOSE on price or not. There’s no sense in investing the time into checking out the house if you are miles off on price.
6: You (or someone else) visits the house
Take pictures, analyze repairs, and compare the property to the comps you chose. The internet is a great tool to get an idea of how the house looks on the exterior, but someone needs to go and get current pictures of the exterior and all of the interior. You’ll also need these later to market the property so keep that in mind as you get the photos taken.
7: Revise your MAX Offer based on the complete data
Now that you have all of the information, zero in on the price you should pay to make this an enticing deal for your buyers. You have to 1) Get the house at a price that works for the Seller, and 2) Have the margins available to make the house a great deal for your Cash Buyers.
8: Negotiate with the Seller
This is when you make an attempt to get the house at the best price possible. Remember to reiterate all the benefits of working with you; remind them of their motivation, and the pain that it is causing them, then fix their problem with your offer.
9: Get the contract signed and deliver earnest money
You and the seller can either sign in person, or use a digital signature service like DocuSign. Concerning the Earnest Money… NEVER give the deposit directly to the seller. Always leave the deposit with your preferred Closing Attorney or Title Company.
10: Assign or Double Close
Determine if you plan to assign the contract to your buyers; or if it is necessary to use a double close (e.g. buying a bank-owned property; earning too large of an Assignment Fee, etc). Typically I assign deals when the profits are 10k or less, but I’ll start considering a Double Closing when my profits are much over 10k. That’s just my personal preference.
11: Prepare and distribute marketing materials to your buyers list
Provide all of the information your buyers will need to determine this is a great deal. Use the pictures you took of the house and of the comps. Like all marketing, repeat the message 5-7 times to achieve the greatest response rate.
12: Begin taking offers and accept the best one
It is not just about price. You also want to assess the Cash Buyer’s ability to close! Keep in mind that they need to be able to close before your contract expires with the seller. Continue to market the deal for sale until a deposit has been received in escrow by the Cash Buyer.
14: Collect a non-refundable deposit from the Buyer
This is where the rubber meets the road and you discover if you have a real buyer or not. A real buyer will be happy to provide the earnest money deposit. Let your closing agent hold the funds in escrow – it will make everyone more comfortable.
15: Obtain the Buyer's Proof of Funds
They said they have access to money, this is where they actually Show You The Money. Get proof of 100% of the funds required. For instance, if they are getting a hard money loan for 90% of the purchase price, they need to prove they have the necessary 10% plus points, plus closing costs.
16: Set up closing with the closing agent
Make sure that the closing gets scheduled well in advance and that all of the parties know the time and place.
Ensure everything is done on the buyer’s side for closing. Sure, your buyer should be a professional, but often they are not. Making sure everything is done will ensure a smooth closing and your payday!
18: Close the deal
Unless it is a double closing, you are not even a part of the closing. With an assignment, the buyer steps into your shoes and fulfills your responsibilities with the seller.
19: Deposit your profit
The best part of the whole process – YOUR PAYDAY! You can get a check, but a wire transfer into your account is your safest and quickest option.
20: Repeat – Repeat – Repeat
From here all that’s left is to think of ways to grow your business, automate tasks, outsource responsibilities, and all the stuff that comes with scaling a successful wholesale business to the next level.
That’s all there is to Wholesaling Real Estate!
That’s the 10,000ft view of the entire wholesaling process from beginning to end.
It’s simple, incredible profitable, and anyone can do it even without any prior Real Estate experience.
How to use this information
Wholesaling is not difficult, but it can be intimidating especially for those just getting started. There are a lot of moving parts to consider, and I think this is where many people get lost.
Depending on where you are in your business, you can use the sequence of steps to help determine where in your business you are experiencing the most trouble. From there you can make adjustments as needed to improve your processes.
Finally, here are some thoughts from my own personal experience with wholesaling where I feel as though I experienced a BREAKTHROUGH or one of those AHA moments that you hear people talking about...
I think that there are very few people who are naturally gifted with all the attributes needed to make wholesaling work effectively and seamlessly.
For instance, I don't consider myself to be a very organized person, or very strong at negotiating, or even particularly good at marketing. For me the breakthrough came after I struggled through my first few deals and I had a chunk of cash to work with.
What I did was I began to delegate tasks to people who actually WERE good at the things I sucked at so that I could focus on the elements of the process that I enjoyed.
I found a local guy that I hired to drive around and take photos of houses for $40 a piece.
I hired a virtual assistant in the Philippines to answer calls from motivated sellers.
I hired a different VA to help me stay organized and manage my offer follow-ups.
Once I made those few changes by outsourcing the stuff I either hated doing or was just bad at, my business REALLY TOOK OFF. Focusing on the stuff I was good at and eliminating the rest made all the difference for me. So keep that in mind as you navigate the process of wholesaling.
While it makes good sense to get through your first few deals yourself so that you intimately understand the process, don't feel like you're always going to be stuck in the process.
OKAY - I hope you enjoyed this SIMPLE breakdown of the Real Estate Wholesaling process.
Wishing you the very best in your Real Estate investing success!
If you're interested in building a Real Estate business OR scaling to the next level, I'd like to send you a free copy of "21 Days To The Deal"!
This book teaches you step-by-step how to close a $10,000+ deal within the next 21 days.
Just tell me where to send it!