Good morning investors!
Folks are always asking what is the sales process of a wholesale deal. It’s not as difficult as you would think. It actually feels a little too easy. If you’ve ever been through a traditional sale of a house where the buyer is there for the entire sales cycle, you will understand what I mean. The entire sales process includes the offer, getting the offer accepted, moving forward with the purchase and sale agreement and then closing. With wholesaling the sales cycle is a little easier. The hardest part is identifying an appropriate property.
Step 1 – Wholesaler identifies a property. They’ve calculated the ARV (after repaired value), they worked their way backwards from the ARV, subtracting their wholesale fee, what a rehabber will want to make on a deal, rehab costs, financing costs, holding costs, contingency, closing fees to get a MAO (maximum allowable offer).
Step 2 – Wholesaler makes an offer on subject property. This is done with an offer to purchase contract. One the contract it must specify that the contract is for you or your assignees.
Step 3 – Wholesaler obtains a signed offer to purchase from the seller.
Step 4 – Market the deal to rehabbers you know, if you don’t know any, contact me, I know quite a few. 🙂
Step 5 – Receive offers from potential rehabbers and utilize an assignment contract including your wholesale fees for the rehabber purchasing your contract with the seller.
Step 6 – The rehabber purchasing the property will then be listed as the buyer on the purchase and sale agreement. They will need to perform on that contract. The wholesaler waits for the closing to get paid their assignment fee.
Hopefully that helped a little.
I wanted to remind folks of the upcoming events – May 7th Rehab Tour, May 17 – Breaking through Boundaries with your business – Can win $4500 in free advertising, May 19th – Monthly Meeting – Click here for all information.
Have a fabulous rest of the week! Happy Investing!
Bernadette Trafton, Boston AREIA Chief Connector