Friday, March 6, 2015

Wholesalers Steal Houses! Don’t They?

Over the past couple of weeks we have looked at some of the necessary preparations for selling a house the traditional way and some of the reasons why this may not be possible or practical for some property owners. These reasons usually involve a property that is not in good enough condition to sell on the retail market, or must be sold quickly.

What is a person to do if they cannot sell their house the traditional way?

There are many buyers who are willing to buy properties in “as is” condition. Some of these are just regular people who can’t afford to pay top dollar for a perfect house. They are willing to buy a rundown house and work on it over time to fix it up. This is known as “sweat equity.”This type of sale works well sometimes, but not always. Sometimes the new owner will try to sue the old owner for “hidden defects” if there are unexpected problems with the property. Also, it can take some time to find the right buyer.

A more elegant solution would be to work with an investor.

Investors are people who are usually willing to buy property in any condition. The house can be in good, bad or even destroyed condition. Some buy houses while others buy apartment buildings or commercial properties. They buy them and improve them, then keep them or sell them for profit. Just as there are many types of properties, there are many types of investors. Some make direct contact with the property owners while others tend to work with other investors.

Wholesalers work directly with sellers who need to sell their properties. In most cases, these are houses that are in some form of physical distress, or the seller just needs to sell the property quickly. When a wholesaler is discussing the offer, they usually take into consideration any repairs the house needs, and deduct it from the offer price. The wholesaler knows that these problems will need to be repaired before the property can eventually be put up for a traditional sale. That is why the offer may seem low to the owner. Some owners even go so far as to think that wholesalers are trying to swindle them out of their houses!

This may sound like the owner is being taken advantage of, but if the owner is able to pay for the repairs themselves in preparation for a traditional sale; they would still have to live through the stress and inconvenience of being in a work zone for several days or weeks.

Once the house was back to normal, they would still have to wait months or years for the house to sell!

When a wholesaler buys a house, they are usually willing to do so on the day that suits the owner. 

At first glance, this may not seem like a big deal, but really it is.

If a traditional sale takes between three months to two years, the owner would not be able to easily go to their new location. They could wind up staying in this house, or paying for the old and new house at the same time! They would have to continue paying the loan, the taxes, some utilities and (vacant property) insurance until the house was sold. 

If this was just $1000 a month combined, after a few months or even a year, it would be costing the owner a substantial amount! If they had to move, they would probably also have to hire a property manager to keep up the house.

Depending on how long it takes to sell, by the time the house finally sold, the owner could have paid $5000, $10000 or even $25000 in expenses PLUS the costs of any repairs they did to put the house on the market!

So a wholesale deal is actually pretty good for the owner. They don’t have to pay for and live through repairs. If they need to move, they don’t have to pay the expenses of a vacant house. They don’t have to worry about an empty house being vandalized. They can have the sale the day THEY choose and move when they want!

Why would a wholesaler agree to do this? It is not often talked about, but a wholesaler makes a fee. TYPICALLY they make $2000 - $5000 when they find a buyer for the property. This buyer is usually another investor who is too busy to look for houses. But wait a minute! If they are getting money, then they are just like a real estate agent! Well….no. Agents don’t usually BUY problem properties, and they certainly don’t guarantee the date of sale! All in all, it is a fairly reasonable amount considering the many advantages to the property owner.

So I hope that this has given you more information and a better perspective on wholesalers. At the very least, I hope you no longer believe they steal houses!

Next week we will take a look at the truth behind the Fix and Flip industry and why that matters to you.

So thanks for reading my post. I'm so glad you're here! And I’ll look forward to getting into more good stuff in future posts so that you can Turn Your House To $OLD!

Feel free to ask me any questions. I would be very happy to help.        

Linda   623-335-2662

Article Source:

Lynda Bathory