4 Common Myths About Wholesaling Debunked


Many new real estate agents question whether wholesale real estate is an obtainable opportunity. When the average person hears about wholesaling, they think it’s too good to be true. It seems crazy that it’s possible to profit in real estate without a real estate license or putting down money upfront. Some even wonder if it’s illegal. While researching the answers to your many questions, you may come across a few myths about wholesaling. So, before you invest in the world of wholesale real estate, we invite you to join us in debunking a few common misconceptions about this fascinating branch of real estate.


Wholesaling Real Estate is Illegal

Just about anything is legal if you know how to make the law work in your favor, and wholesale real estate is no different. Every state has varying laws surrounding wholesale real estate, so it is crucial that you do your research and fully understand the real estate laws in your market. People considering a career in wholesaling must know that there is nothing illegal about selling a contract. In wholesale real estate, the realtor simply takes the contract for the distressed property, typically listed under market value, and sells the contract to an end buyer. The final selling price is often higher than its original asking price because it allows the realtor to profit. Some call this a finder’s fee.

What makes people start to question the legality of this practice is when it is done incorrectly. In the wholesaling business, it is vital for you, the investor, to be as transparent with your intentions as possible. You must state in the contract with the seller that you are purchasing the equitable interest of the property and that you are not responsible for the property itself. There are specific stipulations to this practice. For example, wholesale investors cannot continue without a clear contract, and they must prove their intent. Before you begin wholesaling, make it your top priority to learn all the necessary laws so that you don’t get yourself into any trouble.


You Need a Real Estate License to Wholesale

Of course, another entry on our list of common myths about wholesaling potential investors believe is that a license is required to sell wholesale real estate. On the contrary, you don’t need a real estate license to become a wholesaler. This is because you are only selling the contract-to-buy and not the property itself. Legally, the responsibility of the property belongs to the seller; you are simply finding a buyer for the property. A real estate license is required to practice wholesale real estate in a few states, including Oklahoma, Illinois, and Ohio. Again, be sure to double-check the laws in your state to make sure you are legally allowed to practice wholesaling without a license.

While most states do not require a real estate license to wholesale, there are benefits to having a real estate license when wholesaling. To start, licensed real estate agents have access to resources that are not available to others. For instance, if you have a license, you can use certain property databases and attend real estate networking events. Having a real estate license may also make it easier to grow your wholesaling business because it increases your credibility.



You Need Money to Begin Wholesaling Real Estate

The idea that you can profit $5,000 to $10,000 per deal when wholesaling, without any money upfront, sounds too good to be true, and it almost is. The only money needed in wholesaling is for the negotiation of the contract with the seller. As you become more skilled in negotiating these contracts, the amount of money that you need to invest as the wholesaler lowers. Provided that the cost of this negotiation is under $5,000 to $10,000, the remaining amount is your profit.

This is why, unlike the traditional method of outright purchasing a property, there is no credit check required or any additional funding that is needed. However, to have the most lucrative real estate wholesaling business possible, it will be necessary to invest in marketing your business to potential buyers and sellers. If you’re new to the real estate industry, we recommend that you take advantage of free marketing opportunities and invest the profit made from your initial contracts into marketing your services.


There Is No Risk in Wholesaling Real Estate

This common belief is perhaps one of the biggest myths about wholesaling, aside from its legality. If wholesale real estate involved no risks, there would be no reward! But, unfortunately, while getting your start in wholesaling real estate is simple, business deals can become complicated if they do not go as planned.

Wholesalers must have a complete understanding of the investment deal they’re making with the buyer before they can proceed. You must know the details of the neighborhood you’re investing in and the cost of renovation. It is also wise to know the average price of properties in the area. Luck favors the prepared, and you want to approach each seller with a complete financial picture so that you can confidently close the deal when you reach out to buyers.

Another risk you must accept when beginning a wholesale real estate career is that you might fail. In the beginning, you might not have the skills to negotiate the sale adequately. There is a learning curve with this business, and often the only way to learn is through failing now and then. However, the wholesaler is not always at fault when a deal doesn’t go through. Be aware that it is within the buyer’s rights to back out of the agreement at any time, and craft a strategy to protect yourself, so you aren’t stuck with a property on your hands.




Call Motivated Sellers

Wholesale real estate is an exciting branch of real estate, and when appropriately navigated, it can be wildly lucrative. We hope that debunking common myths about wholesaling inspires you to start your own career.

If you’re interested in wholesaling real estate and need help generating leads or vetting your call list, Call Motivated Sellers is here to help. Our promise is to provide you with cold-calling experts who are highly skilled in generating high-quality leads that are sure to skyrocket your profit. We can also advise your process and help you streamline it!

Are you interested in working together? Contact our team today, and let’s get started!



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