Wholesaling Houses 101

Key Takeaways

  • Wholesale properties award new investors a great opportunity to break into the world of real estate investing.
  • You don’t need to be a seasoned investor to wholesale homes in any market.
  • If you know how to find wholesale properties, you are already ahead of most of the competition.

Wholesale real estate investing, or “wholesaling” as it’s often called, is a fantastic way to jump-start a budding residential redevelopment career. With its reduced financial risk and time commitment—you’re essentially collecting a finder’s fee for locating wholesale properties—this specialized strategy can give you a great primer on the ins-and-outs of real estate investing (all while possibly earning you some money in the process).

The trick, as any wholesale property investor will tell you, is finding those “magical” wholesale leads—the under-valued properties that you, as a wholesale investor, can package and turn over to a real estate investor who intends to rehab the property. And though finding wholesale properties through traditional means, such as the MLS (multiple listing service), can be an effective strategy, savvy wholesale investors know they may have to turn over a few non-traditional rocks to find the ideal property they’re looking for.

Wholesale Homes Definition

Wholesale homes are nothing less than one of the best ways for today’s investors to break into the world of real estate investing. In their simplest form, however, wholesale properties are homes currently owned by distressed homeowners. As such, they are a great target for investors looking to wholesale homes. You see, wholesaling doesn’t refer to the home itself, but rather the exit strategy investors use to make money on it.

To that end, property wholesalers will do one of two things in order to wholesale property deals: assign the contract or conduct a double close. Without getting too far off track, assigning contracts is typically preferred over double closing, as it is essentially easier. That said, assigning contracts will simply have investors sell their rights to buy the home (not the house itself). In a contract assignment, investors will make a deal with the owner that gives them the right to buy the house. Wholesalers will then sell said rights to another buyer. A double closing, on the other hand, will have the wholesaler actually buy the home, only to turn around and sell it as fast as possible. While the two wholesale property strategies are different, they are still under the same umbrella.

[ IMPORTANT: Stay legal! Don’t wholesale a house before completing this 8-point legal compliance checklist ]

Wholesale leads

Wholesale Properties: Listed Vs Unlisted Leads

Before we jump into the sources for finding wholesale properties, it’s important we define two terms we’ll use throughout this column: listed properties and unlisted properties.

  • Listed Properties: These are properties listed on the MLS, and they usually come in one of three forms: Properties owned by private sellers, properties in pre-foreclosure and REO properties (bank-owned). Listed wholesale homes tend to be the easiest to find, but are often the most competitive to secure (and usually provide less profit potential than unlisted properties).
  • Unlisted Properties: These are just what they sound like, wholesale properties in which the seller has not listed the property on the MLS. These often represent the biggest profit potential of the many forms of wholesale properties, but require additional effort, and expense, to locate.

Now that you know a little bit about listed vs. unlisted wholesale properties, let’s jump into the following sources of leads you should account for in your search:

How To Find Wholesale Real Estate Listings

Wholesales represent a great opportunity for investors to acquire deals at a good price. However, wholesales aren’t found as easily as their traditional counterparts. Instead of simply searching the MLS, investors may want to try some of the following methods if they hope to find wholesale homes:

  • Private Sellers On The MLS
  • Pre-Foreclosure
  • Direct Mail
  • Outdoor Signage
  • Pay-Per-Click Advertising

Private Sellers (MLS)

These are properties owned by sellers who have signed a listing agreement with a real estate agent. Though these are often the easiest (and most profitable) forms of listed wholesale properties you can find, it’s imperative you sift through plenty of listings to find the right property for your investing needs.

Your goal is to find undervalued, or “distressed” properties on the MLS. Not every listing on the MLS is distressed, or even a bargain. Be aware because these properties have a real estate agent attached, the actual wholesaling process can be challenging and may require more hoops to jump through than you might expect.

But with the right property, and a motivated seller, private sellers on the MLS can still be a good source of wholesale leads.


This is another form of listed wholesale properties. But unlike a private seller property, pre-foreclosures (or short sale) properties require the approval of the bank to complete the transaction.

And though one might think the bank would be sufficiently motivated to complete the sale, this isn’t always the case. In fact, many banks restrict buyers from reselling or assigning a short sale property within a specified period of time (usually longer than any real estate investor would be interested in).

It’s imperative, as a wholesale investor, you do your due diligence to examine a particular bank’s short sale contractual language to ensure wholesaling is an option. On that note, the importance of understanding a real estate wholesale contract are imperative. The many hurdles involved in a pre-foreclosure wholesaling deal can deter would-be competitors, and provide a relatively new investor access to wholesale leads they wouldn’t otherwise have.

Direct Mail

Now we turn to unlisted wholesale properties. And one of the best ways to find these unlisted diamonds in the rough is through direct mail—which includes postcards, self-mailers (or brochures), letters and even catalogs.

Though the initial start-up cost of direct mail can be high—even with simple postcards—the possible lead-generation benefit can be staggeringly high. With direct mail you can target lists that include:

  • Properties in probate
  • Absentee owners
  • Owners in pre-foreclosure

Direct mail is a powerful tool, precisely because it allows you to “plant the seed” of a home sale long before a prospective seller has considered it.

Outdoor Signage

Postcards and flyers in the mailbox aren’t the only way to find unlisted wholesale properties. Outdoor signage methods—such as banners, billboards, and vehicle magnets—can be a fantastic (and relatively inexpensive) method for finding untapped wholesale deals.

Which particular method of outdoor signage you find most effective will vary by neighborhood; one of the easiest (and most effective) strategies is to use signage at a property you or your partner are already rehabbing. But with a bit of trial and error—and a few extra miles on the odometer—you might just find a fruitful source of wholesale leads, just steps away from your front door.

Pay-Per-Click Advertising

Pay-per-click advertising isn’t quite the gold rush it used to be; the days of one-cent clicks on Google have long faded into the sunset. But that doesn’t mean that online advertising platforms such as Google, Facebook, YouTube and even Pinterest aren’t still a great source of wholesale leads.

Each online platform has their own pros and cons. Google and YouTube are great at targeting “searchers,” people who are typing in specific phrases—such as “how to short sale”—and serving them ads that may help them be added to your marketing funnel. While Facebook has cornered the market on demographic data, letting you target very specific, targeted to ads to quality prospects in your local area.

How To Start Wholesaling Houses

  • Get To Know The Local Market: Investing in real estate will require investors to get in touch with their local market. After all, the golden rule still applies: location, location, location. Therefore, anyone looking to wholesale needs to learn everything they can about the respective market. Demand in a local market, for example, will go a long way in dealing with wholesale.
  • Establish A Marketing Presence: Increase your exposure in a particular area. That way, you’ll not only havre more access to wholesale deals (or at least someone who knows of a deal), but also people who may be interested in acting as the end buyer. Knowing who you will wholesale to is just as important as finding the deal itself. More often than not, you’ll want to have buyers lined up before you even find a deal.
  • Find Deals: Use several marketing funnels to find deals, not the least of which include direct mail marketing, the MLS, Online listing portals, social media, and even other investors.
  • Evaluate The Deals You Come Across: Evaluate the deals you come across in order to market the property to end buyers more effectively. You’ll need to be able to convince someone that the deal is worth buying.
  • Decide Which Wholesale Strategy To Use: Determine whether you will initiate a double close or assignment of contract strategy. Preferably, you’ll be able to assign the contract, but know how to double close if necessary.
  • Market The Asset: Once you know which wholesale strategy to use, start marketing the property to end buyers.

How Will You Find Your Next Wholesale Property?

The key to wholesaling success is to realize it’s a marketing funnel. And like any other business the key is to fill the top of the funnel with enough qualified and interested leads, in the hopes that a few of those leads will mature into completed transactions.

Not every strategy to find wholesale properties will be fool-proof or reap instant benefits. But if you stick with it, and vary up your methods to acquire wholesale leads, you might just find you’re better at wholesale investing than you ever imagined.

Have you learned something in trying to find wholesale properties? Let us know in the comments below.

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