Wholesaling real estate can be one of the most efficient ways to break into property investing without heavy upfront costs. Still, success hinges on understanding core processes like negotiating contracts, securing the best deals, and finding buyers quickly. Whether you’re new to the game or looking to refine your skills, this guide lays out practical, actionable steps to help you navigate the entire process confidently and profitably.
Negotiating Contracts: Setting the Foundation
Negotiating the purchase price is the starting point for every profitable wholesale deal. When evaluating distressed properties, it’s critical to adjust your bids based on repair costs. The more repairs a home needs, the lower your offer should be.
Experienced wholesalers often follow a simple formula: ARV (After Repair Value) x 70% – Repairs = Maximum Offer Price. In competitive markets, however, it’s hard to stick at 70%; you may need to go as high as 75-80% ARV. That said, avoid going higher if your goal is to profit from a flip—desperation can kill profit margins.
Approach negotiations with one focus: securing the property for the lowest price possible while maintaining transparency with the seller.
Evaluating the Property
When walking through a property, carefully assess its condition. Take note of visible issues like structural damage, plumbing problems, or outdated interiors. These factors directly influence the repair estimate.
Accurate repair costs form the backbone of your offer. Bring in contractors for bids during your option period to confirm your estimates align with actual market conditions.
Preparing the Contract: Stay Organized
Walking into a negotiation prepared shows sellers that you’re serious. Bring two pre-filled copies of the contract—one for you and one for the seller. This ensures clarity on both sides and lets the seller feel confident in the transaction.
Be sure to include your chosen title company in the contract. If you don’t have one yet, Facebook investor groups are a great resource for finding title companies that work with wholesalers. Ask questions like:
- “Which title company works best for wholesalers in [location]?”
Once you’ve got recommendations, call the title company to confirm they handle assignments and double closings.
Earnest Money vs. Option Fees
Two terms beginners often confuse are earnest money and option fees, but both play key roles in contracts.
- Earnest money: A deposit held by the title company that signals you’re serious about the property. It’s almost always refundable.
- Option fee: A smaller, non-refundable payment made directly to the seller. It buys you time for inspections or finding an end buyer.
If you’re negotiating the deal, aim to keep your upfront costs low. A $10 option fee is often enough. Adding the word “standard” when proposing the fee (e.g., “My standard option fee is $10”) can help instill confidence. Sellers don’t need to know it’s your first deal—confidence is key.
Maximizing the Option Period
The option period is a critical window for wholesalers. During this time, you’ll confirm repair costs, finalize ARVs, and secure an end buyer.
While traditional contracts allow for 5-7 days, as a new wholesaler, ask for 30 days. If sellers balk, negotiate down to 20 days, but always start high. This extra time gives you breathing room to complete your due diligence and line up buyers.
Once you’ve got the property under contract, your next step is finding an end buyer. Here’s where social media platforms like Facebook come into play.
- Post an eye-catching deal: Use bright colors, bold text, and minimal yet crucial details (e.g., property type, city, ARV). Avoid sharing the address upfront.
- Engage your audience: Encourage potential buyers to email for more details. This allows you to vet serious inquiries and collect their contact info for future deals.
- Build your buyer’s list: Every email you collect is an investment in future deals. Store buyer information—like name, email, and property interest—on a spreadsheet. This creates a ready pool of buyers tailored to your deals.
Expanding Visibility with Instagram
Instagram can complement your Facebook efforts. If you don’t have an account, create one specifically for your business (e.g., “John Buys Houses”).
Follow local real estate hashtags like #RealEstateInvestor or #HouseFlipping to connect with potential buyers. Cross-post your Facebook deals to Instagram to maximize visibility. If you’re consistent, you’ll grow your buyer network faster.
Structuring Your Assignment Fee
Your profit as a wholesaler comes from the assignment fee—the difference between the contract price and what you sell the property for. While experienced wholesalers may charge $20,000 or more, beginners should stick to $5,000-$10,000 to avoid alarming sellers or buyers.
For smaller assignment fees, a straightforward one-page assignment contract works well. But for fees over $10,000, consider a double closing.
Double Closings: When and Why to Use Them
Double closings hide your assignment fee from both the seller and end buyer, reducing the risk of friction. While they add complexity, they’re worth it for large deals.
Some title companies may require you to bring funds to the table for double closings, so research this upfront. Ask about “two HUD statements” that keep your profit confidential.
Closing the Deal
Once you’ve secured a buyer, it’s time to finalize the process. Coordinate with the title company to close the transaction. With no financing contingencies to navigate, most deals close quickly—sometimes within days.
Fast Turnarounds Are Possible
Wholesaling moves fast when done right. For example, one wholesaler shared how they listed a property on social media in the morning, got an offer within hours, and closed days later. Having a strong buyer’s list and a prepared team makes quick flips like this achievable.
Wrapping Up: Keys to Success
Wholesaling real estate requires preparation, negotiation skills, and resourcefulness. Maximize your success by:
- Negotiating wisely: Base offers on accurate repair estimates and market conditions.
- Using social media: Platforms like Facebook and Instagram are invaluable for finding buyers.
- Staying organized: Build a buyer’s list and maintain detailed records for scaling.
The first deal is always the hardest, but with practice, wholesaling becomes second nature. Trust the process, stay confident, and let your knowledge speak for itself.
