Reverse Wholesaling | What You Need To Know

Reverse Wholesaling is an innovative way to approach the wholesaling business.

As you may already know, a great way to get your house flipping career kick-started is by wholesaling properties. Wholesaling is great because you often do not have to spend any of your own money.

Essentially, the process entails you, as a wholesaler, finding a property and putting it under contract. Then, you will find a buyer and sell the contract to him or her. The buyer closes in your place and you do not have to spend a dime. Additionally, you do not have to worry about the rehab and all of the costs and troubles that are included with it. Instead, it is the investor who you sell to that will usually do the rehab. You are given a sort of finder’s fee for locating a good property for the buyer to invest in.

As long as you can find a buyer, you should be in good shape.

But what if I can’t find a buyer?

Finding an investor to buy your property is often the trickiest part of the process. Each buyer has his own needs and demands. Some buyers don’t have a lot of money so they’ll only want to work with smaller properties. Other buyers want a property that is in their own town so they can stay close to their other obligations in life.

If you are not able to find a buyer in time, you will have to close and buy the property yourself. That means, if you don’t have enough money to buy it, you could run into trouble.

Luckily, there is a way to avoid this problem. The process is called “reverse wholesaling”, and it’s a fairly simple idea.

What Is Reverse Wholesaling?

The most difficult part of wholesaling is finding a buyer, so the idea of reverse wholesaling is that you get this step out of the way first.

There is a deadline you need to meet after you put a house under contract, after which point you must pay for it yourself. However when you get a buyer first, there is no real deadline you need to meet to find a property. This worst that can happen is that the investor you are finding a house for might think you are taking to long and decides he no longer needs your help. If that happens you will won’t loose any money or run into any legal ramifications.

Also, by finding a cash buyer first, you can find out exactly what the buyer want in a property. You can see what their price range for a property is and what types of homes they are looking for. Maybe they’re looking for basic three bedroom two story homes, or maybe they want a multi-family house with more than one kitchen because they intend to rent it out. Whatever the case, finding out first makes it so that you won’t need to blindly look for a property.

How To Find An Investor

When finding a cash buyer, you want to start large and then narrow down your search. First you should look up public records to see who has recently purchased property in your area. You can also network at REIA meetings to find potential investors. After you’ve made some connections, start emailing or calling these people.

Eventually, you’ll find a client that sticks and you can start to build a rapport with him or her. You can find out exactly what they desire in a property and then you can go out and search specifically for those attributes.

Make Sure You Have Backup Buyers

Before showing your cash buyer the property you have found, you must put it under contract. If you fail to put it under contract, the buyer could cut you out as a middleman and buy the property straight from the seller.

If you put a house under contract and your buyer does not like the property, you might feel that you are in a bad place. However, this is nothing to worry about. You just need to know how to fix the problem. One of the ways to do this is by returning to your buyer’s list.

Return To Your Buyer’s List

Make sure to keep the list you previously assembled, because it could come in handy. If the buyer you originally chose does not like the property, you are essentially back to square one. You will have to perform a regular wholesale as apposed to a reverse wholesale. Just search your buyer’s list and send out emails advertising your new property. You could even advertise it online or through a newspaper, or even post bandit signs around the area.