What Does it Mean to Wholesale Houses?

Have you heard of the term "Wholesaling Houses"? What does that even mean?

Well, what that means is that someone's going to come in and make you an offer on your house. Typically, these are off-market houses. So it might be, for instance, Grandma's house right down the street, and she has tons of equity in it. Then let's say Grandma's house is worth $300,000, and as investors come in and say, "Listen, I'm going to buy your house in cash for $210,000," and Grandma thinks "Great!" because she doesn't even know that her house is worth $300,000.

Well, the investigator gives himself usually around 60 days to then go out and find another buyer who will buy it at an increase of maybe like $270,000. And so the original buyer doesn't ever take possession of the house; they just reassign the contract to the new buyer, but they walk away with a difference, which is what, $60,000? And they didn't do anything but find the second buyer. It sounds kind of shady, but it's very much legal.

My concern is that Grandma is the one that loses because the truth is, we should put it on the open market for $300,000, so the only person that loses is the seller in this particular situation. So think about that if you ever hear the words like "You should get into wholesaling houses." There are real people behind these houses; they're not just vague money-making monopolies, right? These are real people who are trying to sell their house, who probably need that equity to retire on, so it's not a sandbox I play in.

If you have any questions, be sure to give me a call, Edna Wilson, your Hometown Realtor, as Hometown as Apple Pie.