Real Estate Wholesalers vs. Real Estate Investors: Here’s What You Need to Know
When it comes to selling your home for cash, there can be a lot of new terminology to learn and understand. Closing fees. Earnest deposits. Real estate wholesalers?
Perhaps you’ve seen that last one before, perhaps you haven’t. Either way, when considering selling your home for cash, it’s a good idea to know what a real estate wholesaler does in case you’re approached by one — and understand how they’re different from a real estate investor.
Let’s take a closer look.
What is real estate investing?
A real estate investor is someone who chooses to invest money in real estate options. This can include:
- Buying properties to sell or to rent
- Buying, repairing, and reselling properties
When you decide to sell your home for cash, there are many benefits to choosing to work with a real estate investor like Columbia Redevelopment. A few of the benefits of selling your home for cash to a real estate investor include:
- Receive a fast offer — With traditional real estate sales, it can take months to receive an offer. Columbia Redevelopment will make an offer within 24 hours of viewing the property.
- A real estate investor will buy your home as-is, without requiring repairs or updates
- You won’t need to pay closing fees or inspection fees
- You can choose how quickly you want to close the sale (often as soon as 2-3 days, if you wish)
What is real estate wholesaling?
It’s important not to confuse real estate wholesaling with retail wholesaling. A retail wholesaler sells a large amount of goods to a retailer at a low price due to the quantity. The retailer then resells the large quantity of goods in their own store at a higher price.
A real estate wholesaler doesn’t have anything to do with selling a large amount of homes or properties.
In real estate wholesaling, a wholesaler approaches or is contacted by someone who may be interested in selling their home for cash. The wholesaler enters into a contract with them, where they agree to sell the home for a certain price within a certain amount of time. The wholesaler then reaches out to their investor contacts, finds an interested buyer, and connects the interested buyer with the seller.
“But how do they make money?”, you may be wondering. Here’s how:
- The real estate wholesaler determines how much the cash buyer would like to sell their home for. Let’s say, for example, the seller wants $100,000 for the home.
- The wholesaler reaches out to their investor contacts, and finds a buyer willing to pay $105,000 for the house.
- The wholesaler assigns the buyer the contract with the seller, and keeps the $5,000 difference the buyer is willing to pay as profit for themselves.
This deal is made without the wholesaler ever owning the home, or taking any money from the seller.
Is a real estate wholesaler the same as a real estate agent?
Given the example of real estate wholesaling above, it would be easy to mix up a real estate wholesaler and a real estate agent.
However, there are some important key differences.
A real estate agent is a licensed professional who works with or is themselves a designated real estate broker. Their role is not only to help a seller secure a buyer for their home, but also to:
- Help a seller through the process of preparing their home for sale or to rent
- Guide a buyer through the home buying process and paperwork
- They have access to MLS house listings and lockbox codes for house viewings
For their services, a real estate agent is paid a commission as part of closing on a house.
Although a real estate agent and a real estate wholesaler both never own the home being sold and make a profit off of connecting a home seller to a home buyer, a wholesaler doesn’t need a formal education or license. They can usually close a sale faster than a real estate agent. This is because a wholesaler is often able to facilitate the sale of a home that may be priced under market value, and work on a faster timeline.
How is real estate wholesaling different from real estate investing?
Although there are some similarities between real estate wholesalers and real estate investors, there are definitely some key differences. Let’s take a closer look.
|Columbia Redevelopment (a Portland-area real estate investor)||Real Estate Wholesalers|
|Fees||None||No fees from the wholesaler, possibly fees from the buyer|
|Closing costs||None||No fees from the wholesaler, possibly fees from the buyer|
|Earnest money deposit to seller||Yes. We make a $10,000 earnest money deposit to your account||None|
|Closing time||As quickly as 2-3 days, depending on your preference||Can take 30 days or more|
|Showings||1 showing when we come to do a walkthrough of your home||At least 1 showing, possibly more if the contracted buyer also wishes to view the property|
|Repairs||None||None from the wholesaler, but some repair costs may be deducted from closing with the buyer|
|Risk||No risk to you, you’ll know who the final buyer is from the start||None from the wholesaler, but some repair costs may be deducted from closing with the buyer|
What to consider when deciding between a real estate wholesaler and a real estate investor
When it comes to selling your house for cash, you might wrestle between choosing to work with a real estate investor or a real estate wholesaler.
Maybe you didn’t think you’ll be able to sell your home because of the condition it’s in and you’re tempted when a real estate wholesaler reaches out to you about setting up a contract.
On the other hand, working with a trusted local real estate investor allows you to close the sale of your house in under 30 days, without need to make any repairs or pay any closing fees, and receive an earnest money deposit.
Ready to safely sell your home for cash? Contact Columbia Redevelopment today
When selling a home, it’s important to know the pros and cons of the options available so you can make a decision that feels the most comfortable for you.
If you have questions or are interested in learning more about selling your home for cash in the Portland area, our team at Columbia Redevelopment is here to help!