Wholesale property is real estate for which a seller has assigned the right to purchase to a wholesaler—for the period during which the wholesaler sells that right to a buyer.

Wholesale property can be either residential, commercial, or industrial real estate (or vacant land which can be used for any of those purposes). However, wholesaling is most common in residential real estate. What is common to all wholesale property is that a wholesaler acquires the purchase rights at a price far below market value.

The seller is motivated to sell at a discount usually because the property is in poor condition, and the seller cannot or will not spend the money to fix it. But the seller could also be facing legal challenges, such as foreclosure, tax liens, or other litigation.

If you want to find a real estate wholesaler, you can ask local real estate agents for recommendations. But their suggestions could be biased because agents want to find bargain properties just as you do.

Contacting the National Real Estate Investors Association could put you in touch with your state or your local REIA. But since these organizations are primarily funded by money from real estate investors, how objective will any of their recommendations be?

And you certainly can’t count on the suggestions of a property wholesaler, since they want you as their client.

Our thoroughly vetted and unbiased list of the top 10 real estate wholesalers in your area will give you a jump start in finding the ideal wholesaler for your specific situation. The RealEstateBees directory will help make your search both quick and productive.

Buying property from wholesalers has many benefits—especially for new investors.

An experienced wholesaler will understand your local real estate market. You may not yet have that experience. Buying the wrong house in the wrong neighborhood could stick you with a home that won’t sell for what you have in it.

If you want to invest in a property that you can turn around and sell to a landlord, for example, do you know what they want in a rental? If you don’t, you could have trouble reselling quickly.

You make your money in the purchase. If you pay too much for a property that needs costly rehab, your profits could evaporate. An experienced wholesaler will rarely put too much money into a purchase agreement. Relying on their expertise can more than pay for their assignment fee.

Ask if the person offering the assignment made the initial purchase agreement. Otherwise, you could end up paying for the additional mark-up of others who have no stake in the purchase agreement.

Does the wholesaler have the experience necessary to give you accurate information? If you rely on rehab cost estimates from an inexperienced wholesaler, you might end up paying too much for a property.

Are they using accurate After Repair Values (ARV)? If the comps are wrong for the property, it will be almost impossible for you to make a profit.

If you are looking for rental property, is the wholesaler giving you accurate information on rental prices? Ask the wholesaler to verify that their rental income estimates reflect current rents for that market.

If you discover that the property is in worse condition than advertised, can you back out of the deal without losing your earnest money?

The typical investor wants to make no less than 15% profit of the After Repair Value (ARV) on a rehab. While the wholesaler wants to make as much money as possible. When the wholesaler signs a purchase agreement with the seller, the wholesaler must know what the ARV will be. They must also have a close estimate of the rehab costs.

As an example, a distressed duplex that the wholesaler is considering will have an approximate After Repair Value of $250,000. The wholesaler estimates that the rehab costs could be as high as $75,000. Doing the math, the wholesaler must offer the property for $125,000 to attract an investor.

If the wholesaler wants to make $10,000 on the deal, they cannot offer more than $115,000 to the seller. If the wholesaler has the negotiating skills to get the duplex for $105,000, then they can pocket the extra money.