Buying and selling property is not everyone’s piece of cake, especially when people do not know much about property dealing. You will come across many terms like real estate dealers, property dealers, wholesalers, and brokers. All these perform essentially the same task, i.e., selling property. But, a few differences exist. Many people often get confused between wholesalers and brokers. The main difference between wholesalers and brokers is that wholesalers are usually not licensed. Let’s tell you further about property wholesalers and brokers.
What is Property Wholesalers?
Property or real estate wholesaling refers to selling a property on the owner’s behalf and keeping a profit. The wholesaler does not buy the property and only acts as a bridge between the buyer and the seller. They work through a contract between the seller and the wholesaler regarding the term and conditions of the transaction. They may exit the sale by contract or double-closing. However, real estate wholesalers do not require a license.
How to Become a Property Wholesaler?
Becoming a property wholesaler is quite simple as you do not need a huge capital investment. Yet, it requires in-depth business knowledge to make sure you do well and make good money. It does not require taking a licensing exam but you must know what you are doing. Here are five easy steps to becoming a property wholesaler.
- The first and most important part of getting into a new business is to do your homework about it. When stepping into real estate wholesaling, you must understand how it works. It includes talking to other wholesalers in your area, looking for potential properties, and fetching the details of the sellers. You would not want to get into trouble for fraud buying or selling.
- Secondly, you must have enough capital to purchase the contract. You may get it from another investor and return it to them with a slight profit after keeping yours. It is good for a kick-start, and you may continue with your earned money eventually.
- Now that you are sorted, it is time to look for potential buyers. One of the most effective places to find buyers are Facebook property groups of your locality. You may also search for them in real estate events and email marketing your services.
- The next step to becoming a real estate wholesaler is to look for properties for urgent selling. You might see signs saying “For Sale Urgently” in front of some properties. Or opt for houses that are not in their best condition. People are willing to sell distressed houses at the earliest. You can find some of them on Craigslist, Realtor, or other property dealing websites.
- The last part is to sell the property according to the contract and hand it over to the buyer. Sometimes wholesalers with a high capital may execute a double closing. The wholesaler may purchase the property and sell it at a much higher price.
What is a Broker?
As opposed to real estate wholesalers, brokers are professionals with a state real estate broker license. They work similarly to wholesalers, but they are qualified in their respective fields. They are adept at paperwork and legal compliance with property transactions. They also have professional connections in the business, leading to better property dealing. Brokers may work independently like wholesalers or start their brokerage business.
Having a brokerage business allows the distribution of tasks of the broker. A team of skilled persons finds leads, looks for buyers, collects capital, understands legal matters, and prepares relevant paperwork. The team works together, and everyone gets a commission from property deals.
How to Become a Licensed Broker?
Becoming a broker consists of all the steps involved in being a wholesaler, topped with a real estate broker license. Here’s how you can become a licensed broker.
- The first step is to take a state-approved real estate sales course.
- After the course, you must pass the real estate agent licensing program of your state.
- You may start working as a real estate agent and look for further real estate certifications.
- Next, you can take a state-approved real estate broker course.
- Take your real estate broker exam and pass it to be a licensed broker.
The Bottom Line
If you are stepping into the real estate business, you can opt for property wholesaling or brokerage. Both of them involve selling property on your client’s behalf. Real estate dealers typically do not buy the property. Instead, they sell the property on the owner’s behalf through a contract for a profit. Some wholesalers and brokers also purchase the property to sell at a higher price.
Brokers have licensed property dealers and can start their own brokerage business. Brokerages do not usually work on salaries but on commissions. Each member of the team gets their share in each sale. On the contrary, wholesalers do not need a license to work.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.
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