What is Wholesale real estate Los Angeles?

Wholesale real estate in Los Angeles is a real estate investment strategy where investors (wholesalers) find discounted properties, get them under contract, and then sell or assign those contracts to other investors for a profit without actually purchasing the property themselves. A great benefit that Bigtown clients get are true, actual, off market deals. This is because Bigtown has relationships with people and companies that have these deals, whereas most retail agents do not.

How Wholesaling Works

Here is how wholesaling real estate works.

1. We find a Deal is step number 1. Wholesalers actively search for undervalued properties or motivated sellers.
2. Negotiate a Purchase Agreement. Negotiating a purchase agreement with the seller, typically at a lower price than the property’s market value.
3. We have or connect with an Investor. Connecting with an investor who is willing to purchase the property once the wholesaler has secured it under contract.
4. We assign the Contract. The wholesaler assigns the contract to the investor, often for a fee (the “wholesale fee”), and the investor then closes the deal.

Benefits of Wholesaling real estate in Los Angeles

Here are the benefits of Wholesaling Real Estate.

1. Low Capital Investment.  Wholesaling requires minimal upfront capital, as you are not actually purchasing the property yourself.
2. Quick Profits. Wholesalers can make a profit relatively quickly by assigning the contract.
3. Leveraging Expertise. Wholesalers can leverage their real estate knowledge and network to find and sell properties.
4.  

Real off market deals vs. Not-real off market deals

These off market deals which are completely off market, and will never see the light of day on the MLS. (Unless the seller can’t manage to sell off market- see below)

To understand “real” off market deals, lets first look at the “fake” off market deals.

Fake off market deals: Many realtors promise off market deals, or “pocket” listings. But what a pocket listing actually is, is a regular old real estate listing, which is about to be listed on the MLS– usually from the same brokerage as the showing agent– but isn’t listed yet.  A realtor may be able to show you one of these a day or 2 or even a week or more, before it hits the market at the full list price. 

You may see the listing first and feel like you got to see something special- but, you didn’t. You could maybe lock up the deal if you offer full asking price or over out the gate– and even that is a big fat maybe, because realtor ethics rules frown heavily on sales of a property prior to that property hitting the market (A real estate agents duty to his/her client is to maximize sales price, and putting property on the open market is the only way to truly do that).  Therefore, while pocket listings are technically listings which can be seen prior to going on the market, almost never will these sellers accept an offer before the listing hits the market. Pocket listings make buyers feel like they are seeing something special, but a buyer is really only getting a minor advantage by being the first to lay eyes on something. Most of the time, the buyer is still going to have to compete for the property, or else, overpay for it to prevent it from going on the MLS.

Los Angeles Off Market Listings

Real off market listings: Compare this to Real off market properties. These are properties which are not in any way about to be listed anywhere. These almost always come through wholesalers.

Wholesalers are people and companies who go directly to property owners, usually distressed owners (in default, tax liens, tried to sell but failed (expired listings), etc.)  and then enter into a sales contract with the distressed sellers to buy the sellers property at a discount price.  

But the wholesaler isn’t buying the house- once the house is under contract at a certain price (usually low) the wholesaler reaches out to investors and agents they know, to find a buyer for the house at that price. When the wholesaler finds someone who wants the wholesale real estate investing in Los Angeles for the price the wholesaler negotiated, the wholesaler then assigns the sales contract to the new buyer, and the new buyer- not the wholesaler- takes the property.  The wholesaler then takes a finders fee (similar to a commission).

There are massive networks of wholesalers and big companies that have armies of people working on cold calls, door knocks, mailers, and any other way they can think of, to get to these sellers and get these properties under contract, to then flip to investors like us/our clients. Most flippers, developers, and other savvy investors get the majority of their deals from wholesalers. Retail real estate agents rarely deal with wholesalers, or do wholesale transactions.

Wholesaler Deals in Los Angeles

The reason retail agents do not typically deal with wholesalers is that wholesaler deals in Los Angeles are often difficult properties, commission structures are not the same, and oftentimes, conventional lending is hard to get on wholesale properties. Bottom line, off market wholesale deals are a pain, until you learn them, then they are great. 

Because we are investor agents and not typical retail agents, we know these deals and have the relationships in the local wholesaler/investor community, to where we get these deals just about every day.

For more information on wholesale real estate investing in Los Angeles contact Bigtown Homes today.