What is a wholesaler and how do they work?
Have you ever received a "We buy houses letter"? Are you wondering if the "We buy houses" websites are legit?
The answer is "some of them"
Wholesalers attended seminars and read books on how to buy houses without using their own money. How is this even possible, and what does it mean for the Seller of the property?
Wholesalers are taught to convince the Sellers (Homeowners) to agree to a assignable purchase contract. Once the contract is signed the Wholesaler shops the property to another investor at a higher sales price. When the Wholesaler finds another Buyer he "assignees" the contract to the new Buyer and keeps the difference. They can make thousands of dollars on every deal, taking money out of your pocket. If they don’t find a Buyer they simply cancel the contract.
How can this be prevented?
–Do not sign an assignable contract:
Real investor with cash do not need an assignable contract. An assignable contract just makes it easy for the Wholesalers with no cash to resell your house.
–Proof of funds:
Always ask to see a current bank statement with enough funds to cover the offer amount.
- Work with a professional, local company:
Do a little research, check the BBB