Real Estate Investment Includes Wholesale Selling

Added February 21, 2006 by Ilyce R. Glink

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Summary: One type of real estate investment is wholesale selling. Wholesale selling is another expression for the practice of buying real estate and flipping it intentionally below its cost in order to move it quickly. Wholesale real estate transactions usually take place between real estate investors, not your regular home buyer and seller.

Q: This comment is regarding your response written in a question recently about "wholesale" selling.

Investors will often wholesale homes to other investors, not typically to retail buyers. To wholesale a house, the house is usually priced substantially below market so that the seller will still make a profit and the buyer will have automatic equity due to the low sales price. Seller's agents are not usually involved because this would obviously eat into the profit.

A: Thanks to you and to a number of other readers who weighed in on the subject.

Andrew Waite, publisher of "Personal Real Estate Investor Magazine" (www.personalrealestateinvestormag.com) wrote that a wholesale sale is a term used to reference to a house sold intentionally "below market". It is "either a foreclosure resale operation, REO (bank-owned property), or other bulk buyer reselling property and playing the turn and the spread."

I have known for awhile that there are real estate investors who are buying property and flipping it intentionally below its cost in order to move it quickly, but I wasn't aware that the term "wholesale" had been applied to it.

Also, in this case, the house didn't seem to be priced substantially below market. It still seems to me that either the seller or agent perhaps isn't clear on what it means to sell a property "wholesale."

Again, thanks to all who took the time to update me on the new lingo!

Feb. 21, 2006.

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