There are many different types of real estate transactions. One that is becoming more common in the areas of Virginia and Maryland is wholesaling.
Don’t get confused by the use of the word wholesaling, as this type of real estate transaction does not involve buying multiple properties and reselling them to someone else at a lower rate like retail wholesaling.
So, what exactly are real estate wholesale transactions?
It is when the wholesaler comes under contract with the seller of a property - all the while searching for an end buyer for that property. Investors, then, make their money by selling the property at a higher rate to the new buyer. The whole process can be intricate and require the expertise of an experienced title company.
If you are an investor interested in learning about wholesale transactions, here are 5 things you should know.
1. Assignments are significantly cheaper than double closings
Wholesale transactions can either be done by assigning the initial contract with the seller to a new buyer or via a double closing. At the latter, the first closing will be with the seller and the wholesaler while the second closing is with the wholesaler and the new buyer.
Although you have your options and both are legal, many investors find that while safer, the two sets of closing costs involved with a double closing aren’t worth it.
2. Be Transparent
If you are a real estate wholesaler, then be a real estate wholesaler. There should be no question as to who you are, what the intentions are, or what is actually taking place between parties. Disclose all necessary information and always be fully transparent throughout the process.
3. Follow All Rules In Your Area
Whether you are dealing with wholesale transactions in Maryland, wholesale transactions in Virginia, or wholesale transactions anywhere else, you need to be sure all agreements are valid - and include the proper language required by the rules in your area.
4. Always Have a Backup Plan
As an investor, real estate wholesaling may work well for you. However, sometimes a buyer may not come through. What will you do then? Do you have another plan or something in place just in case? While most wholesale transactions move forward without any hiccups, you always want to make sure you have a backup plan - just in case.
5. Wholesale Transactions Move Smoothly With a Title Company
Working with an experienced title company can ensure you a level of peace you wouldn’t otherwise have. They are able to oversee the entire process and help move the transactions along quickly - without missing a step.
Each wholesale transaction requires a lot of paperwork, a title search, a title insurance policy, an assignment, etc. With a title company on your side, you can feel confident that all the details are taken care of.
Wholesale Transaction Services at District Title
At District Title, we have an entire department dedicated to providing title services to our wholesale clients in the Virginia, Maryland, and Washington, D.C. areas. We understand that there is a delicate balance in dealing with the unrepresented sellers and high volume purchasers.
Interested in wholesale transactions? Contact District Title today at 202-518-9300.
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