How to Wholesale Real Estate in California 2024? (2024)

Top California real estate wholesalers earn up to $84,000 per year. With rising home prices and strong job market predictions for 2024, you can earn even more.

Even as a beginner, you can earn up to $51,459 per year in wholesaling real estate in the Golden State. Apart from market conditions, your success will depend on how well you understand the wholesale real estate laws in California.

What Is Wholesale Real Estate?

Wholesale real estate is an investment strategy. Here, the wholesaler acquires the contract from a seller and sells it to an interested buyer.

Wholesalers typically look for home sellers who want to unload distressed properties. Such sellers are usually interested in selling as is for cash. Also, they are ready to settle below the fair market value (FMV) of the property.

The wholesaler enters into a contract with the seller for a lower price and assigns the contract to a buyer for a higher price. In turn, the wholesaler charges the price difference as the service or the assignment fee.

Wholesaling Real Estate Example

A homeowner wishes to unload a distressed property without investing in repairs. Also, the owner is ready to sell below FMV.

A wholesaler enters into a contract with the homeowner and offers $110,000. The wholesaler then finds an investor from their buyer’s list who offers $140,000 for the property.

The investor takes over the contract by paying $30,000 to the wholesaler as the assignment fees.

7 Steps to Wholesaling Real Estate in California

Anybody with knowledge of the real estate market can be a wholesaler in California. However, you need to be systematic and prepare well for the deal to guarantee success.

Here’s how to wholesale real estate in California in 7 steps:

1. Learn About the CA Housing Market and Real Estate Laws

Find a mentor or a coach who can introduce you to wholesaling real estate in California. Attend seminars and networking events to learn how to assess California housing market trends.

Furthermore, you can enroll in a wholesale real estate course to strengthen your basics. These courses teach you how to build a solid marketing strategy and help you map an investment plan.

After you grasp the fundamentals, learn about California real estate wholesaling laws. Consult a California real estate attorney to learn about the legalities of wholesaling homes in the Golden State.

2. Create a Diverse Buyer’s List

With a diverse buyer’s list, you can offer faster closings and attract more home sellers. Your buyer’s list should include California cash buyers, rehabbers, rental property owners, and other wholesalers.

Here’s how you can build a diverse buyer’s list:

• Send cold emails.
• Attend real estate seminars.
• Visit property auctions to meet investors.
• Join the online forums of real estate professionals.
• Connect with local property management companies.

3. Find the Right Sellers

Typically, most sellers want to maximize their net proceeds, even if it means waiting longer. However, you need to target sellers who want to close quickly and are ready to sell below the FMV.

For instance, a seller on the verge offoreclosureor someone who wants to sell a distressed property in California. Here’s how you can find your ideal seller:

• Use the MLS:Multiple Listing Service (MLS) is a database that real estate agents use to list alltypes of properties. If you have (or can get) access to the California MLS, search for “As Is” properties. Sellers who are in urgent need of funds and want a speedy closing list properties “As Is”.
• Search Your Local Area:Scan the houses on sale while driving or taking a walk. Focus more on abandoned or vacant homes in your neighborhood.
• Networkto Find Properties:Take inputs from your family and friends about the properties on the market.63%of Realtors use social media to market property listings. Join Facebook groups and follow Instagram pages to learn aboutnew property listings in California.
• Use Bandit Signs:These are like small billboards or printed signs. Buy a “We Buy Houses For Cash” bandit sign to attract motivated home sellers.
• View Listings on Real Estate Websites: Find homes that have been on the market for a long time. You can use real estate websites like Houzeo, Zillow, Trulia, etc. They have advanced search features that will help you to find foreclosure homes in California.

4. Perform Due Diligence and Make an Offer

Before you make an offer on a property, try to gather as much information as you can. Determine the fair market value of the property by running comps.

While making an offer, account forCalifornia closing costs, your fee, the buyer’s holding costs, and their end profit. Communicate to the seller that you are a real estate wholesaler and not the buyer.

» Free Home Value Calculator: Find your home’s value within a minute.

5. Draw a Purchase and Sale Contract

Thewholesale real estate contractin California contains the asking price, the closing timeline, and other contingencies.

Remember to include theinspection contingencyclause while drafting the contract. This will allow you to back out of the offer if serious defects are found during the inspection.

As a wholesaler, you need to decide whether to assign the contract to an investor or an eligible buyer. In both cases, there is a “contract handoff”, where you give authority over the contract to the buyer.

6. Assign the Contract

Finalize a buyer from your buyer’s list. Pitch the house to the buyer based on its FMV report and the after repair value (ARV) estimate.

If the buyer agrees, you assign the contract to them and transfer the ownership of the purchase agreement. In return, you get the assignment fee and relinquish your rights over the contract.

The assignment fee is the difference between the amount you pay the seller and the amount you get from the buyer.

7. Coordinate the Closing

At this stage, you sign the contract and formally hand it over to the buyer. The buyer can repair the home or re-sell it to another investor.

Two Ways to End a Wholesale Real Estate Deal

Depending on whether you find the buyer or not, there are two ways to close real estate wholesale deals in California.

• Assign the Contract:You finalize a buyer and hand over the contract to them. You get your assignment fee after the buyer completes the purchase.
• Double Close: You buy the property for a short period of time to wholesale it to an end-buyer later. In this case, you owned the property for some time before selling it.

Is Wholesaling Real Estate Legal in California?

Yes, wholesaling real estate islegal in California as long as you follow the real estate laws of the state.

As a wholesaler, you should be transparent about your role in the transaction. Remember, at no point should you act like a licensed real estate agent representing the seller or the buyer.

The contract should clearly state that you have an equitable interest in the property and don’t wish to buy the house itself. Apart from that, you will have to furnish proof of funds to clearly demonstrate your interest in the property.

While wholesaling real estate in California is legal, here are a few things you should steer clear of:

• Wholesaling without a transparent contract
• Bringing the buyer to the deal first
• Failing to prove your intent as a wholesaler

Do You Need a License to Wholesale Real Estate in California?

No, you don’t need a license to wholesale real estate in California.

However, having a real estate agent’s license can have added benefits. You will have access to the MLS to search properties for wholesale. You can also use the MLS to find the end buyer.

Is Wholesaling Real Estate in California Profitable?

Yes, wholesaling real estate in California is profitable.

On average, real estate wholesalers in California earn $51,459 per year. The number can go up to $83,393 for the top earners. However, if you are familiar with the basics of the California wholesale real estate process, the sky is the limit.

An average wholesaler earns $2,000 to $7,000 in the assignment fee per deal. For experienced wholesalers in California, this figure is between $15,000 and $20,000. So, it shouldn’t take you a lot of transactions to make a good profit.

Pros and Cons of Wholesaling Real Estate in California

Wholesale real estate requires low capital investment and offers a simple learning curve. However, like all things, this investment strategy has its pros and cons.

✅ Pros of Wholesaling Houses

• Little Cash and No Credit Requirements:You only act as a link between the buyer and seller and don’t purchase the property yourself. Therefore, the amount of money in your bank account or a poor credit score doesn’t impact the wholesaling process.
• Low Barrier to Entry: You don’t need a license or a degree to start wholesaling real estate in California. Also, you don’t have to learn how to make repairs and upsell. All you need to do is master the basics and complete your due diligence.
• Low Financial Risks: You don’t buy, hold, or finance the property while wholesaling it. This makes it a relatively risk-free real estate investment strategy.
• Quick Profits: Find a buyer to charge the assigning fee between5% and 10%of the selling price. If you choose to double-close, you can increase your profit bybuying a cheap houseand reselling it.

❌ Cons of Wholesaling Houses

• Difficult to Finalize a Buyer: You may have to purchase the property yourself if you cannot find a buyer in the promised timeframe. To avoid such problems, have a solid buyer’s list ready. You should have a buyer in mind even before you make an offer on a house.
• Legal Complexities: Many people question the legality of this investment strategy. This is because wholesalers only sell the contract, not the house itself. Also, one doesn’t require a license to start wholesaling in California, which further adds to the distrust.
• Insecure Income:The number of properties you wholesale and your eventual earnings greatly depend on market conditions. So, be extra careful with your finances if you choose to wholesale full-time.

Is Wholesale Real Estate in California Worth It?

Yes, real estate wholesaling in California is worth all your efforts. Wholesaling involves minimal expenses and helps you earn more profits. You also build a strong network ofCalifornia real estate professionals, which can help you explore other avenues of real estate investments.

Your success in wholesaling largely depends on searching for the right property and quickly closing the deal. Build a solid list of buyers to ensure faster closing.

To find properties to wholesale in California, view listings on real estate sites like Houzeo, Zillow, Redfin, Realtor.com, etc. These websites have advanced search filters to help you find foreclosures, as-is homes, etc.

Find Wholesale Properties For Sale With Houzeo

With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of homes for sale in California on Houzeo.

» Need More Clarity? Read these exclusiveHouzeo reviewsand learn why the platform is the best in America’s competitive housing market.

Best Places to Wholesale Houses in California

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