Wholesaling houses is the process of placing a property under a contract and then assigning the said contract to a buyer or investor. In this type of real estate investing, an investor makes profits from the assignment fee he earns for every transaction he facilitated.

Many investors prefer wholesaling properties over flipping or rehabbing homes because wholesaling offers a bigger profit potential but a lower investment cost. In addition, being a wholesaler allows an investor to earn considerable amounts of money in just a short time without the added risks.

If you want to learn how whole process works, here are the steps on how to wholesale an investment property:

1. Finding motivated home sellers. The first task of a wholesaler is to find someone who’s willing to have his or her property placed under contract. Motivated home sellers are great sources of investment properties because they don’t usually ask for high selling prices. These people are in a hurry to sell their propertiesbecause of various reasons, which may include a recent divorce, foreclosures, or relocation to another city or county. As long as you can help them quickly find a buyer for their house, you can get the deal you are hoping for.Most wholesalers send a letter of intent to a home seller to let the other party know of their proposal, while some place ads on newspapers or on the Internet. Negotiations usually follow and once both sides reach an agreement on the price of the property, it is now the time to draw up a contract.
2. Placing the property under contract. After the negotiations are over, the next step is to place the property under contract. Although, there is no law stating that an investor is required to pay “earnest money,” which usually ranges from $10 to $500, most wholesalers agree to pay such fee to show that they are really interested in the property.
3. Selling the purchase contract. This should be done as soon as possible to prevent a wholesaler from losing potential profit and paying higher holding costs. To find a buyer for the contract, an investor can use local newspapers or the Internet. Joining the local real estate investing club can help, too, since it provides access to investors who might be willing to close the deal.Once a buyer has been found, a wholesaler has to ensure that the investor is capable of paying for the property. This can be done by verifying the buyer’s source of income or conducting some minor credit check.
4. Closing the deal. After assessing the buyer’s capability to purchase the property, a wholesaler must not forget the title work. To finish the task quickly, the help of the home seller may be required.  While some investors prefer pulling the title after they have obtained the purchase contract for the property, many of them want to delay this particular task until they find buyers for the contract.After the title has been cleared, a wholesaler can now sign a sales contract and collect a deposit from the buyer. Then, the purchase and the sales contracts obtained from the seller and buyer of the property, respectively, will be submitted to a settlement attorney or a title company. Once the processing of papers has been completed, a wholesaler can now collect his assignment fee from the buyer, which usually ranges from $5,000 to $20,000.