What is Virtual Wholesaling in Real Estate?

Technology continues to transform the real estate investing industry. The pandemic forced the majority of wholesalers to change the way they do business, from in-person to remote sales, even in their own local market.

In 2021, virtual real estate wholesaling had become the new way of doing business, and it looked likely to stick around after the pandemic.

A true virtual wholesale strategy provides a competitive advantage over other types of wholesaling, since you can target and change to any market in the country at a given time instead of being limited to your local area. It can take your REI business to the next level and increase your deal flow and profits.

What is Virtual Wholesaling?

Virtual wholesaling is the process of securing contracts and reassigning them to buyers through the use of (online) technology. All you need is a computer, a smartphone, a way to send and sign contracts digitally, and a strong Wi-Fi connection, and you can virtual wholesale from anywhere.

The attraction of virtual wholesaling is not only being able to work remotely but also operating in any market across the country, regardless of where you are.

How to Make Money Virtual Wholesaling?

It’s worth noting that wholesaling is different from flipping houses and other types of real estate investment. In wholesaling, you do not assume ownership of the property, nor are you responsible for fixing it up, but instead you get the property under contract, and then sell the contract to a cash buyer.

So what? So virtual wholesaling not only opens you up to a large volume of properties but also a large volume of real estate investors and buyers, thus increasing your ROI. You’ll make your money by attaching a wholesale fee to the transaction, often 5% to 10% of the property cost.

Pros and Cons of Virtual Wholesaling

In real estate investing, there are benefits and drawbacks to every strategy. Here are some of the advantages and disadvantages of virtual wholesaling:

Pros

• Saves You Time: because you’re not visiting all the listings
• Allows You to Target the Hottest Markets: without geographic limitations, you can target the best markets and change to a new city whenever a market cools down
• Expands Your Reach: to close deals in any market across the country
• Inexpensive: to invest in, but also no travel fees or repair costs

Cons

• Research Extensively: to find the right properties and cash buyers
• Takes Time: to earn a profit
• Hidden Issues: since you don’t see the properties in person

Steps to Virtual Wholesaling

Wholesaling and virtual wholesaling are perfect if you want to break into real estate investing but don’t have much money. A virtual wholesale strategy can be lucrative if you follow these steps:

Step 1: Research

Familiarize yourself with the wholesaling and virtual wholesaling processes. Learn the laws and legal requirements for both so you’re compliant. Understand how to calculate offers, the legal language, market requirements (some metros require licenses), and also what kind of software you need to manage leads and your business.

Step 2: Find Profitable Market Areas

This is an extension of step 1 but so important, it is its own step. This is also one of the biggest advantages of long distance wholesaling: you can wholesale wherever the market is hot.

You want a location where homeowners are motivated to sell fast and below estimated value, but also where cash buyers want to purchase. We called this the Buyers Zip Code Method. What is this method? Simply put, it is searching, buying, and selling real estate in areas with a high volume of distressed owners and cash buyers.

The free HottestZip tool shows where investors are buying, zip code by zip code. A 2021 video walkthrough of the tool: https://youtu.be/5iXSbwqD58w

Step 3: Analyze Desirable Properties

Profitability is only obtainable if you secure properties below estimated value that your end buyer wants to acquire. Some things to consider:

• Property type
• Average estimated value
• Specifics of the location and niches
• Profile of properties buyers have purchased
• Crime and poverty rates in the area, even amenities (this will impact the type of end buyer)
• Start researching how to find buyers and even get their list of requirements

For every property that captures your attention, you should crunch the numbers to be sure it’s worthwhile. Verify its value by researching comparable properties in the area that recently sold. Also take into account valid property data, like rental income, cash flow, damages, etc. All this information will help you decide if it’s worth investing in and what your maximum allowable offer (MAO) will be.

Step 4: Get in Touch with Motivated Sellers

Before you can even make an offer, you need to reach as many sellers as possible; after all, wholesaling is a numbers game. Many tools and applications make it easy to find seller information. Rather than a generic pitch, you should alter your message to address the owner’s distress factor, and so be the solution to their problem. Your data should be scrubbed, skip traced, and undergo list stacking and scoring, so you can start with the “most likely to sell soon” leads.

One of the main issues wholesalers encounter is the lack of quality of data, even after skip tracing.

Step 5: Get Property Under Contract

Present your offer to the seller, be sure to follow up frequently, and get the property under contract. If you’ve done a proper investment property analysis, you’ll know exactly how much to offer: too low, and you risk getting passed over; too high, and you may not get a profit on the buyer deal. Even if this happens, though, you should still attempt to close the deal; it is worth the effort to establish a relationship with a cash buyer and get a better understanding of what to offer next time you encounter a similar property.

Step 6: Market Wholesale Contract to Buyers

Ideally, you would start wholesaling with an existing buyers list. However, that is not always the case, especially when starting out. Technology enables you to build a wholesale buyers list: as soon as you have the property under contract, you can market it to potential buyers, based on their investment preference or what you know to be the most desirable aspects for investors in that location. Be careful when publicizing it, though, as you don’t want your seller to find it and return to you with questions.

Step 7: Assign the Contract

Once you have a buyer, you can use a digital contract software, like DocuSign, to assign the contract and close the deal virtually. The contract should state how and when you get paid your wholesaling fee (this was part of Step 1).

Virtual wholesaling is an excellent opportunity and strategy for anyone in real estate investing, as it requires almost no capital to get started. It also allows experienced wholesalers to expand and grow their business.

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