Virtual wholesaling: how to pick a market you've never seen

The usual advice for picking a virtual wholesaling market is to find a city with low prices, a lot of rentals and a lot of investors. That gets you a list of the same twenty metros everyone else is mailing.

A better way is to read the county's own records. Three numbers do most of the work, and you can check all three before you spend a dollar on mail.

Check 1: how many homes sell off-market each year

A wholesaler buys off-market. So the first question is how often homes in the county sell without an MLS listing, in an arm's-length sale to someone who isn't family. That's your whole pool.

We counted those deeds in every county with at least 150,000 single-family homes, 126 counties in all, over 12 months. The middle county saw about 1.2 off-market sales per 100 homes. The spread is wide:

Source: GoForClose count of off-market, arm's-length deeds in county records, 12 months.

Dallas County has well under half the homes of Los Angeles County and still recorded more off-market sales: 11,331 against 6,286. At Los Angeles's rate, a county Dallas's size would see about 2,400. For the same mail budget, you're writing to a county where far more owners actually sell off-market.

One warning: in a few states the county records don't mark which sales went through the MLS, so every sale looks off-market. If a county shows nearly all of its sales as off-market, treat that number as missing, not as good news.

Check 2: which lists actually sold there

The second number is which seller lists turn into sales in that county. Nationally, the filings win: of every 100 owners whose listing expired or was cancelled, about 12 sold off-market within 12 months, across 492 counties. Free and clear owners sold at about 1.5 per 100, a little under a house picked at random.

But it changes by county. In Harris County, expired listings sold at about 15 per 100 within 12 months. In Denton County, just north of Dallas, about 8. Liens sold at about 10 per 100 in Dallas County and about 4 in Collin County next door. A market where your best list sells at half the rate means mailing a lot more owners to reach the same number of sellers. Texas, county by county.

Check 3: who's buying there

A virtual wholesaler needs end buyers who'll take the contract without seeing you in person. Count how many different investors bought in the county in the last year, and how many bought more than once. A county with a handful of repeat buyers is a county where one buyer can set your price. See who's buying in any county, from the deed records.

What the numbers can't tell you

• Your boots on the ground. You need someone local for walkthroughs, photos and access. Line them up before you mail.
• State rules. Some states regulate wholesaling or marketing a contract you don't own. Texas, for one, requires you to tell buyers in writing that you're selling a contract interest. Check before you pick.
• The competition in the mailbox. County records show who sold and who bought. They don't show how many other investors mailed the same owner last month.

Start with the county, not the city

Cities sit across several counties, and the counties don't behave alike. Dallas and Collin sit side by side and sold their lien lists at very different rates. Read each county on its own. Read any county free: every home, the new filings, and which lists actually sold there.