Wholesaling as Relief for Distressed Homeowners

BARRINGTON NELSON

In today’s economy, it might seem that property owners in distress might not have any good options for getting out of their situation. Have no fear! There is an answer!

Wholesaling allows a local buyer to buy properties that are typically in distress for a fair price, which provides relief for a homeowner or landlord that can be in distress. There are benefits for the buyers and relief for distressed property owners that can be helped by wholesalers looking to buy properties.

Who would be considered a distressed property owner that may need to sell quickly?

• Those headed to foreclosure.

• Owing back taxes

• relocation

• illness

• bad property management

• fire damage

• too much maintenance, repairs, upkeep

• tired landlords

• Evictions

• elderly

• Divorce

• death

• inheriting unwanted property

• tried selling on MLS with no result.

• privacy/not open to selling publicly.

• vacant units

During downturns in the economy, there will also be more distressed property owners due to job loss or job cutbacks. There will be fewer conventional buyers due to concerns about their jobs and the economic outlook. As a result the buyer for wholesale properties is more likely to be a landlord (buy and hold investor). Typically there are 30% or more of people renting, but during a downturn that number rises, resulting in more demand for rental properties.

Going the wholesale route as a distressed property owner is good if time is of the essence and you need to sell quickly. If time is on your side, it’s always recommended to sell traditionally on the open market with a real estate agent, to get as much as you can for your property. Some of the benefits of wholesaling rather than traditional selling are:

• Cash buyers

• No repairs, updates, or clean outs needed.

• No realtor fees.

• No contingencies

• Closing costs paid by the buyers.

• Quick close or closing on your own timeline.

• Privacy

• No daily or weekly showings

A property owner can decide to sell to a wholesaler instead of through the public market for several reasons: some people live in hoarder houses and are so ashamed that they don’t want to allow any showings; others don’t want to deal with all the paperwork involved in listing a house, all the disclosures, compliance, etc. Some people are in so much distress that they can’t even pay for their moving costs. Here’s a recent example. Last week an investor (buyer) friend of mine rented a U-Haul, moved the seller’s furniture himself, and gave the seller an extra $1000 until his check from the sale cleared. Most people would never go that far to help a distressed property owner, but great wholesalers will. Wholesalers also deal with squatters, non-performing tenants, etc. that going the traditional route doesn’t solve, but wholesaling can.

Sometimes people inherit houses, and they don’t know what to do. There are times when property owners get behind on taxes and procrastinate until just before the tax sale. Denial, shame, embarrassment, lack of knowledge, and inability to complete repairs are a few of the many other reasons people will choose the wholesale route. Another important reason wholesaling is good is it also creates a way for local housing providers to buy back properties from foreign property owners that cannot or don’t care about the upkeep and management of properties they own in our backyards. At one point of time in Rochester, NY, 65% of the rental properties were owned by foreign and out of state property owners that did not have the wherewithal to manage these properties or simply didn’t care because it was a tax write off. The community suffered locally with blighted neighborhoods, boarded up properties, crime etc. A big reason

I started wholesaling was to revitalize my hometown of Rochester, NY, one property at a time.

In a nutshell, you have to have someone interested in the properties that no one wants -- the ugly properties, the properties that some (not all) real estate agents don’t want to deal with, or the ones that they don’t put much effort into it because of the condition, or neighborhood it’s in. A wholesaler can remedy all of these situations.

Wholesaling also helps correct the redlining and discrimination that has taken place for many years. It gives opportunities for women, minorities, etc. to buy back properties and create generational wealth they once have not had access to. Wholesaling real estate can also be a great way to get into real estate investing to create another stream of income and eventually create generational wealth.

Don’t be afraid to try wholesaling. If you want more information about how to get started, I explain it all in detail in my book, Start to Flourish: Wholesaling Your Way to a Multimillion-dollar Real Estate Portfolio

Also please know that at Nelson House Buyers, we give a part of our proceeds to local non-profits. Feel free to recommend any property owners that you think could use assistance. Help us to help the distressed sellers in your area find relief that is fair. Email us at nelsonhousebuyers@ gmail.com

Barrington Nelson is a real Estate Investor who began his career wholesaling properties. He is co-owner of Nelson House Buyers in Rochester, New York. Nelson is also author of Start to Flourish, Wholesaling your way to a multimilliondollar Real Estate Portfolio.