How to Create Win-Win Wholesale Real Estate Transactions

Charlotte Miller

Updated on:

One of the most important things to understand about wholesale real estate is that you’re trying to create a mutually beneficial situation for everyone involved.

This isn’t like a traditional real estate deal where a buyer or a seller will ultimately have to make some fairly serious concessions. Nobody wants to feel like they let a piece of property get away for less than it was worth – just like no buyer wants to feel like they grossly overpaid. However, in traditional real estate, these things happen fairly regularly.

In wholesale real estate, on the other hand, you need to make everyone happy – especially yourself. By getting both a buyer and a seller to a position where they’re willing to make an agreement, you get to benefit from being in the middle. It requires a different approach to everything from negotiation to the ultimate signing of the deal, and getting to this point requires you to keep a few important things in mind.

Diving Deep Into the Needs and Motivations of All Parties

One key step to creating a win-win wholesale real estate transaction is to understand everyone’s unique definition of “win” in the first place. This means making an effort to step outside your own interests and understand the needs and motivations of both the buyer and the seller.

What is the seller looking to get out of this real estate transaction beyond money, if anything? Are they trying to unload a piece of property that they’ve historically had difficulty with? Are they attempting to diversify their portfolio and are looking for someone to partner with as a part of their longer-term strategy? What motivated them to begin this process in the first place? These are all excellent questions to answer.

The same is true of the buyer. They’re not the middleman in a wholesale real estate transaction – they’re ultimately ending up with the property in question. Is it a matter of this person looking for a distressed property that they can then rehab? Are they looking for something that will continue to generate revenue for years, like a rental property, or are they looking for something to flip, and you just happened to come across it first?

Understanding what motivates people really is the key to any successful transaction. An old saying reminds us that the definition of a compromise is when all parties walk away unhappy to a certain degree. That’s why a best negotiation practice is to start by asking for more than you think you’ll get to whittle the offering down to what you really need. Wholesale real estate is almost like the inverse of that – at least from the point-of-view of the person in the middle. You need to find a way to make everyone happy, and when you do that, you typically walk away satisfied as well.

Creatively Bridging the Gaps

Wholesale real estate is all about bridging the gap between a seller and a potential buyer. You’re securing a contract with the person selling the property, only to sell the contract to a buyer for terms they’re willing to agree to. Because of that, you won’t be engaged in one negotiation like you would with a traditional real estate transaction – you’ll be a party to two.

This puts you in an ideal position as you’re largely the only person in the equation who is always working from all information. The buyer doesn’t know exactly what the seller wants – you do. The seller isn’t aware of the buyer’s long-term investment objectives – you are. The importance of this context and your ability to leverage it to your advantage cannot be overstated.

You know exactly how far away a seller is from a buyer and vice versa. Figure out what you can add to the situation to bridge that gap or, at the very least, bring the two parties closer together. The more effectively you can do that, the closer you’ll move to a true win-win situation.

It’s About Long-Term Relationship Building

Finally, understand that wholesale real estate is all about building long-term relationships with buyers and sellers. These are people that you may be able to benefit from again in the future, so no matter what, you don’t want anyone to walk away from the proverbial table with a sour taste in their mouth. You also want to use the situation as an opportunity to establish yourself as a legitimate authority in wholesale real estate investing in general.

One of the best parts of being in wholesale real estate is that you have a chance to effectively double your network. Perpetual buyers need sellers, just like sellers need buyers. But you need both – and the harder you work at creating a win-win transaction, the more people you’ll be able to add to your network that you can draw from in the future. But that’s only if you begin with everyone’s best interests in mind.

Throughout this period, it’s important to remember to communicate as openly and honestly as possible with everyone involved. Just as you need to arm yourself with actionable information by understanding everyone’s motivations, the buyer and the seller need to be aware of yours, too – only then will they be truly willing to make the right deal at the right time.

Note that this also means negotiating as fairly as possible, no matter what. Don’t assume you can “pull one over on someone” because this isn’t a “traditional” real estate transaction. Success will depend on your ability to be just as flexible as anyone else when it comes to crafting a true win-win outcome.

Cultivating Trust Pays Off in Wholesale Real Estate

By prioritizing the interests of everyone involved, you can do so much more than just close a single deal. You can cultivate trust in both parties – something that will undoubtedly come in handy further on down your career. You can also establish yourself as a realistic partner – the kind that people can legitimately see working with again. Ultimately, you’ll be able to flourish in the highly competitive wholesale real estate market – which in and of itself is the most important benefit of all.