The first step in a wholesale real estate contract is finding a motivated seller, who is willing to sell under market value.
It goes without saying that the lower the price you negotiate with the seller, the larger the lump sum profit for you.
Where a purchaser under contract to purchase real property "assigns his interest in the contract and the assignee assumes the unpaid balance thereon," must he, as the assignor, pay the Real Estate Sales Tax measured by the unpaid balance on the contract as well as by the consideration received by him for such assignment?
Where a purchaser under a contract to purchase real property assigns his interest in said contract to another who assumes the original contractual obligation for payment of the unpaid balance, the measure of the Real Estate Sales Tax is the sum of the consideration paid or contracted to be paid to the assignee for said assignment plus the unpaid principal balance due on said assigned contract.
The trick is to find a seller willing to sell significantly below the fair market value and to then resell to a buyer at a much higher price.
Remember, in real estate wholesaling, time is money, and if you wait too long to find a buyer, you might end up paying out of your own pocket, as per the terms of the agreement.
Home repairs are the responsibility of the buyer, not the wholesaler. The difference between the contracted price with the seller and the amount paid by the buyer is the wholesaler’s profit from closing in on a deal.
The bigger the difference, the fatter the pay check.
It is our opinion that the assignee of the purchaser's interest in a contract to convey real property is subject to payment of the Real Estate Sales Tax measured not only by the consideration paid or contracted to be paid by him to his assignor for that person's interest under the contract, but also by the principal balance due and remaining unpaid on the contract so assigned and agreed to be paid to the original vendor.
Today’s most prolific wholesalers already know it, and it’s about time you did, too: there are essentially two ways to profit from a wholesale real estate contract.