Kenneth Bargers Blog

Wholesalers Flip Houses, Distorting the Market

Real estate investors, who call themselves wholesalers, are snapping up distressed properties, often paying all cash and seeking a discount, preferably from a cash-strapped home owner. 

Then the real estate wholesaler flips the homes — often so fast that he never takes possession of the title. Instead, he signs a contract with the home’s owner and then signs the contract over to a new buyer for an “assigning fee” — the wholesaler’s profit. 

“Wholesaling is finding a bargain for a bargain hunter,” says Michael Jake, a Colorado-based real estate investor. 

Critics of the practice say it makes it harder for lower-income families to take advantage of a down market, not only because good deals are snapped up quickly but also because the practice distorts the market. 

“It makes the bottom [of the market] very frothy and hard to figure out where real value is,” says Andrew Jakabovics, associate director for housing and economics at the Center for American Progress, a Washington, D.C., think tank. 

Source: Christian Science Monitor, Tracey D Samuelson (05/17/2010)

May 20, 2010 - Posted by kbargers | economy, marketing | andrew jakabovics, assigning fee, bargers solutions, center for american progress, christian science monitor, distressed properties, down market, flipping homes, home buying, home selling, kenneth bargers, michael jake, prudential woodmont realty, real estate investors, real estate wholesalers, realtor, tracey d samuelson