North Carolina is a southeastern state that borders the Atlantic Ocean. The Tar Heel state of North Carolina offers something for everyone and some of the most breathtaking views of nature. And because the weather is warm to moderate, the gorgeous North Carolina coastline can be enjoyed year-round.
Charlotte, North Carolina, the state capital, is the 2nd-largest financial industry city in the nation. Only New York City has a larger financial output. The state boasts an outstanding higher education system and is home to the world-renowned Education Research Triangle in the Durham area. North Carolina is often considered to be one of the best places to live in the U.S.
North Carolina real estate has, like much of the country, seen tremendously high demand over the last few years. The state, along with Texas and Florida, and Arizona, leads the list of states that have attracted the most incoming residents (from 4/1/2020 to 7/1/2021) – likely because of the comparatively low cost of living and warm weather.
In this exclusive article, we'll show you how to take advantage of this incredible real estate market by showing you exactly how to wholesale real estate in North Carolina. Let's get started.
Wholesale real estate is simply a business investment strategy. Wholesalers have no interest in taking title to the property. Ideally, a wholesaler enters into a contract of sale with the primary goal of assigning the right to purchase the contracted property before the first contract closes. A wholesaler achieves this objective by using a legal instrument known as an Assignment of Contract.
A North Carolina real estate wholesaler’s legal right to purchase (which is known as their equitable interest) is a marketable asset awarded when the contract was fully executed. The Doctrine of Equitable Conversion is the legal concept that awards equitable interest.
The difference between the purchase price of the first and second purchase price is a wholesaler’s gross profit.
If a wholesale deal hits a snag and other unexpected timing issues, a wholesaler may need to execute a Double Close, a technique that requires a wholesaler to take temporary possession of the property’s title. These exit strategies are discussed in detail later.
Real estate has been a preferred investment for decades. In fact, a 2022 Gallup article notes that real estate is considered the leading type of investment – exceeding stocks and gold.
Looking to start wholesaling in the Tar Heel State? The following offers a roadmap to a successful wholesale deal.
Here's our simple step by step process for wholesaling real estate in North Carolina:
If you are new to wholesaling in North Carolina, it is likely to pay big dividends if you begin your wholesale career working with a wholesale mentor to professionally guide you through the process a few times – with real money on the line. While wholesaling on paper is relatively straightforward, beginners working alongside an expert will find it valuable to have the tools to avoid the same mistakes these experts once made as newbie wholesalers.
Real Estate License Law in North Carolina can be found in Chapter 93A of the General Statutes of North Carolina.
Section 93A-3 creates the government oversight agency – the North Carolina Real Estate Commission. The NCREC administers and enforces North Carolina’s license laws with regard to real estate.
Based in Raleigh, the North Carolina Real Estate Commission is the state agency responsible for protecting the public. It does so, in part, by requiring real estate professionals to be licensed.
Note that as of 2006, the NCREC issues broker licenses exclusively (the only state-licensed real estate agents) – although there are varying levels of broker responsibility and, therefore, different types of broker licenses.
As of 2012, North Carolina has no formal reciprocity agreements with any other state. Instead, state legislators created a "limited license recognition" agreement with each state, plus Canada and the United States territories.
Anyone holding a valid real estate license for at least three years prior to applying for a North Carolina license – from a state that has equivalent licensing requirements to North Carolina, may ask for a waiver of certain real estate licensing conditions.
The North Carolina Real Estate Commission denotes that there were more than 116,000 real estate brokers and firms (and brokerage companies) licensed by the state agency in 2022. About half of licensees in the state (55,000) are members of the state’s largest professional organization - The North Carolina Association of REALTORS (NC REALTORS).
The NC REALTORS represents 45 local associations throughout the state, divided into ten regions.
In June 2022, North Carolina home prices were up more than 14% (over the previous year), with a median price of $364,900. In addition, rental prices are rising to make real estate investments in the state even more appealing. As of August 2022, the median rent price in North Carolina was up $165 from the previous year – at $1,915 per month – approximately a 9.5% year-over-year increase.
As noted above, North Carolina ranks among the top four states as a preferred relocation destination. As such, the market remains imbalanced and characterized by an inadequate supply of homes, although there has been some rebound in supply with the recent Federal Reserve Interest Rate Adjustment –
North Carolina is considered one of the attorney close states, which essentially means that a licensed North Carolina attorney must close a real estate transaction.
Pro-Tip - If you are required to pay for a real estate lawyer, seize the moment and take advantage of their legal and real estate expertise.
Wholesaling real estate, as an investment technique, requires the wholesaler to have a network of willing (and able) buyers who are, very often, other real estate professionals.
Buyers in a wholesale deal are typically “fix and flippers” – cash buyers who take title to the property and the time necessary to update/upgrade/renovate the property to make it turnkey market ready for a retail customer.
One of the advantages of wholesaling is that this type of investment technique allows real estate investors to learn the real estate wholesaling business while building a curated buyers list. A consistently updated buyer’s list will prove invaluable in the wholesale real estate business.
Potential buyers can be cultivated from the many digital and social media platforms, as well as investment groups/meetups dedicated to the wholesale process.
You can also check out this quick video below that talks about how to find cash buyers online for free!
Real estate wholesalers primarily work with distressed properties – which coincidentally are often owned by financially-strapped and motivated home sellers. Potential wholesale opportunities may include rental property, a foreclosure, or even a multi-unit REO property on Zillow, among others. Wholesalers provide a service to homeowners who need to sell quickly, without restrictions and conditions dictated by conventional lenders, etc.
Possible wholesale deals are available are often non-listed, off-market wholesale properties.
Wholesaling is an investment technique. And, like any investment strategy, wholesaling requires the professional investor to define acceptable investment criteria. Most wholesalers use two general investment metrics in their due diligence to determine an investment's potential profit.
Here is an example to clarify these wholesale investment concepts -
Wholesalers working in North Carolina search the market in various ways for a property that has a price below market value.
A one-family home in disrepair is offered for sale at $210,000 in one of the scenic North Carolina surrounding areas with comparable homes that sell (when updated and move-in ready) for $450,000. This anticipated price of $450,000 is known in the wholesale trade as its ARV – After Repair Value.
After negotiations, a wholesaler will enter a contract to purchase the property at a specific price, time, and other conditions.
Next, a North Carolina real estate wholesaler must find another end buyer who is willing to pay more than the original contract price. As such, a wholesaler must analyze the deal to find the answer to these questions –
Professional “fix and flippers” also use the industry standard - the 70% rule. But, considering flipping specialists are on the hook for renovation and unexpected costs/delays, they must subtract the anticipated costs and carrying expenses from the After Repair Value – to ensure they leave room to turn a profit.
The final price – after subtracting all expenses, is known as the Maximum Allowable Offer (MAO).
In the above example, 70% of the After Repair Value of $450,000 is $315,000. [$450,000 * .7 = $315,000).
The next step in the wholesale investment analysis is to calculate the wholesale buyer's Maximum Allowable Offer. This is done by subtracting the anticipated carrying and renovation expenses from the After Repair Value.
If the estimated repair cost to make the property market ready is $90,000, what would the wholesaler's cash buyer’s Maximum Allowable Offer be?
In the above example, the end buyer’s Maximum Allowable Offer would be $225,000. The following illustrates how the MAO calculation -
ARV – Expenses = MAO, or,
$315,000 - $90,000 = $225,000.
The wholesaler’s gross profit in the above example would be $15,000.
$225,000 (the buyer’s MAO) - $210,000 (the original contract price) = $15,000.
An Assignment of Contract is a legal instrument that allows a wholesaler in North Carolina to transfer their equitable interest (in the subject home) to a new end buyer.
As noted above, equitable interest is the marketable asset awarded to the buyer (in this case, the wholesaler) when the contract is fully executed. The Doctrine of Equitable Conversion is the legal concept that awards equitable interest.
To close a North Carolina wholesale deal, wholesalers usually follow two fundamental exit strategies.
The first is the assignment strategy, which is the most direct, cost-effective, and simplest wholesale exit strategy. These are the reasons why it is the preferred wholesale exit path.
The wholesaler’s assignment fee will be equal to the difference between the original contract and the price denoted in the Assignment of Contract.
If the wholesaler can’t use the assignment-exit strategy (which may happen for a number of reasons), they can opt for the Double Closing exit strategy. This conclusion to a wholesale deal requires the wholesaler to take title to the property by closing on the first contract.
In a Double Closing, in the first closing, the wholesaler is the buyer. When closing the second contract, the wholesaler becomes the seller.
While the double close requires additional closing costs (when compared to the Assignment Strategy), it also mandates that the wholesaler have the cash (or a hard money lender commitment to finance the purchase), if only temporarily. The double close also provides a bit of added legal protection as the wholesaler is a principal owner/seller and would, therefore, never need a North Carolina real estate license.
Pro-Tip - A Double Closing is a closing strategy in which the wholesaler can maintain confidentiality regarding their profit – not usually allowed with an assignment exit strategy.
Also, consider wholetailing the deal for maximum exposure and profits. Luckily, these strategies are absolutely feasible in North Carolina and around the nation!
Read Also: Wholesaling Real Estate For Beginners
Yes, it is definitely legal to wholesale in North Carolina; however, the real estate wholesaler must negotiate the wholesale process without violating the state’s real estate or license laws.
One of the main reasons to select a career as a real estate wholesaler (or other self-employed careers) is that the wholesaler’s earnings potential is always unlimited.
Wholesalers are not salaried professionals, those who receive equal periodic payments from an employer. Wholesalers, who are self-employed, create an income stream based on the investment properties they find and assign/sell – so it is in their interest to have several deals working at the same time – in different stages of the wholesale process.
In the world of wholesaling, the only income limits are those that are self-imposed.
A purchase and sale agreement (which is also referred to as a real estate contract) is a legally binding agreement that is executed between the seller and the buyer. The purchase agreement or contract is one of the most essential legal documents in any real estate deal.
Most North Carolina home sales use contracts developed and approved by the North Carolina Association of REALTORS.
A contract of sale sets forth the enforceable terms of the transaction. It can be a complex document that requires specific information that may include -
No – a wholesaler in North Carolina will not need a real estate license – if their actions do not violate established license and real estate law in the state.
Some wholesalers in the state consider earning a real estate license as this would increase their knowledge about the market and the real estate business. However, this choice to become licensed is completely voluntary and not needed if the wholesaler understands how to stay within North Carolina’s legal lanes.
Wholesaling real estate is a popular investment strategy, having gained real traction in recent years due to rising prices, low mortgage rates, and, most importantly – the creation of a digital marketplace.
Does the recent rise in its popularity speak to how easy it is to wholesale in North Carolina? The answer is – it depends on how you approach the wholesale learning curve. While real estate wholesaling requires little money or capital to begin, it also requires an ability to network and market consistently.
And those new wholesalers but savvy investors may want to consider working with a more experienced wholesaler or jump online for our Pro Wholesaler VIP Program – designed for the modern entrepreneur to learn the basics and the easy potholes to spot and avoid. It is 100% online and is used for local and virtual real estate wholesaling.
Real estate investing offers no guarantees, but it is this uncertainty that offers motivated wholesalers an unlimited income potential. Real estate property investors recognize that market conditions are forever evolving, which is why a wholesale must stay current with market conditions – as well as any changes to North Carolina laws that may limit (or at least redefine) a wholesaler's actions.
But, with thousands of successful wholesale deals happening, clearly, real estate wholesaling has the potential to generate a consistent stream of income – if a wholesaler is mindful of local and state rules, regulations and laws.
Check out our brand new free training on how we help investors all across the country wholesale and flip houses from the MLS using only a laptop and a cell phone. See you there!
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