How To Wholesale Real Estate In North Carolina: Step-By-Step (2024)Jan 16, 2024
If you are a beginner in the industry or a veteran wholesaler looking for your next market, read on as this article will serve as your comprehensive guide to wholesaling real estate in North Carolina:
- What Is Wholesaling Real Estate?
- North Carolina Wholesale Real Estate Trends (2023-2024)
- How To Wholesale Real Estate In North Carolina (9 Steps)
- Is Wholesaling Houses Legal In North Carolina?
- How Much Do Real Estate Wholesalers Make In North Carolina?
- North Carolina Wholesale Contract
- Do You Need A License To Wholesale In North Carolina?
- Is Wholesaling In North Carolina Easy?
- Final Thoughts On Wholesaling In North Carolina
*Before we begin our guide on wholesaling in North Carolina, we invite you to view our video on How To Wholesale Real Estate Step by Step (IN 21 DAYS OR LESS)!
Host and CEO of Real Estate Skills, Alex Martinez, provides a comprehensive, step-by-step guide for beginners to start wholesaling real estate!
What Is Wholesaling Real Estate?
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 is 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.
North Carolina Wholesale Real Estate Trends (2023-2024)
North Carolina continues to shine as a top living destination in the U.S., thanks to its enchanting landscapes and vibrant cities. This appeal is mirrored in its real estate market, which remains an attractive arena for investors, especially those interested in wholesaling.
As of November 2023, the housing market dynamics in North Carolina show promising signs for real estate wholesalers.
- Home prices have seen a moderate increase of 3.6% compared to the previous year, bringing the median sale price to $362,100.
- Despite a slight decline in the volume of home sales, with 10,750 homes sold in November 2023 compared to 11,720 in the same period last year, the market retains its vigor.
- This decrease in sales volume, while notable, still indicates a healthy demand, especially relevant for wholesalers looking to quickly assign contracts.
- The median days on the market now stand at 39 days. This relatively swift turnover rate is a positive sign for wholesalers, as it suggests a market where properties are moving at a steady pace, providing opportunities for quick transactions.
Analyzing the broader market trends, we observe that in Q4 2023, the total housing inventory in North Carolina was 42,508 homes, a decrease of 5.4% year over year. The number of newly listed homes was 11,190, showing a growth of 3.0% from the previous year.
A significant metric for wholesalers is the average months of supply, which currently stands at 3 months, indicating a market leaning towards sellers, which is often conducive to wholesaling strategies.
In terms of pricing dynamics, 23.6% of homes sold above their listing price, a slight decrease from the previous year.
Meanwhile, the percentage of homes experiencing price drops was 22.4%, down from 26.0% in the previous year. The sale-to-list price ratio was 98.3%, showing a minor increase.
These figures suggest a market where pricing is stabilizing, yet still offers room for negotiation, a key aspect for successful wholesaling deals.
The current 2024 trends in North Carolina's real estate market present a favorable environment for wholesaling. The combination of steady home price appreciation, a balanced inventory, and reasonable turnover rates create a landscape ripe with opportunities for savvy investors looking to leverage wholesaling strategies in this dynamic market.
Now, let's deep dive into each step of the process so you can feel confident wholesaling real estate in North Carolina!
How To Wholesale Real Estate In North Carolina (9 Steps)
Here's our simple step-by-step process for wholesaling real estate in North Carolina:
- Partner With A Wholesale Mentor
- Learn North Carolina Real Estate Wholesaling Laws & Contracts
- Understand The North Carolina Real Estate Market & Lingo
- Build A Cash Buyers List
- Find Motivated Sellers & Distressed Properties
- Put Distressed Properties Under Contract
- Assign The Contract To The Cash Buyer
- Close Deal And Collect Assignment Fee
- Double Close Or Wholetail When Necessary
1. Partner With A Wholesale Mentor
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.
If you want to learn from seasoned professionals who have successfully wholesaled properties, be sure to attend our FREE real estate training course below!
2. Learn North Carolina Real Estate Wholesaling Laws & Contracts
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.
3. Understand The North Carolina Real Estate Market & Lingo
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 the 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.
North Carolina Housing Market Statistics In 2023
The housing landscape in North Carolina is witnessing a shift in 2023. While 2022 observed rapid surges in home values, the pace has begun to moderate this year. However, home prices have not plateaued and are continuing their upward trend, albeit more gradually. This changing dynamic is reinforced by an influx of homes available for purchase, with properties taking longer durations to finalize their sales.
Based on the most recent findings by NC Realtors, as of April 2023, the median sales price of homes in North Carolina stands at $302,549. This reflects a 4.4% annual growth from the previous year. Yet, the volume of home sales has shrunk by 16% on a year-to-year basis. In tandem, homes have been lingering on the market for slightly longer durations, with the median days on the market stretching to 36 days, a 10-day increase from the prior year.
Anticipations for the remainder of 2023 project a continual tempering of the North Carolina housing market. Experts foresee home prices advancing by a margin of 2-3%, while the inventory of homes up for sale is set to expand. Such a trajectory suggests potential intensified bidding confrontations and extended market durations for listed properties.
*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.
*Before we continue our guide, be sure to watch our video on the 10 BEST States To Wholesale Real Estate! Learn why North Carolina made our top 10 list!
Covering the entire span of the country, we delve into what sets each of these states apart, creating a perfect environment for both wholesalers and real estate investors.
Want more real estate videos? Be sure to visit our YouTube channel, here!
4. Build A Cash Buyers List
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.
*Check out this quick video below that talks about how to find cash buyers online for free!
5. Find Motivated Sellers & Distressed Properties
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 often available are often non-listed, off-market wholesale properties.
6. Put Distressed Properties Under Contract
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.
- The 70% Rule: The 70% rule is an industry-standard formula that provides a smart starting position for wholesalers. The rule essentially notes that a real estate wholesaler should pay no more than 70% of the After Repair Value (ARV). The ARV is the property’s projected value – the potential sale price after updates and renovations have been completed.
- The Maximum Allowable Offer (MAO): The MAO formula considers the carrying costs and repair expenses required to create a move-in-ready property. If there are repairs needed, the Maximum Allowable Offer will always be less than the After Repair Value.
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:
- What is the maximum price a flipping professional will likely pay for the property?
- How does the MAO compare to the wholesaler’s purchase price?
- Does the subject property appear to have sufficient profit potential?
*Pro Tip: 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 X 0.7 = $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?
- The following illustrates how to do the MAO calculation: ARV – Expenses = MAO
- $315,000 - $90,000 = $225,000.
$225,000 (the buyer’s MAO) - $210,000 (the original contract price) = $15,000. The wholesaler’s gross profit in the above example would be $15,000.
7. Assign The Contract To Cash Buyer
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.
8. Close Deal And Collect Assignment Fee
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.
9. Double Close Or Wholetail When Necessary
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. 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.
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.
Also, consider wholetailing the deal for maximum exposure and profits. Luckily, these strategies are absolutely feasible in North Carolina and around the nation!
Is Wholesaling Houses Legal In North Carolina?
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.
To legally wholesale real estate in North Carolina, you must complete your task – of selling/assigning your rights to purchase a piece of real estate to another buyer without violating North Carolina license law.
How Much Do Real Estate Wholesalers Make In North Carolina?
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, but 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.
North Carolina Wholesale Real Estate Contract
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 -
- The subject property’s legal description.
- A small earnest money deposit that is to be given in good faith.
- Household items that may be included as a part of the transaction.
- Acceptable financing terms.
- Contingency dates that are relative to the sale.
Do You Need A License To Wholesale In North Carolina?
No, a wholesaler in North Carolina will not need a real estate license as long as 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.
Is Wholesaling In North Carolina Easy?
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.
Final Thoughts On Wholesaling In North Carolina
Wholesaling real estate in North Carolina 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!