How To Wholesale Real Estate In Washington

How To Wholesale Real Estate In Washington: Step-By-Step (2024)

real estate investing strategies real estate markets (states) wholesale real estate Apr 01, 2024

With inflation roaring, companies laying off workers, and the economic landscape looking bleak - is it still possible to make money in real estate? Although the days of rock bottom interest rates might be over, what if we told you there is a strategy that can provide positive cash flow to the Washington-based investor even in today’s challenging market?

According to the U.S. Census Bureau, Washington's population grew to almost 7.8 million people as of July 2022.

A gain of 1,000,000 people is a tremendously robust population growth figure. Currently, the population sits at just shy of 8,000,000 - up 15% over the past 10 years. However, amidst this explosive growth, the housing units have only increased by 11%. Meaning, there will likely continue to be a supply and demand imbalance until housing units can increase materially to match the state’s robust growth.

A great real estate investment strategy one can utilize to take advantage of this trend is wholesaling real estate. In this article, we’ll teach you how to wholesale real estate in Washington.

*Before we begin our guide on wholesaling real estate in Washington, 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?

Wholesaling real estate is a real estate strategy that is a mix between real estate investing, matchmaking, and house flipping. It is a strategy where an individual connects homeowners with cash buyers in exchange for a fee. It has the components of traditional real estate investing and house flipping, because - like investing - wholesaling generally deals with distressed properties and motivated sellers. And, it has similar components to real estate brokerage, because wholesaling ultimately connects buyers and sellers.

A truly successful wholesaler will sift the Multiple Listing Service (MLS), foreclosure auctions, and other websites in order to find distressed properties. Then, once the wholesaler has found and goes under contract with the right property selling below market value, he or she contacts a cash buyer and assigns the purchase agreement to them in exchange for a fee. Then, once the assignment contract is signed and the fee is paid, the wholesaler repeats the process again with a new house. 

How To Wholesale Real Estate In Washington (9 Steps)

In the following nine steps, we’ll show you how to wholesale properties in the Evergreen State:

  1. Partner With A Wholesale Mentor
  2. Learn Washington Real Estate Wholesaling Laws & Contracts
  3. Understand The Washington Real Estate Market & Lingo
  4. Build A Cash Buyers List
  5. Find Motivated Sellers & Distressed Properties
  6. Put Distressed Properties Under Contract
  7. Assign The Contract To Cash Buyer
  8. Close Deal And Collect Assignment Fee
  9. Double Close When Necessary

how to wholesale real estate in Washington step by step

1. Partner With A Wholesale Mentor

The first step you’ll take as a wholesaler is to find a local real estate wholesale mentor. These mentors are professional investors that know the ins and outs of the industry. These individuals understand the Washington markets, they know the right cash buyers to reach out to and can put you in touch with the right lawyers and realtors to get deals to the finish line.

By reaching out to these mentors and relying on them for advice you’ll not only avoid mishaps, but you’ll succeed far quicker than others in the industry.

Read Also: How To Wholesale Real Estate With A Realtor (2024)

2. Learn Washington Real Estate Wholesaling Laws & Contracts

The next step in your journey as an aspiring wholesaler is to understand the Washington-specific laws and contracts associated with wholesaling real estate. You might be thinking, what is so challenging about wholesaling real estate? Why would there be specific laws and contracts that are different from traditional real estate transactions?

Well, to answer those questions, we’ll have to check out the Washington State Department of Licensing (DOL). The Department of Licensing is the state agency that administers and enforces real estate laws and licenses. The Real Estate Commission within the DOL is specifically responsible for enforcing these laws. So, are there specific laws relating to wholesaling real estate?

Before we answer that, it is essential to understand the specific laws relating to licensing. In Washington, “Anyone who acts on behalf of a real estate firm to perform real estate brokerage services under the supervision of a managing broker” is required to have a license. The real estate laws that govern the actions of real estate licensees in Washington are found in:

Notice, that wholesaling real estate is absent from these laws. The reason is that wholesaling real estate is the act of buying or selling the equitable interest in a real estate contract - it is not the act of buying and selling the actual property itself. As long as you, the wholesaler, do not act like a broker by publicly marketing a property, you’ll avoid any Washington licensing requirements. Familiarize yourself with the definitions of an Equitable Conversion as it pertains to U.S. law. As a wholesaler, by transferring your right to purchase a property to a cash buyer, you’ll be utilizing this type of conversion.

As an aside, in 2010 the DOL issued specific guidance to real estate businesses that could also apply to wholesaling. The guidance stated that, while an owner has the legal right to sell or market their own property, the DOL may take issue if another individual legally obtains an interest in a property with the intent of finding an alternate buyer before ever closing the sale with the original owner. Essentially, the DOL is trying to crack down on individuals that might take their fee in the form of quasi-ownership

Technically, this individual owns equity in the property and would fit the definition of an owner exempt from licensing requirements. However, this could be misconstrued as a misuse of the legal exemption. If you want to stay on the right side of the law, be sure to seek legal advice from an attorney and discuss your strategy with your mentor before transacting on any deals.

You might also want to gloss through this sample Washington Purchase and Sale Agreement and go over your rights and requirements with your attorney.

wholesale real estate contract pdf

Read Also: Wholesale Real Estate Contract: Template & FREE PDF Download

3. Understand The Washington Real Estate Market & Lingo

After you understand the ins and outs of wholesaling laws, contracts, and regulations, it’s time to perform some market research and due diligence. Before diving into an investment, you should ask a few questions. Are you familiar with the streets and schools within the area? Do you know of popular restaurants, bars, and city centers that would make your house attractive to live in? Is the investment home close to buses, subways, and highways?

By addressing these questions you’ll be able to determine very quickly if your house is located in an ideal spot.

Consider also scanning through Washington realtor sites. Typically, these sites include resources, contact numbers, and important real estate trends you might want to consider.

4. Build A Cash Buyers List

A cash buyer list is a list of investors that have the liquidity necessary to close on a transaction very quickly. This list is a vetted compilation of investors that you know are interested in the property at hand. As a wholesaler, you’ll want to cold call these investors or network with them with your mentor’s help or through attending conferences. These investors are typically flipping houses and commercial real estate, so they understand the Washington market very well. 

Once you go under contract with a seller, you’ll want to already have a cash buyer in mind that could be interested in purchasing your contract quickly. Having strong buyers is key to wholesaling houses successfully.

 *Want to learn the proven strategies for finding cash buyers? View our video below where Alex Martinez covers How To Find Cash Buyers For Wholesaling! [FREE]

Read Also: [FREE SCRIPT] How To Talk To Cash Buyers & Find Their Buying Criteria

5. Find Motivated Sellers & Distressed Properties

The opportunity for success within the real estate market is incredible, but where is the best place to look? The answer lies in distressed properties and ones sold by motivated sellers.

A distressed property is a property that needs repair. These properties are generally found in foreclosure auctions or are being sold by owners that are in a cash crunch. These types of properties are perfect for fix and flip or rental property investors on your cash buyer list.

To be successful, you’ll want to locate these properties - either on or off market - and go under contract with their sellers very quickly. Then, once you’ve secured the property, you’ll be able to flip the contract over to a different investor for a higher price.

Motivated sellers are another great source of opportunity. These are individuals who own a home but need to sell it badly - whether because of liquidity constraints, family issues such as a death or divorce, or anything in between.

Motivated sellers would rather sell their property for below market value to a wholesaler rather than undergo a formal process and wait for the right price. You offer the seller a great deal by closing all cash very quickly, and they offer you a great deal by letting you pay below market value.

download wholesaling cold calling script

Read Also: Finding Motivated Seller Leads: Free & Paid Tactics

6. Put Distressed Properties Under Contract

For this part of the wholesaling process, you’ll want to calculate the After Repair Value (ARV), estimate repair costs, and use the Maximum Allowable Offer (MAO) formula.

The ARV is the value of a property after you fix it up and bring it back on the market. Calculating this figure is essential to the wholesaling process and will help you determine if you and your buyer will end up making money on the transaction. Search the MLS and other brokerage sites to determine what other properties of similar configuration have recently sold for. Once you come up with a value, it’s time to estimate rehab costs.

Speak to general contractors, Home Depot workers, and handymen to estimate how much work your distressed property will need. Remember, not all projects are the same.

After you’ve calculated the ARV and have estimated the budget needed to achieve that value, you’ll need to add your wholesale fee and fix and flip the desired profit. Generally, investors want to make 15-30% profit on their flip, and wholesalers want to make at least $5,000 - $20,000. It is up to you to plug and play with the figures to get to an MAO that is both aggressive enough to win the deal, but conservative enough to protect you on the downside.

Here is what the formula looks like:

MAO = ARV - Rehab Costs - Holding Costs - Wholesale Fee - Investor Profit

Let’s put the formula into an example.

  1. You see a two-bedroom house in Olympia that could use an extra bathroom and kitchen remodeling.
  2. You conduct your market research and determine a house of similar size could sell for $400,000.
  3. You determine, after speaking with some local advisors, that you could achieve that value with a $20,000 budget.
  4. You estimate the holding costs, including property taxes, insurance, utilities, and transaction costs to be $8,000.
  5. You decide that, for the risk you are taking, you’d like to make a $20,000 wholesale fee and that a cash buyer would want to make $30,000. So, what is the MAO?

MAO = $400,000 - $20,000 - $8,000 - $20,000 - $30,000. Therefore the maximum price you should offer for this house is $322,000.

7. Assign The Contract To Cash Buyer

Now, it’s time to assign the contract over to a cash buyer. This contract is the end-all and be-all for the wholesaler. Without it, you won’t be able to make your wholesale fee and transfer the equitable right to the purchase agreement to a new buyer. As a wholesaler, be sure to bake in a sufficient fee to compensate you for all your hard work.

Here is an example of a downloadable assignment contract.

wholesale real estate assignment of contract

8. Close Deal And Collect Assignment Fee

Then, voila! You close on the assignment contract and go ahead and collect your assignment fee. Once the cash buyer pays you the money you are owed it’s time to get the ball rolling again and go source a new property to wholesale.

9. Double Close When Necessary

For the creative wholesaler, there are a number of different variations to wholesaling you might want to consider. Two such examples are a double close and wholetailing.

A double closing is a type of transaction where you forgo the need for an assignment contract. In a double close what happens is that you go under contract with the seller and then simultaneously go under contract with a different buyer that you’ve sourced at a slightly higher price.

For example, you see a home in Bellingham worth an ARV of $500,000. In a double closing you’ll go under contract with the seller at $400,000, put down an escrow payment, and simultaneously go under contract with a different buyer at $420,000. In doing so, you collect a $20,000 profit by facilitating the closing - all done without an assignment contract.

There is a chance you’ll undergo some pushback from lenders and title agencies during a double close. In order to avoid this, some investors use hard money loans or transactional funding to ensure they can close on the two deals at once.

Keep in mind, double closings can also be more expensive than standard wholesale deals. Generally, you’ll be paying legal fees twice, recording taxes twice, and other traditional closing costs both as a buyer and a seller.

Read Also: Wholesaling Real Estate: Step-by-Step PDFs [FREE DOWNLOAD]

Yes, wholesaling real estate is legal in Washington. As mentioned earlier, wholesaling real estate is the act of connecting buyers and sellers and assigning your purchase agreement over to a new buyer. As long as you aren’t circumventing any licensing requirements or marketing the property publicly, you are okay to legally wholesale real estate in Washington.

How Much Do Real Estate Wholesalers Make In Washington?

According to Rocket Mortgage's public data records, the average payment for a real estate wholesale fee is usually 5% - 10% of the total property price nationwide.

How Much Do Real Estate Wholesalers Make In Washington

Real estate wholesalers can make as much or as little as they want. Some make six figures per year while others struggle to make any money at all. It all depends on how much time you can spend learning the craft.

If a wholesaler in Wisconsin finds a buyer for a $150,000 property, then the wholesaler has the potential of making a $30,000 profit legally without even having to own the property themselves. 

Read Also: Wholesale Real Estate Salary: How Much Can You Make Wholesaling?

Do You Need A License To Wholesale Real Estate In Washington?

No, you don’t need a license to wholesale real estate in Washington. That said, it might be a good idea. Getting a license will give you access to a number of resources that could give you a leg up against your competition.

You’ll get access to the MLS and certain networking events that could give you access to off-market deals and other attractively priced properties.

To qualify for a real estate license in Washington, you’ll need the following:

  • Be at least 18 years old.
  • Have a high school diploma or equivalent.
  • Complete 90 hours of approved real estate education. This education must include:
    • A 60-hour course in Real Estate Fundamentals.
    • A 30-hour course in Real Estate Practices.
    • You must complete your education within 2 years before applying for the exam.
    • Visit the Course Search for a list of approved real estate education.
    • Reciprocity applicants don't need to take the 90 hours.
  • Pass the broker's exam(s).
  • Be ready to answer legal background questions and provide documents if needed.
  • Submit your fingerprints for the background check (due every 6 years).

Read Also: Can A Realtor Wholesale Property? The (ULTIMATE) Guide

Is Wholesaling In Washington Easy?

No, but it can be easier with the right coach, a mentor, and the proper training we offer at Real Estate Skills in the Pro Wholesaler VIP Program. Like anything in life, wholesaling takes work and time. Put in the hours and, if you are determined, you’ll become wildly successful at wholesaling.

The Pro Wholesaler VIP Program is designed for the modern entrepreneur to learn the basics and how to help new real estate wholesalers avoid the pitfalls typically found by beginners. It is 100% online and is used for local and virtual real estate wholesaling.

Final Thoughts On Wholesaling In Washington

Real estate investors or real estate brokers - whether beginners or experts in the field - should consider wholesaling real estate and single-family investment properties. As a wholesaler, you’ll act very similarly to a real estate agent, but instead of marketing a property publicly, you’ll go under contract with a seller and assign the purchase agreement to a willing end buyer.

These buyers are typically real estate flippers looking to buy discounted properties. Reach out to motivated sellers looking for an exit strategy, network with potential buyers, calculate ARVs by working with local appraisers, general contractors, and mentors, and take the plunge!

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.

free real estate investment training

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