Vendor Portal
Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
A few weeks back I wrote about how low our home inventory is here in Chicago (Inventory Is Low. What Does That Mean For Chicago Investors?). The short version is that we have about one third the homes for sale that we had in 2019, and it has stayed that low for years now.
When there is almost nothing for sale on the open market, investors have to get creative. You cannot just scroll the MLS and find a deal like you used to. So more and more of the buying is happening off market. And when you buy off market, you are very often buying from a wholesaler.
Here is the thing. As an investor myself, every property we have bought in the last two years has come off market from a local wholesaler. None of them came off the MLS. That got me thinking.
We have had so many great wholesalers and off market buyers on the Straight Up Chicago Investor Podcast over the years, so I wanted to pull them all together and share them with you. Let me break down what a wholesaler is, why they matter so much right now, and who you might want to know.
Key Takeaways
Chicago has about one third the homes for sale it had in 2019, so good deals are hard to find on the open market.
When the MLS is empty, more investors buy off market, and that often means working with a wholesaler.
A wholesaler finds a motivated seller, puts the house under contract, then passes that contract to an investor for a fee.
Working with wholesalers can get you deals you would never see online, but you still have to run your own numbers and check the contract.
Below is a list of Chicago wholesalers and off market buyers we have had on the Straight Up Chicago Investor Podcast.
What Is A Wholesaler?
A wholesaler is a deal finder. They go out and find people who want to sell a house fast. Maybe the house needs a lot of work. Maybe the owner is going through something hard. The wholesaler puts that house under contract at a low price.
Then the wholesaler sells that contract to an investor like you for a fee. They do not fix the house. They do not keep it. They get paid for finding the deal and handing it off. Think of them as the person who knocks on a hundred doors so you do not have to.
Why Low Inventory Makes Wholesalers Matter More
When homes are sitting on the market, you do not really need a wholesaler. You can find deals yourself. But that is not the market we are in.
Right now the deals are hidden. The motivated sellers are not listing with an agent. They are answering a postcard or a phone call from a wholesaler. So if you want first crack at those houses, you want to be on a wholesaler's buyer list. That is where a lot of the real deals live today.
How To Work With A Wholesaler The Right Way
Get on their buyer list. Tell them you are a serious buyer and you want their deals.
Know your buy box. Be clear on what you buy, where, and at what price. Wholesalers send deals to buyers who know what they want.
Be ready to move fast. Off market deals go quick. Have your money lined up and be able to show proof of funds.
Buy with cash or a private lender. Try to buy with cash or a private lender who can move to close quickly. Wholesalers send their best deals to buyers who can close fast without a hitch.
Run your own numbers. Never trust the wholesaler's math alone. Do your own work on repair costs and rent.
Build a real relationship. The best deals go to the buyers a wholesaler knows and trusts.
A Word Of Caution
Not every wholesaler is great, and not every off market deal is a good deal. Some will hand you a rosy spreadsheet and hope you do not check it. So check it.
Look at the contract closely and understand how the assignment works before you sign. We did a whole episode on assigning contracts the right way with our attorney Chance (How To Assign Contracts Like a Pro). Do your own walkthrough, get your own repair bids, and do not overpay just because a deal is off market. Off market does not always mean cheap.
Chicago Wholesalers And Off Market Pros We Have Had On The Podcast
Over the years we have interviewed a lot of folks who live and breathe off market deals. If you want to learn how this side of the business really works, these episodes are a great place to start. Here are some of the wholesalers and off market buyers who have joined us on the show.
Dan Breslin (Episode 2)
Blake McCreight (Episode 10)
Joe Sevcik (Episode 148)
Mike Baker (Episode 180)
Jeff Nydegger (Episode 253)
Ben Allgeyer (Episode 272)
Mike Kehoe (Episode 275)
Dain Laverty (Episode 302)
Jeffrey Ma (Episode 366)
Alex Diaz (Episode 387)
Eli Goodman (Episode 409)
Brendan McElhaney (Episode 446)
Igor Mike Kajpust (Episode 452)
One last thing. If you listen to one of these episodes and you like what you hear, do not be shy. Reach out to the guest. Tell them you heard them on the podcast and that you would like to get on their buyers list. Most of these folks love to connect with serious buyers, and that one call or email could be the start of your next deal.
Frequently Asked Questions
What is a real estate wholesaler?
A wholesaler finds a house, puts it under contract with the seller, then sells that contract to an investor for a fee. They do not fix or keep the house. They get paid for finding the deal.
Are wholesalers licensed real estate agents?
Some are and some are not. Illinois draws a clear line. You can do one wholesale deal in any 12 month period without a real estate license. If you want to do more than one in a year, the state treats you as a broker under the Real Estate License Act, and you need a broker license to keep going. So a wholesaler who does a lot of deals should hold a broker license, while someone who only does one a year may not. It is always smart to ask and to work with a real estate attorney.
Is wholesaling legal in Illinois?
Yes, wholesaling is legal in Illinois when it is done right. There are rules about how you market the deal and how you assign the contract, so it is smart to work with a real estate attorney. We covered the contract side of this on the show with our attorney Chance (How To Assign Contracts Like a Pro).
How do I get on a wholesaler's buyer list?
Reach out and tell them you are a serious buyer. Share your buy box, the areas you want, and your price range. Show that you can close and move fast, and you will start getting their deals.
Are off market deals always cheaper?
No. Off market can mean less competition, but it does not always mean a lower price. You still have to run your own numbers on repairs and rent and make sure the deal works for you.
How is a wholesaler different from a real estate agent?
An agent lists a house and represents the buyer or seller in a normal sale for a commission. A wholesaler controls the house with a contract and sells that contract to an investor for a fee. Different job, different deal.
Don't Go At This Alone!
We've shared a lot of information here on investing in real estate locally in Chicagoland. If you live outside the area, it may seem overwhelming for those wanting to invest in the Chicago market. But we view it as a team sport.
Who's on your investing team? Do you even have a team? GC Realty & Development, LLC has a dedicated team of professionals with decades of experience across all facets of real estate investment. We manage around 1,500 units across Chicagoland and handle everything from brokerage to leasing and property management. Whether you hire us or not, we're happy to provide our resources and expertise.
What gets me up in the morning and keeps me going for 12 hours a day is the ability to add value for local area investors in Chicago and beyond! Those who connect with me often hear me say that our goal is to bring value to everyone we come in contact with.
In return, they will one day hire us for our tenant placement or property management services, refer us to someone they know, or leave a review about our services. We would clearly love all three; however, we're happy whenever we get the opportunity to help!
