In this instructional video, Tyson Smith breaks down wholesaling real estate for beginners, emphasizing that it requires little to no capital, no real‑estate license, and no credit score. He defines wholesaling as finding deeply discounted properties, entering a purchase contract, and then assigning that contract to another investor for a profit. Smith walks through the essential components of a real‑estate purchase contract—price, inspection period, assignability, and earnest‑money deposit—explaining how each element enables a wholesaler to market the contract during the inspection window. He describes the role of escrow accounts and title companies as neutral third parties that hold funds and ensure clear title transfer at closing. The assignment fee, which is the wholesaler’s profit, is paid directly by the end buyer at close of escrow. Smith addresses risk mitigation, noting that a wholesaler can cancel the contract during the inspection period without penalty if no buyer is found. He teases future content on sourcing motivated sellers and provides a free download link for the exact purchase and assignment agreements he uses. Throughout, he intersperses calls to subscribe and like the video.
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What's up everybody, Tyson Smith here, and today I'm going to explain to you what the hell wholesaling real estate even is. Not that wholesaling is some kind of complicated thing, but I'm going to do my best to explain it in a way that even a 5-year-old might be able to understand it. The first thing you need to know is that wholesaling requires very little to even no money to get started. The second thing you need to know is that you do not need any type of real estate license to get started wholesaling. And the third thing you need to know is that you do not need any kind of credit score, and you can even wholesale with a felony on your record. In a nutshell, wholesaling real estate is finding deeply discounted real estate deals to sell to other real estate investors. Wholesalers find properties at under-market prices, enter in contract to buy that property, and then turn around and sell that contract at a bargain price to another real estate investor. Now you're probably asking yourself, Tyson Smith, what do you mean it costs very little to no money to get started if you have to buy a house? The reason is you aren't actually buying or selling the house. You are entering into a contract to buy the house and then you are selling that contract to somebody else. This may sound confusing at first, but when you understand how a real estate transaction works, it'll make a lot more sense. First, a buyer is going to contact the owner of a piece of real estate they would like to buy. Then they agree on a price. Once they do, they're both going to need to fill out and sign what is called a real estate purchase contract. This agreement can be very simple or very complex, but all agreements are going to have a few main components that make wholesaling real estate possible. First is going to be the price. Obviously, both parties need to know how much money is being exchanged for the property. You as the wholesaler need to make sure that this price is at a very deep discount because you're going to need to sell this contract to somebody else for more money than what you have originally agreed upon with the seller, and it still needs to be an excellent deal. The second thing within a real estate contract that allows for wholesaling is gonna be the inspection period. Most of the time, the buyer is able to request a certain amount of days in order for them to inspect the property. During this time, the buyer can actually back out of the agreement for any reason at no cost to them. Now, it's important to note that only the buyer can back out during the inspection period. Once a seller has signed the agreement, and assuming that the buyer lives up to all of their ends of the agreement, there's nothing the seller can do to back out. Now, the number of days of inspection period is completely negotiable. As a wholesaler, you're going to want to negotiate a minimum of 5 days inspection period. More realistically, you'd want to have between 15 and 20 days of inspection period. The more time you have, the more time you have available to find a buyer for this contract. Yes, that's right. We are going to be selling the contract during the inspection period. We're able to do this because once you have a contract with somebody to buy the property, you have something called equitable interest. This allows you to market your interest in that contract to other people. So we are actually going to sell this contract to an end buyer. The end buyer will be the person who's actually responsible for paying for the house, paying you, the wholesaler, and they're going to be the person who actually gets the property. Now, real quick, before we get into the next aspect of the contract that allows for wholesaling, I'd like for you guys to take a minute to subscribe to my YouTube channel by clicking that button and also giving this video a thumbs up. I really appreciate it when you guys hit those buttons, and I thank you right now for going ahead and doing so. Now, this brings us to the next aspect of the contract that allows for wholesaling, and that is going to be that it needs to be assignable. Now, there is a vehicle that allows us to actually sell the contract called an assignment of contract. We're just going to call that the assignment for short. The assignment is a legal agreement that allows you to sell the contract to to somebody else. It keeps all the terms of the contract the same except for the price and the name of the buyer. Now, obviously, the price cannot be less than what it originally was on the original agreement. It needs to be equal to that amount, or if you want to make any money, more. However much money you assign the contract for over the original purchase price is your assignment fee. As the wholesaler, you get to keep 100% of that. There are no fees that come out of it. Well, besides taxes, but that's a whole other story. At least in Arizona, all contracts are assignable by default, but we actually use an agreement that says right there in black and white that this contract is assignable. Keep watching and I will show you how you can download the purchase and sales agreement and the assignment agreement that we use to wholesale properties all across the United States absolutely for free. Now, something you may be wondering about is earnest money deposits. Most real estate contracts have a spot for an earnest money deposit, which we're going to call EMD. The earnest money deposit is money that the buyer, whoever's signing the original contract, is going to need to deposit in an escrow account with the title company. Let's not worry about what an escrow account is or what a title company is. We're going to come back to that in a second. The purpose of EMD is to show the seller that the buyer is serious about moving forward with the transaction. But here's the thing. EMD in its amount, and if it's even there, is completely negotiable. You can work with the seller to just have no EMD. That's why I say that you can get wholesaling for literally $0. When I first started out, I always negotiated $0 in EMD, or even at the very most, $100. One thing you'll learn about real estate transactions is that most everything in them is negotiable. This leaves you a lot of room for getting creative to get deals done. The next thing you're going to have to pay attention to is the close of escrow date. This is the date when the transaction actually closes. By this time, you will have assigned the contract to an end buyer, and the end buyer will have deposited the money into the escrow account, and the title company will be ready to pay off everybody who's owed money for the house, so the mortgagers or any other lien holders, and transfer ownership of the property to the end buyer. So what is an escrow account and what is the title company? The escrow account is going to be a bank account that's owned by the title company where all the money is deposited first, rather than using the seller or the buyer's bank account where things could get mixed up and somebody could get screwed. The title company is a neutral third party who makes sure that both the buyer and the seller hold up to both their ends of the deal. Think of them as like a referee for the real estate transaction. In addition to that, they're going to make sure that the seller is able to sell the property. They're going to see if there's anybody else who may have ownership or interest in that property. You will learn that especially with these wholesale deals, a lot of stuff like that can come up. And part of being a good wholesaler is figuring out how to navigate these issues. I'll be making more videos on some of the most common issues and ways that you can overcome them in the future. Make sure you subscribe so you'll see when that video comes out. So at close of escrow, the end buyer is going to deposit all of the money for the original purchase price plus your assignment fee. The title company is then going to distribute the original purchase price to the seller, and they're going to pay you your assignment fee. This is normally by check or by wire. And lastly, they're going to transfer title of the property to the end buyer. In conclusion, the wholesaler is going to find an owner of a property who's willing to sell at a deep discount. They are then going to enter into a purchase and sales agreement with the owner, and then during their inspection period, they're going to find an end buyer to assign the contract to for more money than they originally agreed upon with the seller. The end buyer is going to bring all the money to the table. It's going to pay off the seller with the original amount, and they're going to pay you your assignment fee. So at close of escrow, the title company gives the money to the seller. They pay you your assignment fee. and the end buyer gets their next great real estate deal. In essence, being a wholesaler is just being a middleman for great real estate deals. Now, one question you might be asking yourself is, what is the risk in doing this? And the answer is there's absolutely none if you do it right. If you are unable to find a buyer for the deal, you don't just get stuck having to close on it. You can simply cancel the contract during the inspection period absolutely for free. You don't get charged for doing this, and you can even get your EMD refunded back to you if there was any in the original agreement. The next question you might be asking yourself is, "Well, Tyson, where do I find these sellers who are willing to sell their property at a discount?" That right there is the million-dollar question. The wholesaler who is able to find the highest amount of people who are willing to sell their property at a discount is going to be the wholesaler who's going to make the most amount of money. In my next video, I'm going to cover some strategies that I use to find sellers. In my next video, I'm going to cover some strategies that I use to find motivated sellers who have a high chance of needing to sell and might be willing to sell at a discount. If you haven't already, make sure and like and subscribe so you can see that video as well. Now, as promised, I want to give you guys access to the exact same purchase and sales agreement that I use to buy deals and assignment agreement that allows me to sell deals to end buyers. You guys want to be able to download those documents that I use absolutely for free, go to my website at www.tysonsmithrei.com/free. There you will be able to download those exact documents that I'm using in my business. Also, we'll go ahead and throw the link down below so you can just go ahead and click it. Guys, thank you so much for watching, and we'll see you on the next one.
