After completing a few wholetail transactions in early 2021, I have come to realize that a lot of people don’t understand what wholetailing real estate is.
This is a shame because I think most markets are perfect right now for selling properties via the wholetail strategy. If you’re in a hot, sellers’ market this strategy may work very well for you right now!
Wholetail vs. Wholesale Real Estate Investing
The main difference between wholetailing and wholesaling is ownership. With wholesaling, you never actually take possession of a property—you simply assign a purchase and sale agreement to a new owner.
With wholetailing, on the other hand, you actually purchase the home, and then relist it on the multiple listing service (MLS) in order to allow the entire market to bid on the home! Sometimes you will clean these houses up a little—clean out the trash, slap some paint on it, remove an old shed from the back yard—and then list it for a premium!
For example, my friend Jon and I bought a home in late February for $12,000. We then put $2,200 into cleaning out the trash, removing the kitchen cabinets, and removing an old shed in the backyard. Then we listed it for $35,000 and sold it for the full asking price. Even after marketing, taxes, and commissions to our real estate agent, we came out on top by a lot with this strategy!
I think wholesaling makes sense in buyers’ markets and seller’s markets alike, but wholetailing is a very competitive strategy in a low-inventory sellers’ market like we are seeing in 2020-2021.
Wholetailing Real Estate
Wholetailing is a cross between wholesaling and house flipping.
Wholetailing real estate requires more work than wholesaling, but the reward often more than compensates you for it.
Sometimes you don’t need to do anything to a home other than purchasing it, and turn around to list it immediately on the market. That being said, this strategy makes the most sense when you’re planning to put a coat of paint on the home, cleanout trash, or mow the grass.
Wholetailing works great because you are taking an ugly house, making it slightly more attractive, and then letting the hot market make offers on it. The competition in the market can potentially bid the home price higher and higher, increasing your profit more than if you were to simply push it out to your email list and getting somebody to pay what you’re asking.
This would work extremely well in a market like San Diego where homes are selling for literally tens of thousands of dollars over the asking price—within days of being listed!
How to Wholetail Real Estate
This may seem a bit redundant, but wholetailing really is a simple process, and I want to highlight that so you don’t overthink it.
- Spend time and money marketing for off-market deals
- Negotiate with the seller until you arrive at a price that makes sense
- Purchase the property
- Clean up the property
- Take professional listing photos
- List the photos on the MLS and let buyers fight over it
Yep, it really is that simple!
The most important parts of this strategy are: knowing what you’ll be able to sell the property for, how much money it will cost you to clean it up and sell it, and negotiating the price down with the seller.
Benefits to Wholetailing Real Estate
I like wholetailing for a few different reasons, but one of my favorite ones is that the seller won’t see what you’re doing at closing. Many sellers have issues with wholesalers because when they realize that you’re making a solid chunk of money off their home, they don’t appreciate it.
On top of that, wholesalers give real estate investors a bad name because they will sometimes get a property under contract without any intention of closing it unless they can find an end-buyer. I think this is a terrible business practice, and recommend that you always intend to close on a property if you put it under contract. You want to gain a reputation as somebody who can close!
When wholetailing, you buy the property, and then turn around and list it, without the seller having any idea that you resold it—or how much money you made in the process.
This is the least stressful way to buy/sell a home quickly, and I much prefer wholetailing real estate from a peace-of-mind standpoint.
Should I Wholetail Real Estate In A Seller’s Market?
In case you have not figured it out yet, I think a hot seller’s market is the perfect market for wholetailing real estate!
The main reason is that you will most likely receive multiple offers on the home and may even get buyers to pay more than you are asking for the home!
I would not recommend wholetailing real estate at the bottom of the market, but when the market is as hot as it is right now, this makes perfect sense.
That being said, you should only purchase properties like this if you would be okay holding them for the near future. You never know when you might get stuck holding a home—whether because you misjudged what you could sell the property for, or because the market fell out from under you—and you don’t want to get stuck holding a property that you aren’t okay with holding.