Haven't you seen all the signs on roadsides saying "We Buy Houses" or "Cash for Your House?" Those are wholesalers. They don't necessarily have the money to outright buy property but they are looking for motivated sellers who might accept a low offer for their house. When somebody agrees to their price they do a contract where the property is assigned to the buyer pending payment. Then they sell the house to somebody who wants to fix and flip or for whatever reason they want it. Say the wholesaler gets the contract on a property that if in good shape or otherwise unencumbered would have a fair market value of $200,000 but the house is run down and needs lots of repairs. Seller might agree to take $100k just to get out from under the property. Wholesaler then agrees to sell the house for say $120k. The buyer mighty spend $20k-30k to fix and flip. Buyer gets $100k at closing and the flipper will have maybe $150k invested in a property he can sell for $200k and make a $50k profit. Wholesaler gets the $20k difference between $100k and $120k, These numbers are just an example. Wholesaler could get much less or much more. It is incredibly competitive. From people just trying to get a toehold in the business to big time buyers dealing with many properties at a time.
