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Wholesalers vs. Investors – What is an Option Period?

Wholesalers vs. investors. Are they the same thing? Which should I work with? Is one better than the other? Let’s take a look.

Wholesalers contract properties without the intent of closing on them and doing the work themselves. Instead, wholesalers contract properties with sellers and utilize their network to sell it to an actual end buyer, or investor, for a profit. 

On the other hand, investors contract a property with the intent of closing on it either to renovate, rent, resell or a combination of the three. By cutting out the middleman, investors tend to be able to not only pay more to sellers but also provide a smoother transaction. 

Unfortunately, many wholesalers masquerade as inventors, but there are a few ways to spot the differences. One of the best ways to determine whether you are dealing with a wholesaler or an investor is to look for an option period. So let’s dive a little deeper into wholesalers vs. investors.

Wholesaler

Wholesalers pay a small fee, usually a few hundred dollars, for an option period generally ranging between 7 and 14 days. Traditional buyers frequently gather inspections, surveys and other due diligence during this period. However, in the wholesaler’s case, this time is used to find a genuine buyer. 

If they are successful, the wholesaler will assign their contractual rights to the property to the end buyer. The end buyer will be the one to fund and close on the property. If the wholesaler cannot find an end buyer willing to pay enough to net an arbitrage, they may request a reduction in the offer. And if the wholesaler cannot find an end buyer, they can terminate the contract with the seller altogether. 

Investor

Investors generally do not require an option period; if they do, it is usually just a few days to allow for contractor bids. In addition, because an investor does not need to sell the property to a third party, offer reductions and contract termination is far less likely.  

Working with the actual end buyer significantly reduces the chance of a deal falling through, allowing sellers to plan their home sale for the future better. 

Contact Flash Realty Solutions

If you are interested in working with an as-is cash buyer or know someone who needs to sell their home quickly in the greater Houston area, please call or contact us online. Flash Realty Solution’s is a true end buyer and local to the area. Because we live and work here, we know the market well and honestly care about our neighbors, meaning fair offers and tailored solutions are our priority.