Differences Between a Real Estate Wholesaler and Realtor

Are you looking to launch into the real estate industry, but not sure in which direction to go? That’s understandable because the ins and outs of real estate are variable with loads of opportunities available. From property investment to becoming a home inspector, your options are virtually limitless for real estate careers.

Two of the most promising and lucrative careers in this industry are real estate wholesalers and becoming a realtor.  These two positions are often compared because they can potentially earn the same income while working in the housing industry.  However, these two careers have very distinct differences.  Read further about the differences between real estate wholesalers and real estate agents.

What is a Real Estate Wholesaler?

Being a real estate wholesaler entails finding properties that are typically under market value and then putting that property under a purchase contract.  Then, the wholesaler finds interested parties such as property investors and sells the rights to the wholesale real estate contract at a higher price including a finder’s fee.

What is a Real Estate Agent?

A real estate agent is a licensed professional that works through a designated broker to list homes for sale or act as an agent for a buyer.  Their main function is to scour the housing market to find the right homes for their clients. They also provide assistance and represent home buyers and sellers.  In essence, they act as a go-between, helping to negotiate price and terms during a home purchase deal.

Education and Qualifications of Wholesalers vs Real Estate Agents

Education and qualifications are perhaps the most glaring distinction between these two careers. While neither requires a college degree, a high school diploma or equivalent is typically required.  The biggest separation between these two titles is that real estate agents, by law, are required to have a license to practice in their state.  Contrarily, real estate wholesalers can conduct business without a license.

Income Earning Differences

When you compare the above-mentioned requirements, you might be asking yourself, “Is wholesaling real estate legal?” because wholesalers don’t require a license as real estate agents do. The answer is yes, it is legal, and it can be quite lucrative. Depending upon the amount of effort invested, a wholesaler can make between $5000 – $10,000 in commissions, per property.  Alternatively, a real estate agent averages around $45,000 base pay in commissions annually.  Of course, these are only income projections.  The earning potential for both service providers in the real estate industry is mostly limited by motivation and ambition.  In other words, income for both careers can vary, and earnings are linked to one’s ability to effectively research the market for viable money-making opportunities.

Differences in Startup Costs

The costs to start doing business as a real estate wholesaler are minuscule, and that’s part of the appeal of this position.  Most of the tools required to successfully buy and sell contracts are probably on-hand, such as a computer, internet connection, and a place to work which could be in one’s own home.  There are no membership dues or broker fees, and there is no requirement for training classes or fees associated with obtaining a license.

On the other hand, the startup costs for real estate agents can be hefty.  While no official education is required to become an agent, classes are recommended in order to successfully pass the state real estate examination to obtain a license.  These training classes start at $100 and go up depending on the course package.  There is a fee for the license too, which varies from state to state.  Additionally, an agent needs to pay broker fees as well as Realtor membership dues.

Which Real Estate Prospect is Best for You?

The answer to this question depends upon your preferences and expectations.  As discussed, there are many differences between these two housing industry careers. However, both titles have the potential to be very lucrative.  While the startup for a realtor might be pricey, those costs can offer assurances a solo wholesaler might not have.

Each position offers flexibility because both a wholesaler and an agent typically work independently.  The biggest decision-making factor is how much effort you’re willing to put into either career because both jobs require a self-starting attitude.  Additionally, both careers demand long hours hunting down leads, contacts, clients as well as finding the right properties that win the income you deserve.