Wholesaling

Wholesaling is an intermediary business practice where a party arranges transactions between suppliers and buyers to earn a fee or margin, rather than taking long-term ownership. The term covers several industries, notably product distribution and real estate. In product wholesaling, wholesalers buy goods in bulk from manufacturers and sell them to retailers at wholesale prices. In real estate wholesaling, a wholesaler contracts with a seller and assigns or closes the contract with an investor buyer, earning a wholesale fee.

Product wholesale involves procuring large quantities, coordinating logistics, and selling to downstream buyers. Wholesalers often provide services such as market access, credit terms, and distribution networks. They generally do not perform final product assembly and do not typically keep goods for long on their own balance sheets.

Real estate wholesaling requires identifying undervalued properties, obtaining a contract with favorable terms, and marketing the contract to investor buyers. The typical profit comes from an assignment fee or a small spread between the contracted price and the buyer’s price. Some wholesalers also perform a double closing to complete the sale, rather than transferring the contract. Real estate wholesaling relies on market knowledge, networking, and due diligence, and is subject to legal rules that vary by jurisdiction; licensing requirements may apply in some regions.

General considerations: wholesalers rely on rapid turnover and low upfront capital, but margins can be thin and deals can cancel. Ethical practice emphasizes transparent disclosures to sellers and buyers, fair pricing, and compliance with contract and licensing laws. The term contrasts with retailing, where products are sold directly to end consumers and ownership of inventory is permanent, and with manufacturers or distributors who sell through channels rather than as single-transaction intermediaries.