In the wholesale real estate market, 85% of properties that go under contract successfully reach the closing stage. This key metric, known as the Contract to Close Ratio, is vital for investors, particularly wholesalers, as it reflects their efficiency in converting potential deals into actual sales.
Explanation of the Contract to Close Ratio
- The Ratio: Represents the percentage of properties under contract that successfully close, serving as a measure of a wholesaler's effectiveness.
- Securing the Contract: The process begins with a wholesaler agreeing on a purchase price with the property owner, putting the property under contract.
- Finding an End Buyer: The wholesaler then finds a buyer interested in acquiring the property.
- Closing the Deal: The transaction completes when the end buyer purchases the property, allowing the wholesaler to earn a commission.
Conclusion
The Contract to Close Ratio, averaging between 80% and 90% with an industry norm of about 85%, is crucial for evaluating a wholesaler's success in the real estate market.
