How to wholesale? Am i doing this correct?

Question

So honestly don't do wholesaling at all unless i would have to. So i found a deal recently out of my area from where i usually buy for $195k. Supposed to be worth maybe $230k. So i got under contract for $195k and had everything lined  up to put on MLS for $230k and thought i told my realtor not to say what we would list it for but she told them i believe and they said they wanted it gone fast and didnt want to wait around and they would have listed it with a realtor if they knew i was doing that which i told them but they didnt want to wait around which for maybe 215-230k maybe would have sold fast and they get there 195 but they just backed out. I was gonna pay realtor fees from my end and closing costs and what not. Did i mess something up? How do you correctly structure a wholesale deal? i have it where i get it under contract and its assignable and i was gonna put on mls like im seller but with mls i think realtor needed them to sign to put it on. Then when we found buyer i was gonna have them sign a new sales contract where im seller. What am i missing?

Paul Crutcher · Answer

Brandon Turner does mention in his book "the book on investing with no and low money down" about wholesaling that being honest from the beginning about what your intentions are usually make for a happy deal all around.

Joshua D. · Answer

@Stephen Keighery Thank you very much for the response. Yes i knew all that just was wondering about doing it that way. My attorney said i could and realtor said i could list it on mls as long as the contract is assignable. Usually fixer uppers and stuff i get with cash buyers but im meaning as something ready to be listed on mls and yes i understand wholetailing also. So your saying this isnt the best approach? Just ethics are what is in question and my realtor said wanted to tell them what we were doing which is what messed the deal up.

Stephen Keighery · Answer

You are missing a lot. Wholesalers generally have a network of cash buyers that they work with. If they get a deal under contract then they will contact the relevant buyers and assign them the contract. You can't put a deal on the MLS if you don't have title to the property. If you want to do that you need to close on the property then list on the MLS. This is generally what is referred to as a "wholetail". Also you won't move a lot of properties at the price you got. Everyones buying criteria is different but the general rule of thumb is an investor will pay 70% of the After Repair Value minus the repair costs. They need this discount to justify the time it takes to rehab, the holding costs of the property and the risk they are assuming. I suggest you go on Youtube and learn more about wholesaling. Wholesale Hackers is an excellent channel as is Max Maxwell. There is a lot of free information out there. Start to consume it and build your knowledge base.