Who pays the Wholesaler?

Question

Ok I always hear "link Up with a RE Agent" so I have. The problem is now I come across quite a few Investors that want cheap deal like $25k and lower. A Real Estate agent sends me a listing of properties under 10k that I don't know what to do with. Im still learning the Wholesale part: find a property, put it under contract, find a buyer, add your fee. Ok so my question is how does this process work with a RE agent? She provides me with listing 10k and lower, how do I present this to an Investor? How do I get paid and the agent. The REagent did tell me that the seller pays her, but how do i get paid? I hope I am asking the question right.

Kristi L. · Answer

We can always reap good advise here on BP. This place is a wealth of information. I'm so glad I happened upon it.

Frank O. · Answer

This is all good information. I'll have to refer to this thread later when I start figuring out much more about wholesaling

Louise Whidby · Answer

Thank you everyone! Ned Carey I will keep that in mind. My mentor says he doesn't fool with it. Wouldn't it benefit me to have a Real Estate Agent in my corner. I think they would have a problem giving me comps if I didn't get them deals.

Wayne Brooks · Answer

Louise Whidby You get paid one of two ways, with or without a realtor.
1) Put the property under contract, find a buyer willing to pay you more than your contract price.  The difference is paid to you as an assignment fee, when you assign your contract to the buyer
2) You put it under contract, buy it then resell it to the end buyer.

Louise, there are hundreds of threads here on wholesaling.

Ned Carey · Answer

Louise, To "wholesale" a property you have have it under contract.

If it is a listed property the agent gets paid at settlement.

Your fee is comes from the difference between what you have the property under contract for and what you sell it to your end buyer for.  Your fee  also generally gets paid at settlement but you can collect it up front if your buyer will do that. Generally you will collect an earnest money deposit from your end buyer and the rest comes to you at settlement.

A second option is to get a referral fee for passing the deal along to another investor.  This is called "bird dogging."  However most investors don't feel getting a deal passed along from the MLS is very valuable service and wouldn't pay much if anything for the deal. There are also legal implications to taking that fee, but people still do it.

Personally I don't think wholesaling listed properties is a very practical idea. Yes I know people do it, some very successfully. That doesn't make it easy or practical. Firstly most contacts you will use on listed properties specifically say the contract may not be assigned.  Secondly why would someone pay you more than they could have bought it for themselves on the MLS.

Good luck - Ned

Patrick G. · Answer

I've always held to the philosophy that no matter how you word it, the buyer is paying all the fees.

The buyer is the one bringing all the money to table.  Whether he pays money directly to the wholesaler/agent or he pays the seller then the seller turns around and pays the wholesaler/agent is irrelevant.  The fact is that 5 minutes ago that money was in the buyers pocket.

Obviously your question has more to do with how to structure the paywork, which I honestly can only sale that my opinion would be to structure it into the sellers part, so you can advertise the property for X dollars and the process is simplier for the buyer.

Chris K. · Answer

You could argue either way that the buyer pays or that the seller pays. Either way all parties get paid at closing including you.

Aaron Yates · Answer

Louise Whidby, you get paid when you close the sale with the end buyer as does the real estate agent and the seller.

Who pays the Wholesaler?

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