Negotiate with a Wholesaler

[Reggie Rearden]

A wholesaler contacted me about an SFR. I'm very interested in this home as a flip. Do we negotiate prices with a wholesaler the same way we do with off-market and MLS deals? The wholesaler gave me a price of $65K. After adding granite and changing carpet to laminate flooring, the realtor I generally work with said the house would list for $108K. I'm estimating around $10K for those and some other light rehabs. This would potentially be my first flip but I could also add it to my buy and hold portfolio as a secondary strategy.

[David Lee Hall, III]

@Reggie Rearden

You can negotiate. You have no idea what he/she has it under contract for. If he has it under contract at $60,000 there is t much room, but if he has it at $25,000 there is plenty of room to come down.

Example here:

$108 sale price

10% sale cost: $11k

5% Purchase costs: $6k

2.5% holding cost: $3k

Rehab: $10k

Minimum profit: $20k

So I wouldn’t pay over $58k (MOA)

I would probably offer $53 and negotiate up as needed not going above me MOA.