Seller Financing through a Wholesaler

Architect · Pittsburgh, PA · Member since 2016 · 31 posts · 9 votes

Has anyone ever bought a property with seller financing through a wholesaler? I'm sure wholesalers prefer all cash offers or am I mistaken? I figure as long as the wholesaler finds a buyer and they make their fee, what does it matter to them what the financing looks like on the other side? What does that structure look like? Is it possible (and legal) to both pay the seller on terms and also get the wholesaler his/her fee in the deal?

I'm wondering if anyone has ever done this and if so, how did you structure and negotiate everything?

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Michael Dumler

Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes

@Randy Hunter realistically, it's the original owner of the property that wants the cash sale. Keep in mind, the wholesaler is assigning the contract to an end buyer, they never close on the property unless the deal is structured for a double closing. If the wholesaler closes on the deal, then maybe seller financing can be arranged with the end buyer, but I don't see how their assignment fee would be included in the transaction. Hopefully, others can shed more light on this topic!

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Michael Dumler
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
4y
@Randy Hunter realistically, it's the original owner of the property that wants the cash sale. Keep in mind, the wholesaler is assigning the contract to an end buyer, they never close on the property unless the deal is structured for a double closing. If the wholesaler closes on the deal, then maybe seller financing can be arranged with the end buyer, but I don't see how their assignment fee would be included in the transaction. Hopefully, others can shed more light on this topic!
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David Avery
Flipper/Rehabber · Phoenix Arizona · Member since 2020 · 1k+ posts · 686 votes
4y
So a wholesale deal is when the owners of the property are in big trouble with paying on their loan.
The wholesalers find out about these deals and approach the owners, Sometimes 4 wholesalers will be working a house. I have emails on the same address from three different wholesalers.
Wholesaling will be against the law shortly because they practice selling houses. Only attorneys and RE agents can do this.
Double closings are very , well I have seen almost fights in lobby's of closing companies where this happens.
Can you imagine that your mom was behind in her payments and a wholesaler grabbed her $125,000 equity and sold it and the wholesaler made $25,000 and someone else bought the house and have almost $100,000 equity?
Most wholesalers wouldn't even think about their best friends that have the money to buy it and split the profits with them. Or buy the house themselves because they have no credit, down payment, ability to get a loan, or brains to figure it out!
It happens all the time.
Be careful when working with whoresalers!
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Jesse LeBlanc
Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
4y
Unless the wholesaler is also buying it on the AB side then seller financing to you, then perhaps they might be willing to do a seller carry back for their spread or assignment. Holding the note as a wholesaler with an end buyer on a long term rental is AWESOME for both wholesaler and end buyer. I always suggest wholesalers doing this if the spread isn't life changing for them at the time. being the bank is where it's at. :)
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Nick C.
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
4y
This isn't impossible, but it will take an extremely unique situation. To get the property under contract in the first place the wholesaler is promising the seller a quick, cash sale. You'd have to convince the wholesaler to skip over any other cash offers they're getting to go back to the seller to try to convince the seller to take seller financing instead of the promised cash. And pay the wholesaler an illegal commission for brokering the deal. This would take an uneducated desperate wholesaler and an uneducated, desperate seller to pull off. You're not likely to find either with the ease of selling houses these days.
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
4y
This is like looking for a needle in a haystack, but first having to find the haystack drifting somewhere in space. This would be overcomplicating things in order to find a miracle. If you want to buy a property with seller financing, you are most likely going to have to find that yourself because the one thing that most won't tell you about seller financing is that the seller is not doing that type of deal if they don't like you and if you are an ancillary party asking for that, you are nothing to them.
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Randy Hunter
OP
Architect · Pittsburgh, PA · Member since 2016 · 31 posts · 9 votes
4y
Quote from @David Avery:

So a wholesale deal is when the owners of the property are in big trouble with paying on their loan.
The wholesalers find out about these deals and approach the owners, Sometimes 4 wholesalers will be working a house. I have emails on the same address from three different wholesalers.
Wholesaling will be against the law shortly because they practice selling houses. Only attorneys and RE agents can do this.
Double closings are very , well I have seen almost fights in lobby's of closing companies where this happens.
Can you imagine that your mom was behind in her payments and a wholesaler grabbed her $125,000 equity and sold it and the wholesaler made $25,000 and someone else bought the house and have almost $100,000 equity?
Most wholesalers wouldn't even think about their best friends that have the money to buy it and split the profits with them. Or buy the house themselves because they have no credit, down payment, ability to get a loan, or brains to figure it out!
It happens all the time.
Be careful when working with whoresalers!
Thanks David. I am confident there are trustworthy wholesalers out there, but I definitely keep my guard up.
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Randy Hunter
OP
Architect · Pittsburgh, PA · Member since 2016 · 31 posts · 9 votes
4y
Quote from @Nick C.:

This isn't impossible, but it will take an extremely unique situation. To get the property under contract in the first place the wholesaler is promising the seller a quick, cash sale. You'd have to convince the wholesaler to skip over any other cash offers they're getting to go back to the seller to try to convince the seller to take seller financing instead of the promised cash. And pay the wholesaler an illegal commission for brokering the deal. This would take an uneducated desperate wholesaler and an uneducated, desperate seller to pull off. You're not likely to find either with the ease of selling houses these days.
I'm currently talking to two different wholesalers. One of them has properties that appear from photos to not need much work, and he's asking for what I would consider close to retail value. Because of that, I don't think their great deals to simply pay cash for but I wasn't sure how to get around that and make it a win-win for everyone involved.

The other person I have talked to, has a better priced deal and also has a personal relationship with the current owner/landlord. Additionally, I think the property may be owned free and clear. When I floated this idea to him, and we discussed it for a minute, he came around to the idea that as long as he was able to make his fee and his owner/friend liked the idea of receiving payments, he'd be open to try to figure it out. I certainly do not want to do anything illegal/under the table.
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Randy Hunter
OP
Architect · Pittsburgh, PA · Member since 2016 · 31 posts · 9 votes
4y
Quote from @Jonathan Greene:

This is like looking for a needle in a haystack, but first having to find the haystack drifting somewhere in space. This would be overcomplicating things in order to find a miracle. If you want to buy a property with seller financing, you are most likely going to have to find that yourself because the one thing that most won't tell you about seller financing is that the seller is not doing that type of deal if they don't like you and if you are an ancillary party asking for that, you are nothing to them.
Jonathan, I appreciate the optimism, lol. But, I get it. My first thought about this whole scenario is that it wouldn't work. But then I figured why not ask the question and see if I'm missing something. I understand the vast majority of sellers aren't going to just give their house away on payments to a total stranger.
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Randy Hunter
OP
Architect · Pittsburgh, PA · Member since 2016 · 31 posts · 9 votes
4y
Thanks all for your thoughtful responses. Let me lay out a scenario for you to poke holes in and tell me it's not possible or legal. Let's say the wholesaler is looking to get no less than $5K out of the deal. And let's say the seller owns the home free and clear, it's a rental property, and for whatever reason, they no longer want the property. They need a little cash for this or that to walk away with. I agree to give them $5K as well, then, the owner/seller agrees to take payments for the remaining balance.
Is it possible to structure the paperwork in this way? I put 10K down, 5k goes to assignor and 5K goes to seller. The rest is on terms. What am I missing?
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