How much should I get as a wholesale fee for a $4 million deal?

[Jacob St. Martin]

Hello everyone,

I am a real estate investor near charlottesville va, and do not specifically focus on wholesaling but will occasionally wholesale something if I think it is a good deal but doesn't work for me. I found a property that is 150 acres with 4 STR cabins that are performing well with huge room to expand. The price the seller gave to start was 4.25 million, I think I can get them a good bit lower but even at this price I have an interested buyer. My question is how large of an assignment fee do I collect on this? I see people take 10k on a 100k property but if you were to scale that to 4.25 million that is $425,000 which seems egregious. My buyer is also a charitable organization that I believe in a lot so I plan to take whatever a "reasonable" assignment fee would be and take substantially less but would still like something.

Thank you in advance!

[Larry Turowski]

@Jacob St. Martin the correct answer, generally speaking, is it doesn't matter as long as it is still a deal to the buyer. However, I applaud your considering your conscience. Not enough of us do that.

It might be helpful to consider a story. John is a car mechanic. Dan needs a new transmission. This would normally cost $2,000, but he asks John for a "friend" discount of $500 for a total cost of $1,500. From Dan's perspective, John does not lose out on anything but Dan save's $500. However, in economics/accounting, that $500 didn't come from nowhere. It came from John. John could have worked on someone else's transmission and made $2,000, or maybe he could have just had a day off. (These are opportunity costs John gave up). In economic reality, John loses out of $500 and Dan gains $500. There is a $500 gift going on. Why not have it go the other way? Why doesn't Dan offer to pay $2,500 for John's services because John is a friend?