I am new to the wholesaling industry and was cold calling local real estate agents to see if they had any recommendations for cash buyers. One woman informed me that she had a cash buyer. She informed me that typically with wholesaling, I'd bring her a deal and she'd refer it to her cash buyer so we both got paid. I understand how the wholesaling process works when I have my own cash buyer but am confused to how this instance would work.
Would she represent me as the buyers agent?
How would I sell the contract to her cash buyer?
Should I expect a lower wholesale fee?
Any answers or insights would be greatly appreciated!
Real Estate Agent · Central Coast, CA · Member since 2022 · 110 posts · 58 votes
3y
Hi @Austin Stamegna - congrats on getting involved with real estate. As a wholesaler, you are selling a CONTRACT for a property sale. The agent is licensed to actually run that transaction. If they are also bringing you the buyer - then they certainly deserve to be compensated for that and their ability to secure with title/escrow is a huge benefit to you and your sellers.
Your contract is with the seller and the agent's contract would be with the buyer. Your contract price should be "low enough" to ensure that it can be sold at a price high enough to compensate both you and the agent for your services.
I would go back to the agent and get clarification on the following:
1. If you bring them the contract for sale, are they willing to handle all paperwork with title/escrow?
2. What fee would they want for bringing the buyer?
Make sure you have the property under contract before sharing it with the agent. Once you know what their fee would be, you would sell the contract to their buyer for the contract price you have in hand + your assignment fee + agent's fee + closing costs. You and the agent would get paid by the buyer through escrow.
Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes
3y
1) She will be representing her buyer, not you
2)If you offer a commission to the end buyer's agent, you can sign a commission agreement with her at the same time you sign the assignment agreement with the end buyer. Her commission will be deducted from your fee. You can instruct her to add her commission on top of your net asking price and offer the property at that price to her buyer. Alternatively, you can also ask her to include her commission on her buyer's side.
3) You sign an assignment agreement with the end buyer giving them the rights to purchase the property taking over your purchase agreement with the seller.
4) If you are paying the agent a commission you are going to get less of a fee unless you increase the price because you are offering to pay buyer's agent commissions.
2)If you offer a commission to the end buyer's agent, you can sign a commission agreement with her at the same time you sign the assignment agreement with the end buyer. Her commission will be deducted from your fee. You can instruct her to add her commission on top of your net asking price and offer the property at that price to her buyer. Alternatively, you can also ask her to include her commission on her buyer's side.
3) You sign an assignment agreement with the end buyer giving them the rights to purchase the property taking over your purchase agreement with the seller.
4) If you are paying the agent a commission you are going to get less of a fee unless you increase the price because you are offering to pay buyer's agent commissions.
Thank you! Is the fee for the real estate agent typically a flat amount or a %? And could you possibly elaborate a little more on what you said in your 4th bullet?