Arnold, MD · Member since 2014 · 28 posts · 7 votes
Does anyone have any insight into Wholesaling in Maryland?
I was doing my homework and looking around the site but can't find this. A rehabber I know said he didn't want to get into wholesaling because the taxes and fees are too much and not worth it. I want to disagree with him but know enough about it yet and I wanted to get the members on this site's input who practice in Maryland.
Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
12y
Welcome to the BP Nation.
I'm not sure I understand the "taxes and fees are too much" concept with wholesaling . . . as a wholesaler, you are assigning your interest in a property to an end buyer for a fee. What that fee is is directly proportional to your ability to negotiate - unless you have the truly motivated seller who wants to be done with the property yesterday and is in fire-sale mode. The deeper the deal, the more room you have to play. Everything is negotiable in real estate but my experience is the END BUYER is the one paying the taxes and fees. The wholesaler is not. MD is the "if you can dream it, we can tax it" state so again, there has to be a good spread for all parties to have a win-win. Taxes and all the closings costs equal thousands of dollars in MD.
Ok. I get the assignment of interest concept. However lack of experience prohibits me from knowing all extraneous fees that go along with the transaction. So as a wholesaler in Md. you get the seller under contract, with disclosure that you intend on assigning it to another person, than market the property and find a cash buyer, and transfer the interest to them. Where and what fees take place? You said the fee is negotiable, in your experience, how do you go about negotiating that fee and what exactly is it called?
Forgive my remedial questions, for some reason I don't feel like I'm envisioning this process fully in my head and at this point, it's all I really have to go off of :)
Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
12y
Your wholesale fee is what you want to be paid in exchange for assigning your interest in the contract. It is typically the spread between what the seller accepts for sale price to you and what your end buyer accepts for sale price from you. That can be as slim or as wide as you see fit based on your ability to negotiate the deal and your own moral compass (this has and is always debated to death here on BP about what "is" and "is not" a "fair" wholesale fee). when you wholesale you are selling your rights to the contract. You are NOT selling a property.
Listen to podcasts here by wholesalers and do a lot of searching on wholesaling.
Investor · Hagerstown, MD · Member since 2014 · 299 posts · 140 votes
12y
@Tony Leighty A wholesaler friend of mine said that he has to pay the fees to the attorney to work up the contracts. But this is just offset from his wholesaler fee, or commission. In our case, he knew that we were looking to purchase a property and asked if we'd like to see it this one. He then asked what we would offer. He then goes to the owner and offers about $5k less (that's what he will take as his fee) and then if the offer is accepted, the sale gets transferred to us at settlement. We, as the buyers, would pay the taxes and title fees.
However, I also know that some wholesalers get properties cheap and then resell them at a discounted price. They don't find their buyers ahead of time. I guess this would be where the "taxes and fees too much and not worth it" comes in?