Raleigh, NC · Member since 2014 · 18 posts · 4 votes
Everywhere that discusses wholesaling talks about being able to make $500-$20000+ on wholesaling deals. Common basis for pricing things out is of course the 70% ARV less repairs. My question is how you go about determining what you will get paid for the deal? Is it just a matter of feeling things out and trying to maximize it without being excessive, do you do a certain % of the overall cost, or something else?
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
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Originally posted by @Account Closed:
Common basis for pricing things out is of course the 70% ARV less repairs. My question is how you go about determining what you will get paid for the deal?
How much are you able to buy below 70% less repairs? That is your spread. Of course if different investors use a different formula or estimate ARV or repairs less then you, then that will affect the wholesale fee you get.
Investor · Greenwood Village, CO · Member since 2014 · 42 posts · 12 votes
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It all depends on the deal, but you have to leave enough room in it for the wholesale buyer. If it doesn't sell you get nothing, plus you want the buyers to come back to you for future deals.
Raleigh, NC · Member since 2011 · 721 posts · 343 votes
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Daniel,
There isn't a hard and fast rule regarding the amount you get paid. Your local market will offer you the best feedback on a deal. But I think you hit the nail right on the head, "maximize it without being excessive". Also, touch base with other wholesalers in your area. They can give you great feedback. Oh, by the way I do wholesale in Raleigh.
I usually shoot for $5,000. I've done deals with a lot more and a lot less.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
11y
Originally posted by @Account Closed:
Common basis for pricing things out is of course the 70% ARV less repairs. My question is how you go about determining what you will get paid for the deal?
How much are you able to buy below 70% less repairs? That is your spread. Of course if different investors use a different formula or estimate ARV or repairs less then you, then that will affect the wholesale fee you get.
Raleigh, NC · Member since 2014 · 18 posts · 4 votes
11y
@Colleen Chapin@Ned Carey thanks for the thoughts! Do you often find that the seller gets upset when they see a high 'fee' if you do an assignment, or do they usually not take much notice? (and if they do get upset can they pursue anything with it or are you still solid because they've signed already?)
@Roland Paicely thanks! Just a matter of feeling out each situation individually then? Might get in touch with you in the future with a few questions about the Raleigh area if you don't mind
St. Petersburg, FL · Member since 2011 · 57 posts · 30 votes
11y
One of my friends bought a house for 30 and sold it for 90. I bought one for 43 and sold it for 80. MLS deals are going to be skinnier because there's more competition but I see people making better than 10% of purchase price on off market deals. Also comes down to your strength as a negotiator on the front side and the strength of your buyers list on the back end.
Specialist · Denver, CO · Member since 2013 · 134 posts · 81 votes
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Daniel, I like to have a basic template showing my wholesale fee's based on the amount of equity in the deal. This way, the better I do, the more I get paid. As a result, my buyers recognize the added benefit and can anticipate their fee's.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
11y
Originally posted by @Account Closed:
@Colleen Chapin @Ned Carey thanks for the thoughts! Do you often find that the seller gets upset when they see a high 'fee' if you do an assignment, or do they usually not take much notice? (and if they do get upset can they pursue anything with it or are you still solid because they've signed already?)
The seller may not even notice the assignment fee because it is on the buyers side of the hud-1. They are looking at what their fees are, not the buyer's fees. I often wind up double closing so the seller never sees the fee anyway.
Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
11y
Make as much as you can and still be able to deliver investor a great deal.
Your wholesale profit will be determined by your ability to find and negotiate killer deals.
Financial Advisor · Raleigh, NC · Member since 2013 · 71 posts · 11 votes
11y
Originally posted by @Account Closed:
Everywhere that discusses wholesaling talks about being able to make $500-$20000+ on wholesaling deals. Common basis for pricing things out is of course the 70% ARV less repairs. My question is how you go about determining what you will get paid for the deal? Is it just a matter of feeling things out and trying to maximize it without being excessive, do you do a certain % of the overall cost, or something else?
It absolutely depends on the deal and how you structure the deal. If you're are presenting a deal that is actually at 70% ARV less repairs, the investor will not care how much you are making on the assignment. I go into every wholesale deal with the expectation that my cash buyers net more profit on their flip than I do on the assignment.
The HUD will reflect the assignment fee. I have been at every closing where I have assigned a contract over. I have never had a homeowner question anything. Be transparent at the front end with everyone and the closing will go smooth.
BTW if you come across any 70% deals in Raleigh, PM me. I don't care how much you make on the deal. If it's in my target area, I'll take it...
Financial Advisor · Raleigh, NC · Member since 2013 · 71 posts · 11 votes
11y
Originally posted by @Anthony P.:
Originally posted by @Daniel Lipetzky:
Everywhere that discusses wholesaling talks about being able to make $500-$20000+ on wholesaling deals. Common basis for pricing things out is of course the 70% ARV less repairs. My question is how you go about determining what you will get paid for the deal? Is it just a matter of feeling things out and trying to maximize it without being excessive, do you do a certain % of the overall cost, or something else?
@Daniel Lipetzky It absolutely depends on the deal and how you structure the deal. If you're are presenting a deal that is actually at 70% ARV less repairs, the investor will not care how much you are making on the assignment. I go into every wholesale deal with the expectation that my cash buyers net more profit on their flip than I do on the assignment.
The HUD will reflect the assignment fee. I have been at every closing where I have assigned a contract over. I have never had a homeowner question anything. Be transparent at the front end with everyone and the closing will go smooth.
BTW if you come across any 70% deals in Raleigh, PM me. I don't care how much you make on the deal. If it's in my target area, I'll take it...
Real Estate Broker · Fort Worth, TX · Member since 2014 · 34 posts · 24 votes
11y
In my market we're operating at 80%. So the 70% is great but when the market is hot you have to know what everyone else is doing. The formula stays the same but the numbers you use need to be adjusted depending on what is going on. You want to maximize profits but your deals need to be as good or better than the other wholesalers in your area.