How does wholesaling work?

Question

Hello,

I've been studying how wholesaling works for awhile, but I don't have a clear sense of how you get the property to closing and how you get your "wholesaling fee". For example- if I found a property for $80k and wanted to charge a $10k fee how do I go about that? Do I advertise the property for $90k? And how to you set up the agreement of sale so you are able to get out of it if you don't find a buyer? I wouldn't want to be in that situation but that would be good to know just in case. Any input would be greatly appreciated!

Ryan Dossey · Answer

In MO my closings are handled by a title company no attorney involved. You will typically need to use a Special Sale contract if you are buying As-is.

Kelly Cole · Answer

Thanks Ryan! So do you use just a standard agreement of sale? And do you give the papers to an attorney before or after you find a buyer?

Ryan Dossey · Answer

How I negotiate properties is by being completely honest.

1)Your house is worth ______ according to market value.

2)Your house needs ________ dollars worth of work to get that top dollar.

3) I don't work for free.

4)I can pay cash at a date of your choosing.

5)Knowing your house is worth _______ but needs________ what would you take as an all cash buy out with no contingencies?

Ryan Dossey · Answer

Howdy Kelly. Gonna hop in here before you get a lot of flack. You don't want to "set up the agreement of sales so you are able to get out of it if you don't find a buyer". You want to have other means to be able to close on the property if you can't "find a buyer". You want to make your offers such that it is a great deal for you to buy if you have to.

Typically you are wanting to pay 70% of the ARV (after repair value) - repairs and - your "fee". If you are truly getting deals that cheap you will have NO problems moving them. Where most people screw up and give wholesalers a bad name is not being able to close because they agreed to pay too much. Also I wouldn't count on getting 10k per wholesale deal. It happens but most people typically average at around 3.5k.