Suggestions on how to hide my wholesale fee

12 Replies

I have a deal the property is uc for 600,000 I have a buyer for 650,000 I know 50k is a lot to swallow for some buyers if I double close after my realty transfer tax and my flash funding costs and expenses I am looking at 18k in costs. I am thinking about just assigning. I wanted to know if anyone had a creative way to conceal what I was making until the buyer  puts down the 50k non refundable. The seller has 30k as a deposit from me  and I am only liable for the deposit so if the buyer gets mad about the 50k I am OK. So anyone have an idea on how to keep what I am making a secret until the assignment is signed with his deposit in my account? One investor said he will have the buyer sign a separate contract as if we are double closing and then after the deposit is made just suggest they do an assignment instead.  That way his deposit is tied up.  Only problem I see is that  he might try and ask for a reduction in price knowing the cost of a double close. Any ideas would be great

@Jeffrey Carusotto I know that you haven't heard from any others regarding creatively structuring it, so maybe there is a way to go forward with an assignment while ensuring that the $50k assignment fee will be non-refundable. But if I were you, I'd give this some careful consideration because even though the $50k is less than 10% of the purchase price, the C Buyer may balk at the assignment fee and demand a lower fee. If you don't do it, then they may walk. You know your buyer best and how they may react to the scenario, but it may be worth it to pay for the funding. This is a pretty high-priced wholesale deal, so I'd be interested in hearing from others who are wholesaling with this price point. Is a $50k assignment fee considered reasonable when the purchase price is this high?

@Jeffrey Carusotto @Shari Peterson

can't help on the structure but can tell you how I would feel I just had this happen to me on a deal I bought 2 weeks ago in Charleston

wholesaler presents me a deal for 190k I do some research and see he has recorded an option to buy it for 100k.. I call him and ask him if he does not think a 90k fee's is a tad strong.. he hims and ha's blah blah balh.. and I tell him your just taking to much of the sellers money here I am going to pass.. ( he knows me as a very STRONG cash buyer) well then it turns out the lady owed 210k against it so then they try to put it on the MLS for 270k at that price its not a deal...

long story short they come crawling back.. and I dictated what I thought was fair.. the lady got nothing it was a sale for what was owed and I gave them 5k for their trouble which is what this was worth to me...

So if I was you I would tread lightly and your correct buyer may no be too keen and do what I did and say pass... best is to Have Shari give you the flash cash and close and make what you make before you lose your deposit..

just one perception... and a recent experience I had.

A quick nickel is better then a slow dime... 

@Jay Hinrichs you have high integrity. I'd love to connect with you. If I come across any deals that make sense, is it ok to contact you?

I guess we don't see eye to eye. I see it as non of your business what the guy is making on the deal.  Who are you to say he is taking to much money from the seller? I am not only a wholesaler I also rehab so to me if I don't make 50k I only make 10k I would rather just do it myself then only make 10k. I never worry what someone else is making.  You are going to turn down a million dollar deal because someone is making to much money?  I guess I am glad people think like that because I will pay the 50k and get the deal rather then miss out worrying about what is in someone's pockets.  I am just looking for a way to have his 50k then I hope he backs out so I can bring it to another buyer and make more. 

to each there own.. that's how the world works that's for sure.. I rarely buy form wholesalers for these very reasons it just seems like the underbelly of our business..  and the vast majority were like these kids  did not bother to check title before they market the deal

and if you think ripping off little old ladies is OK well that yours character not mine.

Don't  want to debate ethics lol. I just wanted to see if anyone has anyway  to structure it so I can get there deposit before they see what I am making.  I don't rip anyone off I buy at what they are wiIlling to sell it at. 

yes but would rather make a quick 50k why do ask?

Just on the whole ethics thing, which I know isn't why you're posting here. If everyone is "willing"--the seller at their price, the buyer at theirs, and you at both--then I don't see the issue. 

It shouldn't make any difference to a buyer what a wholesaler is earning. The buyer should only buy if the deal is a good one for them. If it is not, pass. I recently paid a $45K assignment fee on a $150K purchase. It was right in the open. That was far higher than I have ever paid before but I thought the deal was a good one for me. I flipped the deal 45 days later (that was not the original plan) and all I did was pull a couple dumpsters full of trash out of the house. (I estimate there were at least 10 more dumpsters left--it was a hoarder house.) I made $30K. I guess I was right that it was a good deal. I will be happy to pay that kind of wholesaling fee again for a another deal like that.

In answer to the OP question. You can use 3 documents. The first is your purchase agreement for the property--your agreement with the seller and yourself. The second is your purchase agreement for the assignment--this is your agreement with the end buyer. When they pay your assignment fee you then execute the actual assignment agreement.

I am an advocate of openness and would rather work with people who disclose what they are doing. I find it easier to find people to do multiple deals with that way but as I know (and can see in this thread) there are too many people in this business who pay too much attention to what the other guy is earning and not enough attention to their own business.

Thanks Jeff I am glad there are people like Jay hindrichs the deals they pass up on because the wholesaler is making to much money more deals for us lol.  So I was under the impression that you had to show them the original a to b contract before they would put down the deposit because they need to see what they are getting assigned? So aren't they going to need to see the original contract before they put down the money to make sure the contract says they need to give up there first born lol

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