Wholesale fees - what are some rules of thumb to follow?

4 Replies

I know there’s a ton a variables that come into play, but what are a couple rules of thumb to estimate how much a wholesaler should be charging for a deal? Is 10% of the potential profit a rough estimate? For example, if I stand to make a $50k profit, would a $5k fee be reasonable?

The long answer is that 'it depends'.  I don't think that there is a specific amount that a wholesaler should make on a deal.  However, that can be influenced by local norms.  If you're in an area such where the average fee is $2,000-$10,000 that's one thing.  However, I doubt that would fly in California where the price of a house is much higher.  Hence I'd assume that the fee would be much higher.  It looks like you're in Gainesville, FL.  So I'm guessing the lesser of the two scenarios would apply.  

$10k Minimum to cover your marketing, fees, overhead, etc. If you are only looking at a fee of $3k and there is a dispute with who pays closing costs or additional holdings costs because one person can't close in time, there will be a very heated discussion when your fee is cut 30%+. (Currently dealing with this)

If your fee of $10k wipes out the profit then maybe its not a deal for that buyer anyways.

Wholesaling isn't about charging a fee. It's about finding a discount and reselling it. There is no fee involved and the better the deal the more you make. This is how people get in trouble.