Phoenix, AZ · Member since 2017 · 135 posts · 294 votes
6y
Just buy the house yourself and rent it out. If you haven't signed anything yet, then you aren't their agent yet and have no legal responsibilities. You don't need to be an agent to buy directly from another person, just skip the agent part all together and have a lawyer draft up a contract.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
6y
@Michael J Scanlon why not just list the place for them? If they will go that low, you should have no trouble selling it and you will get a lot of experience. As an agent, it is really hard to wholesale as you have to have the client's best interest in mind. It is NOT worth losing your license over one listing.
Real Estate Agent · Nampa, ID · Member since 2017 · 439 posts · 361 votes
6y
I would list it. It puts you in a sketchy position to make income on both the commission and the wholesale. And, although your intentions may be pure, they will not appear to be pure to all involved in the transaction. I would list it low and let the market dictate the price. I would also make it VERY clear that the seller will make no repairs.
Phoenix, AZ · Member since 2017 · 135 posts · 294 votes
6y
Just buy the house yourself and rent it out. If you haven't signed anything yet, then you aren't their agent yet and have no legal responsibilities. You don't need to be an agent to buy directly from another person, just skip the agent part all together and have a lawyer draft up a contract.
Realtor · Chicago, IL · Member since 2019 · 222 posts · 153 votes
6y
@Bob Daniels
I'm trying to verify that the HOA would allow renters. My ideal is buy and hold but the seller believes the HOA does not allow renting. The association hasn't answered their phone yet today.
The best thing you can do for them is to put that property on the open market and get them as much as you can for it. Make it a 1 day sale price and have people falling over each other. There is absolutely nothing you are doing to help them at all by getting into a contract you are unable to hold up your end of the bargain on. If you were looking to purchase it yourself you could make a case for giving them a lowball number. However you are not buying it, you are simply trying to get all of the equity between what they will take and what you can get someone to pay. If you want to buy it first that's fine.
As far as not needing the trouble, as an agent you can get that property in front of more eyes this afternoon than you ever could as a wholesaler. Put a note must close quick. I've sold tons of property that are not able to be viewed for liability reasons. Plenty of "not show ready" and even some sight unseen with one picture of the outside. To put it on the MLS nothing says it has to have pretty pictures or be staged.
The right thing to do is to help this friend sell their house. Heck charge 8-10-15-25% commission because it's a tall order to dump this thing. Commissions are between you and the seller and for anti trust reasons there is "no standard" commission.
Realtor · Chicago, IL · Member since 2019 · 222 posts · 153 votes
6y
@Mike Cumbie
I guess I wasn’t really aware that I could charge such a high commission because it’s a very small deal (comps are wildly different in the same condo complex for the same exact 2 bed 1.5 bath ranging from $36k to $79k over the last 6 months to a year) so there’s not a lot of money to be made.
If the condo association will allow renting, I can offer them a better price if they would do seller financing but I guess it’s either that or list it as wholesaling would be tricky.
Yeah I've done land at 10% and mobile homes in a park for a minimum fee. If I have one where they have dogs and can only show between 6-7:30 on the fourth Tuesday of the month and they want me at all showings. I charge more. If it has to close within 30 days, it's more money because it's a rush. No real reason to Wholesale when you can set your own pricing.
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
6y
@Michael J Scanlon does your local association of realtors require that you disclose to a seller whom you are buying from, or a buyer whom you are selling from, that you carry a real estate license? If so, and you do disclose and make it clear in your disclosure that you are not acting as an agent or providing representation, I don't imagine you'd be barred from engaging in real estate investing activities.
I think it's best to be clear with the seller and say- hey, I'd like to buy this property myself at this price, just so there is no reason for anyone to be upset and create a mess later.
Best source for this question if you really want to be technical is your broker (but I could see why you wouldn't want to approach them) or an administrator of your association.
Realtor · Chicago, IL · Member since 2019 · 222 posts · 153 votes
6y
@Elliott Elkhoury
It’s so hard to gauge because within the same condo complex, this past year a few (all 2/1.5) went for about $79k. Then a few (also 2/1.5) went for as low as 36k and 39k
So an end buyer is somewhere between $36-79k all with similar features/Reno work
A fair cash offer is $25k in my opinion as a wholesaler (70% of the lowest fair market value)
List it for 45K with a 5K commission (Assuming it can go FHA/VA/Conventional). If it doesn't sell drop the price 1K a week till it does. At that price though I would expect a cash offer.
Rental Property Investor · St Augustine, FL · Member since 2019 · 74 posts · 47 votes
6y
@Michael J Scanlon I believe the real question is: which is more important to the seller?
Would they rather the guarenteed quick cash (purchase yourself) or longer sale to net more $?
I come across sellers frequently who would rather the quick cash for whatever reason, which is sometimes hard to believe but “give the people what they want”.
Rental Property Investor · St Augustine, FL · Member since 2019 · 74 posts · 47 votes
6y
@Michael J Scanlon there you go. Seems like a no brainer. Either buy it and pay closing costs (should be less than 1k), then resell or rent it for the flow.
If they want it gone quick and not to deal with it, give them what they want yourself. If you feel a moral obligation to them, just cut them a check as a “thank you” after you’re cashed out, I do this sometimes.
The other option is list it if you know that it will close quick with another cash buyer from MLS (and let someone else make the $?). In the eyes of the seller (wanting their cash quick), they may not even want to do this if they know there's an option to cash out now.
People on BP lately have been shaming for buying property under market value, which makes no sense to me. The seller is the only person who knows what they want.
Rental Property Investor · Grass Valley, CA · Member since 2010 · 69 posts · 21 votes
6y
@Jacob Kline I agree with Jacob. The moral police are always out here giving advice do they can pay themselves on the back without knowing all the details of each unique situation. So if someone is potentially going to buy it for half price anyway, and then the seller still owes commissions are you really looking out for their best interests to list it? I’ve seen some horribly unethical behavior by agents and brokers before who go to church every Sunday. Not all are bad of course but it’s not a guarantee that a fiduciary duty is even a motivation for them.
Disclosure is everyone’s friend. Write it up as a principal to the transaction. No listing fees. Sell it quickly or close on it. Everyone’s happy. Or satisfied at least.
I’ve found that either you are a person with ethics and a sense of integrity or not. Fiduciary or no fiduciary.
Each situation is different. Go with your gut. Good luck.
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
6y
I can’t honestly believe this many people are on board with screwing a family friend’s grieving family. That’s what this is. Fair market would bring the same cash buyers that close quickly. It would just sell for fair market value. You are proposing to take the equity yourself because they are desperate. How’s is being much worse and bringing worse buyers than literally any agent of the street helping them? If it’s worth 36k then list it and an offer should roll in quickly. That’s so small any offer you get will be cash anyway. Zero advantage for your great family friend. 17k disadvantage to them for knowing you.
The argument that other agents or just people in general can be unethical so it’s fine if I do can’t be serious. If your wife met someone who cheated on her husband is it fine if she cheats on you too? That’s an argument my 5 year old makes when she hits her brother. “He did it first.”
Also, why would you deserve a 5k commission? What would any agent off the street charge them? Should the family friend be double or triple the commission of the stranger?
Wholesalers are great to help people get off dead assets that aren’t doing anything with them. Your family friend is obviously trusting you.
Lay out your whole plan on how you’d sell their place their place for 80% of value. You get 30% and they get 50%. Vs them calling a stranger and getting 90% after fees. All with same closing date. See what they say. Be a good Facebook live video. #wholesaling 😂