How Do You Professionally and Fairly Earn Your Wholesaling Fee?

Question

Hello Wholesalers!

Thanks for taking the time to read my questions today - I need some help/advice from wholesalers who have experience in successfully connecting buyers to sellers and getting your cut!

I have not yet made my first deal, but am in the process right now.

Quick Background Story:

At first, I think that my mindset was more about secrecy and getting the seller to agree to some amount, say $120k sale price, and then assigning the contract to my cash investor at higher amount, say $125k, and the title company would cut me the difference.

However, I think this mindset is wrong - and the wholesaling fee should be a transparent agreement between the investor and the wholesaler that found the deal. However, I'm worried that I lose power to charge a wholesale fee unless I do an assignment of contract.

My Question: Exactly what methods of agreement/processes have you successfully used to bring a seller to a buyer and get your wholesale cut?

Any other advice other than this question is very welcomed - you may be able to tell from my background that there are gaps in my knowledge that need to be filled.

Again, thank you for taking the time to read this message, and I look forward to your reply. Either reply to this post or message me to my inbox.

Sincerely,

John Hall

Barry Pekin · Answer

@John Hall,

I totally recommend transparency. When I make an offer to the seller, I am very clear about the method I use to come up with the offer(s) and I include my profit in that calculation. I explain how I work, how I need to buy at a discount, why, and where all that "extra" money goes. If you're not transparent, then they think you're going to make a killing because they don't know about all of the related costs to flipping a house.

As for going to buyers, they really shouldn't care, and if they do, they're not necessarily a good buyer. Assuming you're successful at finding good deals, and they're complaining that you're making $10k instead of $5k, then you're probably not going to bring those deals to them. Why? There are plenty of buyers who don't give a rat's a$$ what you're making. What's important is how good the deal is to THEM! In fact, if you have a deal where it's on the thin side, you might consider offering it to them with a very low fee. They will see that your priority is to bring them a good deal. And then when you have one that's a huge fee, they're going to be nothing more than happy for you - and for themselves, considering they're still getting a good deal.

My buyers tell me outright that they don't care what I'm making as long as it works for them.

John Hall · Answer

That makes a lot of sense, Barry. Thank you for your very helpful reply!

I feel like I now have a full understanding of how I can professionally and fairly earn a wholesaling fee that I deserve.

Thank you everyone for your replies, and I wish you the best of luck in your endeavors!

P.S. If you are a cash investor looking for wholesalers in the CT market, look no further!

Cordially,

John Hall

Kyle J. · Answer

I'm not a wholesaler, but I have bought from wholesalers. In the above example you gave where you get a property under contract for $120k and then assign it to a cash investor (end buyer) for $125k, there actually is no "secrecy" in that process. At least not with regards to what "wholesaling fee" the end buyer will be paying you.

You'll be assigning the end buyer the contract you have with the seller, so the end buyer would see that you actually have the property under contract for $120k. If they agree to pay $125k, simple math will tell them you're making the $5k spread (i.e. your "wholesaling fee") on the deal. It'll also be listed on the final closing paperwork from the title/escrow company (or whoever handles your closing). I have a line item on my closing statement that says "Assignment fee to XXX (name of wholesaling company)", along with the dollar amount.

So, it really is transparent. If the end buyer is getting a good enough deal, they won't care. Just be sure you bring value to the buyer and the seller, and hopefully nobody will care. I know I wouldn't expect anyone to work for free.

John Hall · Answer

That makes a lot of sense - thank you very much for replying.

I need to understand that's it's all a transparent process, and so I don't need to stress about that.

I only need to figure out myself, based on the specific deal, what fee I decide to charge - as long as all parties are happy and making plenty of profit, then hopefully nobody will care!

I really appreciate your time and your detailed, quick response! Thanks and best wishes to you.

Sincerely,

John Hall

How Do You Professionally and Fairly Earn Your Wholesaling Fee?

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