Fees and Closing Costs Associated with a Wholesale Deal

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Fees and Closing Costs Associated with a Wholesale Deal

Shawn Burns
Realtor · New London, CT · Member since 2019 · 19 posts · 6 votes

Hi BP, 

I am wondering what closing costs and other expenses I should be aware of when assigning a contract?

I would like to be able to let the seller know what to expect when closing and similarly what to expect the buyer to cover. I know there will be costs for the attorney, title search and any unpaid taxes. What else am I missing and what fees are typically negotiable?


Thanks for the help,

Shawn 

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Brandon VukelichBusiness Member
Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 549 posts · 458 votes
6y

Everything is negotiable.  On a typical deal, we usually negotiate that seller is responsible for their mortgage balance and we (future buyer) is responsible for both sides title, escrow and our local state excise tax.  It adds about 5% to the purchase price but we try to keep the math simple for sellers.  They owe $80k, we offer them $180k and then they know they'll clear $100k at closing.  Best wishes on your journey!

Broker at Multifamily Properties519 Reviews
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  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 549 posts · 458 votes
    6y

    Everything is negotiable.  On a typical deal, we usually negotiate that seller is responsible for their mortgage balance and we (future buyer) is responsible for both sides title, escrow and our local state excise tax.  It adds about 5% to the purchase price but we try to keep the math simple for sellers.  They owe $80k, we offer them $180k and then they know they'll clear $100k at closing.  Best wishes on your journey!

    Broker at Multifamily Properties519 Reviews
    WebsiteView Page
    2Reply
  • Justin A Pratt
    Wholesaler · Kansas City, MO · Member since 2017 · 16 posts · 1 vote
    6y

    @Shawn Burns

    Thanks for starting this thread. I’m looking for some of these answers as well.

    0Reply
  • Shawn Burns
    OP
    Realtor · New London, CT · Member since 2019 · 19 posts · 6 votes
    6y

    @Brandon Vukelich

    Thanks for responding! Does that information get outlined in the Purchase and Sale agreement? 

    0Reply
  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 549 posts · 458 votes
    6y

    Yes, in the PSA. Be sure you point out the total potential costs to your end buyer (flipper). They don't always read contracts thoroughly. Early on my first deals, I had a guy pretty pissed at closing to see all the costs. He obviously didn't read the PSA before signing the assignment agreement but I learned it's best to be very clear from the get go.

    Broker at Multifamily Properties519 Reviews
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    1Reply
  • Justin A Pratt
    Wholesaler · Kansas City, MO · Member since 2017 · 16 posts · 1 vote
    6y
    Originally posted by @Brandon Vukelich:

    Everything is negotiable.  On a typical deal, we usually negotiate that seller is responsible for their mortgage balance and we (future buyer) is responsible for both sides title, escrow and our local state excise tax.  It adds about 5% to the purchase price but we try to keep the math simple for sellers.  They owe $80k, we offer them $180k and then they know they'll clear $100k at closing.  Best wishes on your journey!

    Thanks for the info.  I have my first motivated seller and I know what he is expecting to get for the property.  I want to be as transparent with both seller and buyer as possible.  I assumed I would pay the closing costs out of my assignment fee, but this looks like you have the buyer handle that.  Is that common practice or is it a matter of preference?  My initial plan is to cover all closing costs myself and factor that into the assignment fee.

     Thanks for joining this conversation.  I appreciate your time in answering for a couple newbies.

    0Reply
  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 549 posts · 458 votes
    6y

    My way is pretty typical from what I understand but you are welcome to negotiate to pay anything you and the seller agree upon.  My assignment fee is flat number specified in my assignment agreement and paid by the buyer at closing.

    Broker at Multifamily Properties519 Reviews
    WebsiteView Page
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