All Forum Posts by: Account Closed

Quote from @Anna Laud:

@Account Closed  Good post and lots of great feedback here, I think one issue that is missing is SHOULD wholesaling be outlawed and, while I know this will draw fire from some, overall the answer is probably yes at least partially. If you've spend more than one week in any market (I'm primarily in Indy and in the midwest) then you've seen:

- Houses that are "pending" and the realtor thinks closing is coming but it is being fished out

- MASSIVE spam and abuses of people that get HUNDREDS of calls a day from "wholesalers"

- The same deal advertised with 10 different prices

- Sellers who are lied to and taken advantage of

- Wholesalers lying about values, rents, etc.

Yes there are ethical wholesalers for sure but our collective immune system should be stronger and there shouldn't be so many people like this.  Yes I do think eventually the laws will pass in more states and wholesalers will have to provide much more value.  We do a lot of free training by the way on how to build your business correctly with wholesaling.  Hope that helps. Thanks everybody!

@Anna Laud, thank you for sharing your perspective on it! All opinions are valuable, especially those we disagree with. Otherwise, our discussions would sound like an echo chamber))

I will just comment on some of the points you have made:

- Houses that are "pending" and the realtor thinks closing is coming but it is being fished out

Are these houses on MLS, made available to the public? Are they on-market? Because they shouldn't be.

- MASSIVE spam and abuses of people that get HUNDREDS of calls a day from "wholesalers"

There are DO NOT CALL lists and laws in place that prohibit abusive calls. The government should step up and enforce those laws. And it's not just wholesalers, a lot of other businesses subscribe to abusive marketing practices. They all should be prosecuted (they are already outlawed).

- The same deal advertised with 10 different prices

Wholesale deals should NOT be advertised to the public. Wholesalers can NOT sell a property, he can only assign a contract and do a B2B transaction (sell to investors, NEVER market to the public). And why does any wholesaler, if he has a TRULY wholesale deal, have to make 10 different advertisements? If the deal is REAL (meaning, all comps are accurate, the ARV is accurate, the cost of repair is accurate, and there is 30% profit to be made by fix-and-flipper), then investors should be ones lined up to buy it, and wholesalers can then assign the contract to the highest bidder. If wholesalers go around peddling in 10 places a deals that no one wants to buy then they DON'T have a wholesale deal. Market is the best remedy for those, since no intelligent buyer/investor will touch what they offer.

- Sellers who are lied to and taken advantage of

How exactly are they lied to and taken advantage of?

-Wholesalers lying about values, rents, etc.

I firmly believe that those "wholesalers" are idiots. You can't "lie" about values in this industry, all data is there and accessible to all. Especially to an investor who is going to part with 200K-700K of his hard-earned money. It takes one call to a realtor to run comps on MLS and tell you what the true numbers are. Only complete fools can be misled by false values, and RE is not a fool's business, thus if one is a fool one should never invest in RE.

Quote from @Peter Walther:

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Quote from @Jay Hinrichs:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

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Quote from @Jay Hinrichs:

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Quote from @Jay Hinrichs:

Quote from @Doug Smith:

Good Post, @Alan Asriants. From a lender's perspective, we're also seeing a lot of greed with some wholesalers raising their spread to the point that the math doesn't work for the end buyer. For instance, we had an application today where the wholesaler got a home under contract for $200k and then put a $50K mark-up on it to sell it to the "C" buyer for $250K. The math didn't work at $250K, but it works at $222K. They are sticking to their full $50K. We as a lender are passing on the deal. If you're a wholesaler, one much understand that a rising tide raises all ships. If you're end buyer can't get the numbers to work, you'll likely have no deal anyway. We used to do a ton of wholesale deals, but the spreads are getting out of hand. 

Doug the big issue to me is as a cash buyer  I do not get title insurance for the amount of the assignment fee.. I insist on it some title companies will allow it others wont.. its a big issue and I am sure many buyers out there who pay cash have no clue when they pay 250k for a property and the assingment fee is 50k they are only getting 200k in title insurance.. So if title is buggered and one has to make a claim and I seem to have to make about 1 a year with these deals coming through wholesalers if you dont have title insurance that includes the assignment fee you will lose that money.

 Jay, why are you buying anything from wholesalers? Why don't you go out and find the sellers who own property directly, so you can buy from individual homeowners and cut the middleman out? 

Well because I am a JV partner ( I am the Money) and I live in Oregon and do these deals in 10 states.. So we get them from all sources  MLS  courthouse steps  and of course wholesalers.. And we pay cash for everything.  Thats why I was commenting on the title insurance issues which your average investor probably has no clue. 

I get it. But if I were you and had such a negative perception of wholesalers, or any specific wholesale deal where I can't get a title fully insured, I would simply forego the assets offered by wholesaler/s. Every day I go buy things for my household I decide whether the price I pay for an item is worth it or not. If it's not, or if purchase is too risky and costly, I simply don't buy it. 

As to assignment fee, the average is said to be $10,000, with actual fee ranging from $2,000 to $50,000 or more. It all depends on numbers. Let's assume I , as a wholesaler, after netting $2000 per deal x 20 deals I closed in an entire year, stumbled upon certain property in town A. I run comps with my agent and they come at $450,000. I have full report drawn from MLS. That's my ARV. I deduct 30% and arrive at 315K. I hire a contractor to do accurate estimate of repairs and they quote $45,000. That brings the total down to $270,000. Suppose I want to make $10,000 , so I am ready to write a contract for $260,000. That's my MAO. The seller is motivated and says they want to get out of that property ASAP and will give it to anyone who pays them $220,000. $270,000 is a fair price for that property for an investor. I run my numbers, I know the market, I know the ARV. If I send this property to my buyers I will have three people next day wanting to pay cash to buy it at $270,000. Suppose you, as an investor, also find out (through my RE agent) about that property and want to buy it. Do you think I should assign it to you for less than $270,000, so you can get full title insurance on it, while three other buyers are willing to buy it for 270K with no questions asked (and aware of the issue with title insurance)? How much should I assign it to you for? $230K? And forego other investors/buyers? If yes, please tell me why should I consider it a fair deal and give that contract to you, knowing that this house has $450K ARV after $45K spent on rehab/renovation? What I think is fair is for you to do what I did, to find that exact house or similar property on your own, close the deal at $220K and not deal with me at all. But if you go through me, then I am entitled to my fair share. You didn't pay me to work the entire year, driving one town after another, putting up signs, making cold calls, networking, paying for local ads to make $2000 on each deal I netted prior to this $50K gem. Why should I give it to you for less than it's worth in a wholesale market?

Correct if the title company you were using would not give me insurance sufficient to cover your fee I would not buy it or fund it for one of my JV Partners.. Risk is not worth it.. We have no shortage of deals so this would just be another one in our pipeline nothing special.. And if your other TRUE cash buyers were not smart enough to know about title insurance then thats one them. I suspect a lot of your buyers to most of your buyers are getting HML Loans in that case title insurance is for the amount of the loan and if the loan included our fee then they are insured.. I am sure these are issues your probably just not experienced enough to know of.

The reality is the writing is on the wall states are after NON licensed wholesaling assigning just is what it is.. the fact that you would make 50k on a 220k sale when a brokerage fee would be 15k.. thats 35k that is being taken from a seller who probably knows no better or has just been lied to by the wholesaler as to the real value.. and that is what the law makers and regulators are focused on.. 

 The first part of your post makes sense and I find nothing to disagree with. It's a free market, no body can force anybody to buy or sell anything. If the product/contract/service I offer is not suitable to you then I don't want you to be my customer. We both can happily part our ways under free market conditions.

But the second part of your post implies that all sellers are idiots, or that I (or State) is a nanny that must make decisions for mentally deranged sellers , all of whom have an IQ of 10 years old child. I don't believe this to be true. On my part, I would avoid to close any transaction with someone who is handicapped, has IQ of 10 years old child and is unable to read and understand the contract they are signing. After all, if someone was clinically handicapped and not able to understand and consent to terms of the legal agreement, then the agreement itself could be declared null and void in the court of law. 

I will be dealing with adults, not handicapped individuals. And it's their responsibility to figure what they want to ask for their property. I don't run charity, I don't run educational non-profit classes. By the way, that's one of the reasons I don't want to touch pre-foreclosures, with accounts delinquent for 60 days. Some wholesalers do, they go and offer to help sellers to stay in their homes, educate them about loss mitigation , ask if seller needs help with it and etc., before seller begs them to just rid them of their house. I will have none of it. It's none of my concern to educate or baby sit another adult in my state. No one did for to me, except for my parents, and I have no intention to parent strangers. But once I have an adult, with full cognitive abilities, who is motivated to sell and get out of that property for MAO or less, rest assured I will make my offer on that property and if they accept it I will write a contract. Let them State AG's come after me in droves, there is no crime in making an offer to someone who owns the property to buy it from them. It's marketing to public that is illegal and I have no intention to sell dilapidated , dirty , stinky and full of trash property to an end buyer in MD or anywhere. I won't sell it to investor either, I will simply secure my interest in the contract. So, which part of it is illegal or wrong? You could say I am taking it from seller if I had a contract for 220K and paid seller 185K. That would be stealing from a seller. But if seller is entitled to get more, then who is forcing them to give their property to me for 220K? Who is stopping them from finding you or other investor on their own and getting full $270K in their pocket? I certainly don't. Regulators and law makers in these blue states couldn't care less about the sellers. If they did they would have better economic policies , create safe neighborhoods and investor/business friendly atmosphere, to make their citizens prosper and able to afford the houses they live in, instead of losing it to banks in foreclosures. No, it's not the sellers they care about. They care about eating all the pie by themselves and sharing it with those who finance their campaigns and free vacations, that's what those law makers really care about. And while at it they will make sure there will be more poverty , more foreclosures and less opportunities for average Joe to make a living here. We all know the drill. I am just glad that we have 50 States and not all of them are blue and purple. So, we can still focus on doing business, even if it means we have to move out of blue and into a red state in the near future.

 so Eric you have not actually done any deals it sounds like.. U understand the 70% minus rehab costs those numbers have been going around for a long time.. its pretty tough out there right now but hopefully you can make it work.. although I always wonder why those that want to sell real estate  ( that is what your doing at the end of the day bringing a buyer and seller together) why you dont just get in the game with a license and make a career of it.. if your any good at sales and can stick to it can be a very rewarding occupation.. wholesalers they dont last very long unless they are very well capitalized and vertically integrated. 

Good question, Jay. For couple of reasons. First, becoming REA requires 60 hours of schooling , and then you are stuck with less than 3% commission per transaction (see below link with average rates of REA's compensation), and tons of regulations on top of it while competing with hundreds of other realtors on MLS. It's just not worth doing it in my opinion. It works well for those who have been doing it for decades, but it may take at least a decade to get anywhere as REA.

Becoming a broker takes 3 years in MD after becoming REA. You can't apply and become a broker without those 3 years under your belt. And then you split commissions with agents and have a cap limiting what you can earn on each transaction regardless of the deal you struck.  How is this fair to the broker?))

After much research and talking to people who did it all (running crews/flipping, owning to rent/passive investment, brokering, selling real estate as agents and etc.). I concluded that wholesaling is best to start with. Gradually, if you are able to make it work, you can explore flipping, owning to rent and other options to build wealth. But none offers a quick turn around and cash flow, with the least amount of headache and financial risks (not to confuse with the least amount of WORK),  as wholesaling. It's just a good stepping stone when you enter the world of RE investment.

LINK: https://listwithclever.com/average-real-estate-commission-rate/maryland/

The average total real estate agent commission rate in Maryland is 5.34% of the final sale price. Based on the latest median home sale price in Maryland ($418,534), that translates to a total cost of roughly $22,350.

Home sellers typically cover the total commission fee from their sale proceeds, which is split between the listing and buyer’s agents who handle the sale. In Maryland, the average listing agent fee is 2.76%, while the average buyer’s agent fee is 2.58%.

Real estate agent commissions make up a significant portion of the closing costs for Maryland home sellers. But you don't have to pay the full 5.34% to a traditional agent. If you're selling a home in Maryland, you can use a discount broker to save on realtor fees. In fact, depending on your situation and the agents you work with, you could save 33% on realtor fees, or about $7,366 on average.

So much to consider in your posts, so little time.  One thing that jumps out at me that I can quickly respond to is a glaring omission of why you might not want to be a real estate agent: as one, you're a sub agent of your broker who is a fiduciary of the seller.  As such, not acting in the best interest of the seller is not a a concern of yours now, but as an agent, it would be. 

 There are many places where goods are sold without much care for sellers' or buyers' interests. Take government or public auctions where cars are sold. Unlike Manheim, you can't test the car, you can't check the car, you can't turn its engine on, and so on. Government and public auction holders have been doing it for years, but no one seems to care. Do you know why? It's because people who come to those auctions are adults and understand the risks. And if they don't and are fools, then it's on them. Adults who don't want to accept the risk of buying in an auction shouldn't go there. That's just one example. Now, if this hypocritical government can sell junk cars at auctions and profit from it, what moral grounds does it have to ban Joe Six-packs from wholesaling properties, which btw are checked by buyers and sold with the content of homeowners? Why suddenly such concern for a seller? In my opinion, all this talk about caring for sellers is a smokescreen the gov uses to take under control, tax, and regulate another free market enterprise. And since wholesalers appear to be  "little guys" (the ones with the least amount of capital required to enter the field), they also appear to be the lowest in the food chain that anyone with more capital is happy to eliminate/kill. hence all this negative talk about wholesalers. Fortunately, I have been around long enough to not be so naive and suppose that it's a concern for the sellers that drives the push by mostly blue and purple states to outlaw wholesaling. Greed is the only driving force in it. 

P.S. This is not to say that everyone who opposes wholesaling is driven by the same motive. Someone can be naive about it and believe the narrative pushed by crooked legislators, I just say the drive itself is fueled and driver by those in the know, and those "in the know" are the ones that are least of all concerned about some poor guy forced to sell his property for less than 70% of its market value. Anyone concerned about sellers should ask why we have so many people unable to afford their homes and motivated to get rid of it on short notice, with most or all of their mortgages already paid off. But asking such questions would anger mayors, legislators, and politicians of blue and purple states. After all, it is none of their concern that so many people are destitute, clueless, and unable to survive in these so-called "progressive" states. As long as they succeed in keeping everyone but a chosen few poor their mission is accomplished. 

That property would have to be sold for more, or the seller would get less if a wholesaler had to close on it. The only parties to win when you double close are the tax-hungry state, county, and attorneys who will charge for "closing" the property you don't intend to hold. If the real purpose was to lobby for their interests then I could understand the logic. However, forcing wholesalers to buy/close on a wholesale property will simply add more cost to it. Of course, as a wholesaler, I can decide one day to buy a property for my project, I would then definitely need to close on it. But why close on it if I can assign it to an investor, without adding the cost of closing to my contract? I seem to fail to understand why so many people are hostile to wholesaling. How does flipping, if done properly, hurt anybody? And if there are folks who do it improperly, why not focus specifically on those guys instead of outlawing the entire practice? 

Quote from @Alan Asriants:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

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Quote from @Jay Hinrichs:

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Quote from @Jay Hinrichs:

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Quote from @Jay Hinrichs:

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Quote from @Doug Smith:

Good Post, @Alan Asriants. From a lender's perspective, we're also seeing a lot of greed with some wholesalers raising their spread to the point that the math doesn't work for the end buyer. For instance, we had an application today where the wholesaler got a home under contract for $200k and then put a $50K mark-up on it to sell it to the "C" buyer for $250K. The math didn't work at $250K, but it works at $222K. They are sticking to their full $50K. We as a lender are passing on the deal. If you're a wholesaler, one much understand that a rising tide raises all ships. If you're end buyer can't get the numbers to work, you'll likely have no deal anyway. We used to do a ton of wholesale deals, but the spreads are getting out of hand. 

Doug the big issue to me is as a cash buyer  I do not get title insurance for the amount of the assignment fee.. I insist on it some title companies will allow it others wont.. its a big issue and I am sure many buyers out there who pay cash have no clue when they pay 250k for a property and the assingment fee is 50k they are only getting 200k in title insurance.. So if title is buggered and one has to make a claim and I seem to have to make about 1 a year with these deals coming through wholesalers if you dont have title insurance that includes the assignment fee you will lose that money.

 Jay, why are you buying anything from wholesalers? Why don't you go out and find the sellers who own property directly, so you can buy from individual homeowners and cut the middleman out? 

Well because I am a JV partner ( I am the Money) and I live in Oregon and do these deals in 10 states.. So we get them from all sources  MLS  courthouse steps  and of course wholesalers.. And we pay cash for everything.  Thats why I was commenting on the title insurance issues which your average investor probably has no clue. 

I get it. But if I were you and had such a negative perception of wholesalers, or any specific wholesale deal where I can't get a title fully insured, I would simply forego the assets offered by wholesaler/s. Every day I go buy things for my household I decide whether the price I pay for an item is worth it or not. If it's not, or if purchase is too risky and costly, I simply don't buy it. 

As to assignment fee, the average is said to be $10,000, with actual fee ranging from $2,000 to $50,000 or more. It all depends on numbers. Let's assume I , as a wholesaler, after netting $2000 per deal x 20 deals I closed in an entire year, stumbled upon certain property in town A. I run comps with my agent and they come at $450,000. I have full report drawn from MLS. That's my ARV. I deduct 30% and arrive at 315K. I hire a contractor to do accurate estimate of repairs and they quote $45,000. That brings the total down to $270,000. Suppose I want to make $10,000 , so I am ready to write a contract for $260,000. That's my MAO. The seller is motivated and says they want to get out of that property ASAP and will give it to anyone who pays them $220,000. $270,000 is a fair price for that property for an investor. I run my numbers, I know the market, I know the ARV. If I send this property to my buyers I will have three people next day wanting to pay cash to buy it at $270,000. Suppose you, as an investor, also find out (through my RE agent) about that property and want to buy it. Do you think I should assign it to you for less than $270,000, so you can get full title insurance on it, while three other buyers are willing to buy it for 270K with no questions asked (and aware of the issue with title insurance)? How much should I assign it to you for? $230K? And forego other investors/buyers? If yes, please tell me why should I consider it a fair deal and give that contract to you, knowing that this house has $450K ARV after $45K spent on rehab/renovation? What I think is fair is for you to do what I did, to find that exact house or similar property on your own, close the deal at $220K and not deal with me at all. But if you go through me, then I am entitled to my fair share. You didn't pay me to work the entire year, driving one town after another, putting up signs, making cold calls, networking, paying for local ads to make $2000 on each deal I netted prior to this $50K gem. Why should I give it to you for less than it's worth in a wholesale market?

Correct if the title company you were using would not give me insurance sufficient to cover your fee I would not buy it or fund it for one of my JV Partners.. Risk is not worth it.. We have no shortage of deals so this would just be another one in our pipeline nothing special.. And if your other TRUE cash buyers were not smart enough to know about title insurance then thats one them. I suspect a lot of your buyers to most of your buyers are getting HML Loans in that case title insurance is for the amount of the loan and if the loan included our fee then they are insured.. I am sure these are issues your probably just not experienced enough to know of.

The reality is the writing is on the wall states are after NON licensed wholesaling assigning just is what it is.. the fact that you would make 50k on a 220k sale when a brokerage fee would be 15k.. thats 35k that is being taken from a seller who probably knows no better or has just been lied to by the wholesaler as to the real value.. and that is what the law makers and regulators are focused on.. 

 The first part of your post makes sense and I find nothing to disagree with. It's a free market, no body can force anybody to buy or sell anything. If the product/contract/service I offer is not suitable to you then I don't want you to be my customer. We both can happily part our ways under free market conditions.

But the second part of your post implies that all sellers are idiots, or that I (or State) is a nanny that must make decisions for mentally deranged sellers , all of whom have an IQ of 10 years old child. I don't believe this to be true. On my part, I would avoid to close any transaction with someone who is handicapped, has IQ of 10 years old child and is unable to read and understand the contract they are signing. After all, if someone was clinically handicapped and not able to understand and consent to terms of the legal agreement, then the agreement itself could be declared null and void in the court of law. 

I will be dealing with adults, not handicapped individuals. And it's their responsibility to figure what they want to ask for their property. I don't run charity, I don't run educational non-profit classes. By the way, that's one of the reasons I don't want to touch pre-foreclosures, with accounts delinquent for 60 days. Some wholesalers do, they go and offer to help sellers to stay in their homes, educate them about loss mitigation , ask if seller needs help with it and etc., before seller begs them to just rid them of their house. I will have none of it. It's none of my concern to educate or baby sit another adult in my state. No one did for to me, except for my parents, and I have no intention to parent strangers. But once I have an adult, with full cognitive abilities, who is motivated to sell and get out of that property for MAO or less, rest assured I will make my offer on that property and if they accept it I will write a contract. Let them State AG's come after me in droves, there is no crime in making an offer to someone who owns the property to buy it from them. It's marketing to public that is illegal and I have no intention to sell dilapidated , dirty , stinky and full of trash property to an end buyer in MD or anywhere. I won't sell it to investor either, I will simply secure my interest in the contract. So, which part of it is illegal or wrong? You could say I am taking it from seller if I had a contract for 220K and paid seller 185K. That would be stealing from a seller. But if seller is entitled to get more, then who is forcing them to give their property to me for 220K? Who is stopping them from finding you or other investor on their own and getting full $270K in their pocket? I certainly don't. Regulators and law makers in these blue states couldn't care less about the sellers. If they did they would have better economic policies , create safe neighborhoods and investor/business friendly atmosphere, to make their citizens prosper and able to afford the houses they live in, instead of losing it to banks in foreclosures. No, it's not the sellers they care about. They care about eating all the pie by themselves and sharing it with those who finance their campaigns and free vacations, that's what those law makers really care about. And while at it they will make sure there will be more poverty , more foreclosures and less opportunities for average Joe to make a living here. We all know the drill. I am just glad that we have 50 States and not all of them are blue and purple. So, we can still focus on doing business, even if it means we have to move out of blue and into a red state in the near future.

 so Eric you have not actually done any deals it sounds like.. U understand the 70% minus rehab costs those numbers have been going around for a long time.. its pretty tough out there right now but hopefully you can make it work.. although I always wonder why those that want to sell real estate  ( that is what your doing at the end of the day bringing a buyer and seller together) why you dont just get in the game with a license and make a career of it.. if your any good at sales and can stick to it can be a very rewarding occupation.. wholesalers they dont last very long unless they are very well capitalized and vertically integrated. 

Good question, Jay. For couple of reasons. First, becoming REA requires 60 hours of schooling , and then you are stuck with less than 3% commission per transaction (see below link with average rates of REA's compensation), and tons of regulations on top of it while competing with hundreds of other realtors on MLS. It's just not worth doing it in my opinion. It works well for those who have been doing it for decades, but it may take at least a decade to get anywhere as REA.

Becoming a broker takes 3 years in MD after becoming REA. You can't apply and become a broker without those 3 years under your belt. And then you split commissions with agents and have a cap limiting what you can earn on each transaction regardless of the deal you struck.  How is this fair to the broker?))

After much research and talking to people who did it all (running crews/flipping, owning to rent/passive investment, brokering, selling real estate as agents and etc.). I concluded that wholesaling is best to start with. Gradually, if you are able to make it work, you can explore flipping, owning to rent and other options to build wealth. But none offers a quick turn around and cash flow, with the least amount of headache and financial risks (not to confuse with the least amount of WORK),  as wholesaling. It's just a good stepping stone when you enter the world of RE investment.

LINK: https://listwithclever.com/average-real-estate-commission-rate/maryland/

The average total real estate agent commission rate in Maryland is 5.34% of the final sale price. Based on the latest median home sale price in Maryland ($418,534), that translates to a total cost of roughly $22,350.

Home sellers typically cover the total commission fee from their sale proceeds, which is split between the listing and buyer’s agents who handle the sale. In Maryland, the average listing agent fee is 2.76%, while the average buyer’s agent fee is 2.58%.

Real estate agent commissions make up a significant portion of the closing costs for Maryland home sellers. But you don't have to pay the full 5.34% to a traditional agent. If you're selling a home in Maryland, you can use a discount broker to save on realtor fees. In fact, depending on your situation and the agents you work with, you could save 33% on realtor fees, or about $7,366 on average.

 this is why wholesale guru's can sell 30k packages as people drink the cool aid basically verbatim of what you just said.. Any way like I said good luck.. 

 Thank you. But from what I understand in wholesaling it's not so much luck but consistent work, good discipline, persistence and ability to analyze deal that deliver results. Discipline and consistent work would probably top the list, as analyzing the deal doesn't take much brain power and effort. Negotiating comes naturally once you properly analyze the deal.

The gurus are another subject. May be they are the ones who should be outlawed. There is absolutely nothing one can learn in this business worth paying 30K. The rules of the game are simple, can be read and understood in less than a day. It's amount of WORK and CONCENTRATION that will make a difference between make or break, and no GURU can make you stick to your regimen and do something persistently and systematically if you can't make yourself do it. 

 The issue is that many wholesalers falsely advertise themselves, lie, or keep seller in the dark to make the deal work. They lose deals unfortunately when they are transparent 

 A lot of people are stupid. Not just house owners/sellers, but people in general. 15 years ago I was in reverse logistics/liquidation business. I was able to consistently buy and then liquidate certain number of pallets/goods through the channel I have established. I would go to warehouses, negotiate/make an offer on a truckload of goods and then purchase one pallet at the time to help miserable seller to get rid of it. I never spent fortune to fill my warehouse with truckloads of goods, but I was buying them at the rate I could liquidate them and as long as I could liquidate them. Obviously, I profited handsomely while doing it. And what I recall is that out of 10-15 warehouses I dealt with ONLY TWO were owned by decent men who knew how to do business. One was a Chinese owned in NYC and another was owned by Hasidic Jew in New Jersey. These two were grateful to me that I was helping them clean their warehouse and get rid of their shittiest products that no one was willing to buy from them. All the rest grew resentful, angry and jealous when they saw how quickly I was moving their pallets. They were angry and resentful that I was making money on the trash that was sitting in their warehouses forever and that they couldn't sell to anyone on Earth. They would start playing games, sometimes pretending that they were not available or able to deliver goods. At others they would ghost me. Or, worst of all, try to go behind my back and find the distributor/seller I was dealing with, to cut me out of the deal. If I asked them why were they being so idiotic (of course in milder, non insulting terms), their answer would be "it's a dog eat dog town". Idiots! One of them lost the business and money couple of years later. I don't know what happened to others. But the point is, I am very well familiar with this idiotic type of product owner who is NEVER able to sell his goods, but gets angry and resentful at you if you help him to, because he thinks he is entitled to get what you get just because it's his goods that you found him a buyer for. I hope to spot sellers like that during my fist contact and send them to kick rocks and forever live in the $*it they are, with no help coming from me to get them rid of their property. 

Quote from @Nicholas L.:

@Account Closed

some questions for you and things for you to think about:

-are you trying to generate capital to invest with?  or build a network?  or do you genuinely want to wholesale?  or all of the above?  i actually don't know if it's the 'best' way to get in.  there is a lot of competition - you're going to be up against both other low-budget operations and also high-budget, national operations.  yes, you can put in time of lieu of money but if you do that, your list will be smaller.

-i think a great way to get started in real estate is a house hack or a live-in flip.  this isn't an option for everyone based on family situation and lifestyle, but I know multiple people who have sequentially house hacked their way to a portfolio of 5-15 units in 5-10 years simply by using their monthly housing payment.

-i think there is a great opportunity right now to whole-tail.  yes, this is 'riskier' than wholesaling since you have to close.  but there is such tremendous demand by investors that if they see something that's been cleaned up, they will all pounce.

hope this helps

 Hi Nicholas,

I decided to get into RE sometime before COVID struck. My initial plan was to buy homes at wholesale price, fix them and retail them through an agent. COVID, of course, didn't help much to get this idea materialized. However, it provided me with plenty of time to think about my options. The fact is I don't have million dollars in cash sitting in my bank account. At best, I can bring 100K to the table. Then I have to go for HML, with high interest rates and 12 month repayment period. In HOPES that market will not crash/correct itself in the meantime, that crews I hire will work diligently and timely, that there will be a demand for the end product when the work is finished, and my realtor will be able to sell it before I get penalized and foreclosed by the lender. All of it is risky, especially for someone who doesn't run his own crew. And, to make things even worse, after I deduct all the expenses, costs to hold property, repay the loan with huge interest rates, I would end up with little or (possibly) no profit at all. That if all things work out as planned and there are only minor hick ups along the way. So, this is not the road to take (IMHO) unless you have million or two million dollars in cash , sitting there in your savings account and doing nothing for you. I will admit it can be lucrative and workable if you are an investor with pile of cash you are sitting on. It's good to become an investor once you amass enough liquidity to run your project, get the title to the house, pay crews full salary, order materials, fix and wait until your property is sold without paying a penny in interest rates to HML. So I think if wholesaling works out, the other projects would naturally line up. They would be realized depending on favorable circumstances. I am sure I will be networking while wholesaling. If I am profitable at it I may even generate enough capital to further invest with it.

You are right about competition. But two things are to be noted. First, a lot of wholesalers (so it seems from what I read on this board and hear from people) are totally clueless and doing it only because there is no barrier to enter the field. I don't consider them to be my competition. But then you have some serious players in the game and you also have some guys that are not as big but are doing pretty good. Both are aggressive with marketing and able to get results they want. There are not too many of these guys, but they are a real competition. I wouldn't try to get into the field if I didn't know about one thing that is in my favor: there are still plenty of deals to be made out there, more than those good  and well stablished wholesalers can grab. 

As to budget, I have friends who do marketing for living. I have SEO engineer who quit his full job in finance, went to MIT , got engineering degree and is dedicated to online marketing services. If you have $100K per month to spend he will find a use of it for you. If you have $250K a month to spend, he will find a way to make it useful too. But that's not the way I am proceeding. My costs will be minimal. Primarily I will be running local ads and posting signs to get motivated sellers contact me. And, in the meantime, I will get the lists of people I THINK could be motivated to sell, skiptrace them and call them. The idea is to close one deal per 200-300 leads I get, and may be 1 deal out of 1000-2000 calls made each month. Neither cost astronomical amounts of money. Both are doable. With cold calls being the worst / most frustrating part of it. But who said money grows on the trees and falls on your laps just because you want it? 

What is whole-tailing? One of the things I will consider with each deal is buying/closing them on my own if I can't assign the contract in 30 days. 

I can't do it with very expensive houses in DC market (which outlawed wholesaling anyway), but I could close on a home bought for 200K in MD, based on the value of the property itself. The way I will be looking at this is finding properties that I myself would be willing to buy as an investor. This should: A) make the deals attractive enough to sell on their own; B) Should I end up being forced to buy it I will find myself in a good spot, with valuable property acquired at less than it's wholesale value on the market. Which, naturally, should be a rare thing if all the numbers are properly analyzed and solid (not made up/inflated ARV in the area no one wants to buy, with fraudulently diminished cost of repairs in hopes of finding a stupid buyer and etc.).

Quote from @Jay Hinrichs:

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Quote from @Doug Smith:

Good Post, @Alan Asriants. From a lender's perspective, we're also seeing a lot of greed with some wholesalers raising their spread to the point that the math doesn't work for the end buyer. For instance, we had an application today where the wholesaler got a home under contract for $200k and then put a $50K mark-up on it to sell it to the "C" buyer for $250K. The math didn't work at $250K, but it works at $222K. They are sticking to their full $50K. We as a lender are passing on the deal. If you're a wholesaler, one much understand that a rising tide raises all ships. If you're end buyer can't get the numbers to work, you'll likely have no deal anyway. We used to do a ton of wholesale deals, but the spreads are getting out of hand. 

Doug the big issue to me is as a cash buyer  I do not get title insurance for the amount of the assignment fee.. I insist on it some title companies will allow it others wont.. its a big issue and I am sure many buyers out there who pay cash have no clue when they pay 250k for a property and the assingment fee is 50k they are only getting 200k in title insurance.. So if title is buggered and one has to make a claim and I seem to have to make about 1 a year with these deals coming through wholesalers if you dont have title insurance that includes the assignment fee you will lose that money.

 Jay, why are you buying anything from wholesalers? Why don't you go out and find the sellers who own property directly, so you can buy from individual homeowners and cut the middleman out? 

Well because I am a JV partner ( I am the Money) and I live in Oregon and do these deals in 10 states.. So we get them from all sources  MLS  courthouse steps  and of course wholesalers.. And we pay cash for everything.  Thats why I was commenting on the title insurance issues which your average investor probably has no clue. 

I get it. But if I were you and had such a negative perception of wholesalers, or any specific wholesale deal where I can't get a title fully insured, I would simply forego the assets offered by wholesaler/s. Every day I go buy things for my household I decide whether the price I pay for an item is worth it or not. If it's not, or if purchase is too risky and costly, I simply don't buy it. 

As to assignment fee, the average is said to be $10,000, with actual fee ranging from $2,000 to $50,000 or more. It all depends on numbers. Let's assume I , as a wholesaler, after netting $2000 per deal x 20 deals I closed in an entire year, stumbled upon certain property in town A. I run comps with my agent and they come at $450,000. I have full report drawn from MLS. That's my ARV. I deduct 30% and arrive at 315K. I hire a contractor to do accurate estimate of repairs and they quote $45,000. That brings the total down to $270,000. Suppose I want to make $10,000 , so I am ready to write a contract for $260,000. That's my MAO. The seller is motivated and says they want to get out of that property ASAP and will give it to anyone who pays them $220,000. $270,000 is a fair price for that property for an investor. I run my numbers, I know the market, I know the ARV. If I send this property to my buyers I will have three people next day wanting to pay cash to buy it at $270,000. Suppose you, as an investor, also find out (through my RE agent) about that property and want to buy it. Do you think I should assign it to you for less than $270,000, so you can get full title insurance on it, while three other buyers are willing to buy it for 270K with no questions asked (and aware of the issue with title insurance)? How much should I assign it to you for? $230K? And forego other investors/buyers? If yes, please tell me why should I consider it a fair deal and give that contract to you, knowing that this house has $450K ARV after $45K spent on rehab/renovation? What I think is fair is for you to do what I did, to find that exact house or similar property on your own, close the deal at $220K and not deal with me at all. But if you go through me, then I am entitled to my fair share. You didn't pay me to work the entire year, driving one town after another, putting up signs, making cold calls, networking, paying for local ads to make $2000 on each deal I netted prior to this $50K gem. Why should I give it to you for less than it's worth in a wholesale market?

Correct if the title company you were using would not give me insurance sufficient to cover your fee I would not buy it or fund it for one of my JV Partners.. Risk is not worth it.. We have no shortage of deals so this would just be another one in our pipeline nothing special.. And if your other TRUE cash buyers were not smart enough to know about title insurance then thats one them. I suspect a lot of your buyers to most of your buyers are getting HML Loans in that case title insurance is for the amount of the loan and if the loan included our fee then they are insured.. I am sure these are issues your probably just not experienced enough to know of.

The reality is the writing is on the wall states are after NON licensed wholesaling assigning just is what it is.. the fact that you would make 50k on a 220k sale when a brokerage fee would be 15k.. thats 35k that is being taken from a seller who probably knows no better or has just been lied to by the wholesaler as to the real value.. and that is what the law makers and regulators are focused on.. 

 The first part of your post makes sense and I find nothing to disagree with. It's a free market, no body can force anybody to buy or sell anything. If the product/contract/service I offer is not suitable to you then I don't want you to be my customer. We both can happily part our ways under free market conditions.

But the second part of your post implies that all sellers are idiots, or that I (or State) is a nanny that must make decisions for mentally deranged sellers , all of whom have an IQ of 10 years old child. I don't believe this to be true. On my part, I would avoid to close any transaction with someone who is handicapped, has IQ of 10 years old child and is unable to read and understand the contract they are signing. After all, if someone was clinically handicapped and not able to understand and consent to terms of the legal agreement, then the agreement itself could be declared null and void in the court of law. 

I will be dealing with adults, not handicapped individuals. And it's their responsibility to figure what they want to ask for their property. I don't run charity, I don't run educational non-profit classes. By the way, that's one of the reasons I don't want to touch pre-foreclosures, with accounts delinquent for 60 days. Some wholesalers do, they go and offer to help sellers to stay in their homes, educate them about loss mitigation , ask if seller needs help with it and etc., before seller begs them to just rid them of their house. I will have none of it. It's none of my concern to educate or baby sit another adult in my state. No one did for to me, except for my parents, and I have no intention to parent strangers. But once I have an adult, with full cognitive abilities, who is motivated to sell and get out of that property for MAO or less, rest assured I will make my offer on that property and if they accept it I will write a contract. Let them State AG's come after me in droves, there is no crime in making an offer to someone who owns the property to buy it from them. It's marketing to public that is illegal and I have no intention to sell dilapidated , dirty , stinky and full of trash property to an end buyer in MD or anywhere. I won't sell it to investor either, I will simply secure my interest in the contract. So, which part of it is illegal or wrong? You could say I am taking it from seller if I had a contract for 220K and paid seller 185K. That would be stealing from a seller. But if seller is entitled to get more, then who is forcing them to give their property to me for 220K? Who is stopping them from finding you or other investor on their own and getting full $270K in their pocket? I certainly don't. Regulators and law makers in these blue states couldn't care less about the sellers. If they did they would have better economic policies , create safe neighborhoods and investor/business friendly atmosphere, to make their citizens prosper and able to afford the houses they live in, instead of losing it to banks in foreclosures. No, it's not the sellers they care about. They care about eating all the pie by themselves and sharing it with those who finance their campaigns and free vacations, that's what those law makers really care about. And while at it they will make sure there will be more poverty , more foreclosures and less opportunities for average Joe to make a living here. We all know the drill. I am just glad that we have 50 States and not all of them are blue and purple. So, we can still focus on doing business, even if it means we have to move out of blue and into a red state in the near future.

 so Eric you have not actually done any deals it sounds like.. U understand the 70% minus rehab costs those numbers have been going around for a long time.. its pretty tough out there right now but hopefully you can make it work.. although I always wonder why those that want to sell real estate  ( that is what your doing at the end of the day bringing a buyer and seller together) why you dont just get in the game with a license and make a career of it.. if your any good at sales and can stick to it can be a very rewarding occupation.. wholesalers they dont last very long unless they are very well capitalized and vertically integrated. 

Good question, Jay. For couple of reasons. First, becoming REA requires 60 hours of schooling , and then you are stuck with less than 3% commission per transaction (see below link with average rates of REA's compensation), and tons of regulations on top of it while competing with hundreds of other realtors on MLS. It's just not worth doing it in my opinion. It works well for those who have been doing it for decades, but it may take at least a decade to get anywhere as REA.

Becoming a broker takes 3 years in MD after becoming REA. You can't apply and become a broker without those 3 years under your belt. And then you split commissions with agents and have a cap limiting what you can earn on each transaction regardless of the deal you struck.  How is this fair to the broker?))

After much research and talking to people who did it all (running crews/flipping, owning to rent/passive investment, brokering, selling real estate as agents and etc.). I concluded that wholesaling is best to start with. Gradually, if you are able to make it work, you can explore flipping, owning to rent and other options to build wealth. But none offers a quick turn around and cash flow, with the least amount of headache and financial risks (not to confuse with the least amount of WORK),  as wholesaling. It's just a good stepping stone when you enter the world of RE investment.

LINK: https://listwithclever.com/average-real-estate-commission-rate/maryland/

The average total real estate agent commission rate in Maryland is 5.34% of the final sale price. Based on the latest median home sale price in Maryland ($418,534), that translates to a total cost of roughly $22,350.

Home sellers typically cover the total commission fee from their sale proceeds, which is split between the listing and buyer’s agents who handle the sale. In Maryland, the average listing agent fee is 2.76%, while the average buyer’s agent fee is 2.58%.

Real estate agent commissions make up a significant portion of the closing costs for Maryland home sellers. But you don't have to pay the full 5.34% to a traditional agent. If you're selling a home in Maryland, you can use a discount broker to save on realtor fees. In fact, depending on your situation and the agents you work with, you could save 33% on realtor fees, or about $7,366 on average.

 this is why wholesale guru's can sell 30k packages as people drink the cool aid basically verbatim of what you just said.. Any way like I said good luck.. 

 Thank you. But from what I understand in wholesaling it's not so much luck but consistent work, good discipline, persistence and ability to analyze deal that deliver results. Discipline and consistent work would probably top the list, as analyzing the deal doesn't take much brain power and effort. Negotiating comes naturally once you properly analyze the deal.

The gurus are another subject. May be they are the ones who should be outlawed. There is absolutely nothing one can learn in this business worth paying 30K. The rules of the game are simple, can be read and understood in less than a day. It's amount of WORK and CONCENTRATION that will make a difference between make or break, and no GURU can make you stick to your regimen and do something persistently and systematically if you can't make yourself do it. 

Quote from @Jay Hinrichs:

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Quote from @Russell Brazil:

You do realize fascist and communist are polar opposites, and are not synonymous lol.

You also clearly don't have a grasp on the politics of this as it is red states that have been leading the fight on the issue, not blue ones lol. South Carolina, Ohio, Arizona, and Virginia have passed the strictest regulations on it....and in most cases, unanimously.

 Yes I do, Russell. While fascist and communist on face of it appear to be opposites, both share fundamentally same totalitarian approach to governing the citizenry. So, I intentionally paired those two systems together. Both remind me of certain blue and purple states)))

Dems carried AZ and VA in 2020. OH is a swing state. VA is notoriously purple. MD is blue, so is DC and IL. Not sure why SC and NC jumped on the bandwagon. I guess insatiable greed blindfolded them too.

from what I see IL has the strongest law .. its just very clear you can only wholesaler or assign ONE property per year without a RE license.

 Agreed. IL makes it practically impossible to wholesale. 

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Quote from @Doug Smith:

Good Post, @Alan Asriants. From a lender's perspective, we're also seeing a lot of greed with some wholesalers raising their spread to the point that the math doesn't work for the end buyer. For instance, we had an application today where the wholesaler got a home under contract for $200k and then put a $50K mark-up on it to sell it to the "C" buyer for $250K. The math didn't work at $250K, but it works at $222K. They are sticking to their full $50K. We as a lender are passing on the deal. If you're a wholesaler, one much understand that a rising tide raises all ships. If you're end buyer can't get the numbers to work, you'll likely have no deal anyway. We used to do a ton of wholesale deals, but the spreads are getting out of hand. 

Doug the big issue to me is as a cash buyer  I do not get title insurance for the amount of the assignment fee.. I insist on it some title companies will allow it others wont.. its a big issue and I am sure many buyers out there who pay cash have no clue when they pay 250k for a property and the assingment fee is 50k they are only getting 200k in title insurance.. So if title is buggered and one has to make a claim and I seem to have to make about 1 a year with these deals coming through wholesalers if you dont have title insurance that includes the assignment fee you will lose that money.

 Jay, why are you buying anything from wholesalers? Why don't you go out and find the sellers who own property directly, so you can buy from individual homeowners and cut the middleman out? 

Well because I am a JV partner ( I am the Money) and I live in Oregon and do these deals in 10 states.. So we get them from all sources  MLS  courthouse steps  and of course wholesalers.. And we pay cash for everything.  Thats why I was commenting on the title insurance issues which your average investor probably has no clue. 

I get it. But if I were you and had such a negative perception of wholesalers, or any specific wholesale deal where I can't get a title fully insured, I would simply forego the assets offered by wholesaler/s. Every day I go buy things for my household I decide whether the price I pay for an item is worth it or not. If it's not, or if purchase is too risky and costly, I simply don't buy it. 

As to assignment fee, the average is said to be $10,000, with actual fee ranging from $2,000 to $50,000 or more. It all depends on numbers. Let's assume I , as a wholesaler, after netting $2000 per deal x 20 deals I closed in an entire year, stumbled upon certain property in town A. I run comps with my agent and they come at $450,000. I have full report drawn from MLS. That's my ARV. I deduct 30% and arrive at 315K. I hire a contractor to do accurate estimate of repairs and they quote $45,000. That brings the total down to $270,000. Suppose I want to make $10,000 , so I am ready to write a contract for $260,000. That's my MAO. The seller is motivated and says they want to get out of that property ASAP and will give it to anyone who pays them $220,000. $270,000 is a fair price for that property for an investor. I run my numbers, I know the market, I know the ARV. If I send this property to my buyers I will have three people next day wanting to pay cash to buy it at $270,000. Suppose you, as an investor, also find out (through my RE agent) about that property and want to buy it. Do you think I should assign it to you for less than $270,000, so you can get full title insurance on it, while three other buyers are willing to buy it for 270K with no questions asked (and aware of the issue with title insurance)? How much should I assign it to you for? $230K? And forego other investors/buyers? If yes, please tell me why should I consider it a fair deal and give that contract to you, knowing that this house has $450K ARV after $45K spent on rehab/renovation? What I think is fair is for you to do what I did, to find that exact house or similar property on your own, close the deal at $220K and not deal with me at all. But if you go through me, then I am entitled to my fair share. You didn't pay me to work the entire year, driving one town after another, putting up signs, making cold calls, networking, paying for local ads to make $2000 on each deal I netted prior to this $50K gem. Why should I give it to you for less than it's worth in a wholesale market?

Correct if the title company you were using would not give me insurance sufficient to cover your fee I would not buy it or fund it for one of my JV Partners.. Risk is not worth it.. We have no shortage of deals so this would just be another one in our pipeline nothing special.. And if your other TRUE cash buyers were not smart enough to know about title insurance then thats one them. I suspect a lot of your buyers to most of your buyers are getting HML Loans in that case title insurance is for the amount of the loan and if the loan included our fee then they are insured.. I am sure these are issues your probably just not experienced enough to know of.

The reality is the writing is on the wall states are after NON licensed wholesaling assigning just is what it is.. the fact that you would make 50k on a 220k sale when a brokerage fee would be 15k.. thats 35k that is being taken from a seller who probably knows no better or has just been lied to by the wholesaler as to the real value.. and that is what the law makers and regulators are focused on.. 

 The first part of your post makes sense and I find nothing to disagree with. It's a free market, no body can force anybody to buy or sell anything. If the product/contract/service I offer is not suitable to you then I don't want you to be my customer. We both can happily part our ways under free market conditions.

But the second part of your post implies that all sellers are idiots, or that I (or State) is a nanny that must make decisions for mentally deranged sellers , all of whom have an IQ of 10 years old child. I don't believe this to be true. On my part, I would avoid to close any transaction with someone who is handicapped, has IQ of 10 years old child and is unable to read and understand the contract they are signing. After all, if someone was clinically handicapped and not able to understand and consent to terms of the legal agreement, then the agreement itself could be declared null and void in the court of law. 

I will be dealing with adults, not handicapped individuals. And it's their responsibility to figure what they want to ask for their property. I don't run charity, I don't run educational non-profit classes. By the way, that's one of the reasons I don't want to touch pre-foreclosures, with accounts delinquent for 60 days. Some wholesalers do, they go and offer to help sellers to stay in their homes, educate them about loss mitigation , ask if seller needs help with it and etc., before seller begs them to just rid them of their house. I will have none of it. It's none of my concern to educate or baby sit another adult in my state. No one did for to me, except for my parents, and I have no intention to parent strangers. But once I have an adult, with full cognitive abilities, who is motivated to sell and get out of that property for MAO or less, rest assured I will make my offer on that property and if they accept it I will write a contract. Let them State AG's come after me in droves, there is no crime in making an offer to someone who owns the property to buy it from them. It's marketing to public that is illegal and I have no intention to sell dilapidated , dirty , stinky and full of trash property to an end buyer in MD or anywhere. I won't sell it to investor either, I will simply secure my interest in the contract. So, which part of it is illegal or wrong? You could say I am taking it from seller if I had a contract for 220K and paid seller 185K. That would be stealing from a seller. But if seller is entitled to get more, then who is forcing them to give their property to me for 220K? Who is stopping them from finding you or other investor on their own and getting full $270K in their pocket? I certainly don't. Regulators and law makers in these blue states couldn't care less about the sellers. If they did they would have better economic policies , create safe neighborhoods and investor/business friendly atmosphere, to make their citizens prosper and able to afford the houses they live in, instead of losing it to banks in foreclosures. No, it's not the sellers they care about. They care about eating all the pie by themselves and sharing it with those who finance their campaigns and free vacations, that's what those law makers really care about. And while at it they will make sure there will be more poverty , more foreclosures and less opportunities for average Joe to make a living here. We all know the drill. I am just glad that we have 50 States and not all of them are blue and purple. So, we can still focus on doing business, even if it means we have to move out of blue and into a red state in the near future.

 so Eric you have not actually done any deals it sounds like.. U understand the 70% minus rehab costs those numbers have been going around for a long time.. its pretty tough out there right now but hopefully you can make it work.. although I always wonder why those that want to sell real estate  ( that is what your doing at the end of the day bringing a buyer and seller together) why you dont just get in the game with a license and make a career of it.. if your any good at sales and can stick to it can be a very rewarding occupation.. wholesalers they dont last very long unless they are very well capitalized and vertically integrated. 

Good question, Jay. For couple of reasons. First, becoming REA requires 60 hours of schooling , and then you are stuck with less than 3% commission per transaction (see below link with average rates of REA's compensation), and tons of regulations on top of it while competing with hundreds of other realtors on MLS. It's just not worth doing it in my opinion. It works well for those who have been doing it for decades, but it may take at least a decade to get anywhere as REA.

Becoming a broker takes 3 years in MD after becoming REA. You can't apply and become a broker without those 3 years under your belt. And then you split commissions with agents and have a cap limiting what you can earn on each transaction regardless of the deal you struck.  How is this fair to the broker?))

After much research and talking to people who did it all (running crews/flipping, owning to rent/passive investment, brokering, selling real estate as agents and etc.). I concluded that wholesaling is best to start with. Gradually, if you are able to make it work, you can explore flipping, owning to rent and other options to build wealth. But none offers a quick turn around and cash flow, with the least amount of headache and financial risks (not to confuse with the least amount of WORK),  as wholesaling. It's just a good stepping stone when you enter the world of RE investment.

LINK: https://listwithclever.com/average-real-estate-commission-rate/maryland/

The average total real estate agent commission rate in Maryland is 5.34% of the final sale price. Based on the latest median home sale price in Maryland ($418,534), that translates to a total cost of roughly $22,350.

Home sellers typically cover the total commission fee from their sale proceeds, which is split between the listing and buyer’s agents who handle the sale. In Maryland, the average listing agent fee is 2.76%, while the average buyer’s agent fee is 2.58%.

Real estate agent commissions make up a significant portion of the closing costs for Maryland home sellers. But you don't have to pay the full 5.34% to a traditional agent. If you're selling a home in Maryland, you can use a discount broker to save on realtor fees. In fact, depending on your situation and the agents you work with, you could save 33% on realtor fees, or about $7,366 on average.

Quote from @Russell Brazil:

You do realize fascist and communist are polar opposites, and are not synonymous lol.

You also clearly don't have a grasp on the politics of this as it is red states that have been leading the fight on the issue, not blue ones lol. South Carolina, Ohio, Arizona, and Virginia have passed the strictest regulations on it....and in most cases, unanimously.

 Yes I do, Russell. While fascist and communist on face of it appear to be opposites, both share fundamentally same totalitarian approach to governing the citizenry. So, I intentionally paired those two systems together. Both remind me of certain blue and purple states)))

Dems carried AZ and VA in 2020. OH is a swing state. VA is notoriously purple. MD is blue, so is DC and IL. Not sure why SC and NC jumped on the bandwagon. I guess insatiable greed blindfolded them too.

Quote from @Jay Hinrichs:

Quote from @Account Closed:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

Quote from @Doug Smith:

Good Post, @Alan Asriants. From a lender's perspective, we're also seeing a lot of greed with some wholesalers raising their spread to the point that the math doesn't work for the end buyer. For instance, we had an application today where the wholesaler got a home under contract for $200k and then put a $50K mark-up on it to sell it to the "C" buyer for $250K. The math didn't work at $250K, but it works at $222K. They are sticking to their full $50K. We as a lender are passing on the deal. If you're a wholesaler, one much understand that a rising tide raises all ships. If you're end buyer can't get the numbers to work, you'll likely have no deal anyway. We used to do a ton of wholesale deals, but the spreads are getting out of hand. 

Doug the big issue to me is as a cash buyer  I do not get title insurance for the amount of the assignment fee.. I insist on it some title companies will allow it others wont.. its a big issue and I am sure many buyers out there who pay cash have no clue when they pay 250k for a property and the assingment fee is 50k they are only getting 200k in title insurance.. So if title is buggered and one has to make a claim and I seem to have to make about 1 a year with these deals coming through wholesalers if you dont have title insurance that includes the assignment fee you will lose that money.

 Jay, why are you buying anything from wholesalers? Why don't you go out and find the sellers who own property directly, so you can buy from individual homeowners and cut the middleman out? 

Well because I am a JV partner ( I am the Money) and I live in Oregon and do these deals in 10 states.. So we get them from all sources  MLS  courthouse steps  and of course wholesalers.. And we pay cash for everything.  Thats why I was commenting on the title insurance issues which your average investor probably has no clue. 

I get it. But if I were you and had such a negative perception of wholesalers, or any specific wholesale deal where I can't get a title fully insured, I would simply forego the assets offered by wholesaler/s. Every day I go buy things for my household I decide whether the price I pay for an item is worth it or not. If it's not, or if purchase is too risky and costly, I simply don't buy it. 

As to assignment fee, the average is said to be $10,000, with actual fee ranging from $2,000 to $50,000 or more. It all depends on numbers. Let's assume I , as a wholesaler, after netting $2000 per deal x 20 deals I closed in an entire year, stumbled upon certain property in town A. I run comps with my agent and they come at $450,000. I have full report drawn from MLS. That's my ARV. I deduct 30% and arrive at 315K. I hire a contractor to do accurate estimate of repairs and they quote $45,000. That brings the total down to $270,000. Suppose I want to make $10,000 , so I am ready to write a contract for $260,000. That's my MAO. The seller is motivated and says they want to get out of that property ASAP and will give it to anyone who pays them $220,000. $270,000 is a fair price for that property for an investor. I run my numbers, I know the market, I know the ARV. If I send this property to my buyers I will have three people next day wanting to pay cash to buy it at $270,000. Suppose you, as an investor, also find out (through my RE agent) about that property and want to buy it. Do you think I should assign it to you for less than $270,000, so you can get full title insurance on it, while three other buyers are willing to buy it for 270K with no questions asked (and aware of the issue with title insurance)? How much should I assign it to you for? $230K? And forego other investors/buyers? If yes, please tell me why should I consider it a fair deal and give that contract to you, knowing that this house has $450K ARV after $45K spent on rehab/renovation? What I think is fair is for you to do what I did, to find that exact house or similar property on your own, close the deal at $220K and not deal with me at all. But if you go through me, then I am entitled to my fair share. You didn't pay me to work the entire year, driving one town after another, putting up signs, making cold calls, networking, paying for local ads to make $2000 on each deal I netted prior to this $50K gem. Why should I give it to you for less than it's worth in a wholesale market?

Correct if the title company you were using would not give me insurance sufficient to cover your fee I would not buy it or fund it for one of my JV Partners.. Risk is not worth it.. We have no shortage of deals so this would just be another one in our pipeline nothing special.. And if your other TRUE cash buyers were not smart enough to know about title insurance then thats one them. I suspect a lot of your buyers to most of your buyers are getting HML Loans in that case title insurance is for the amount of the loan and if the loan included our fee then they are insured.. I am sure these are issues your probably just not experienced enough to know of.

The reality is the writing is on the wall states are after NON licensed wholesaling assigning just is what it is.. the fact that you would make 50k on a 220k sale when a brokerage fee would be 15k.. thats 35k that is being taken from a seller who probably knows no better or has just been lied to by the wholesaler as to the real value.. and that is what the law makers and regulators are focused on.. 

 The first part of your post makes sense and I find nothing to disagree with. It's a free market, no body can force anybody to buy or sell anything. If the product/contract/service I offer is not suitable to you then I don't want you to be my customer. We both can happily part our ways under free market conditions.

But the second part of your post implies that all sellers are idiots, or that I (or State) is a nanny that must make decisions for mentally deranged sellers , all of whom have an IQ of 10 years old child. I don't believe this to be true. On my part, I would avoid to close any transaction with someone who is handicapped, has IQ of 10 years old child and is unable to read and understand the contract they are signing. After all, if someone was clinically handicapped and not able to understand and consent to terms of the legal agreement, then the agreement itself could be declared null and void in the court of law. 

I will be dealing with adults, not handicapped individuals. And it's their responsibility to figure what they want to ask for their property. I don't run charity, I don't run educational non-profit classes. By the way, that's one of the reasons I don't want to touch pre-foreclosures, with accounts delinquent for 60 days. Some wholesalers do, they go and offer to help sellers to stay in their homes, educate them about loss mitigation , ask if seller needs help with it and etc., before seller begs them to just rid them of their house. I will have none of it. It's none of my concern to educate or baby sit another adult in my state. No one did for to me, except for my parents, and I have no intention to parent strangers. But once I have an adult, with full cognitive abilities, who is motivated to sell and get out of that property for MAO or less, rest assured I will make my offer on that property and if they accept it I will write a contract. Let them State AG's come after me in droves, there is no crime in making an offer to someone who owns the property to buy it from them. It's marketing to public that is illegal and I have no intention to sell dilapidated , dirty , stinky and full of trash property to an end buyer in MD or anywhere. I won't sell it to investor either, I will simply secure my interest in the contract. So, which part of it is illegal or wrong? You could say I am taking it from seller if I had a contract for 220K and paid seller 185K. That would be stealing from a seller. But if seller is entitled to get more, then who is forcing them to give their property to me for 220K? Who is stopping them from finding you or other investor on their own and getting full $270K in their pocket? I certainly don't. Regulators and law makers in these blue states couldn't care less about the sellers. If they did they would have better economic policies , create safe neighborhoods and investor/business friendly atmosphere, to make their citizens prosper and able to afford the houses they live in, instead of losing it to banks in foreclosures. No, it's not the sellers they care about. They care about eating all the pie by themselves and sharing it with those who finance their campaigns and free vacations, that's what those law makers really care about. And while at it they will make sure there will be more poverty , more foreclosures and less opportunities for average Joe to make a living here. We all know the drill. I am just glad that we have 50 States and not all of them are blue and purple. So, we can still focus on doing business, even if it means we have to move out of blue and into a red state in the near future.