All Forum Posts by: James Trautz

Wendell, both Cindy and I will be there!

As someone who's just getting into the Wholesaling business, let me weigh in by saying thank you for all your comments - they are invaluable. It seems to me the lessons to be taken away from this topic are twofold: First (and most importantly), operate with honesty and integrity. Second, it's important to know your craft. Obviously, the latter is much easier said than done, and there are levels of expertise (as in all crafts), but like any job, you can't be the CEO without first learning how to operate the copy machine. As far as operating with honesty and integrity are concerned; that just seems to be a no-brainer to me. I hold no misconceptions about how hard this is - yes, I'm sure there will be many "no's" from potential cash buyers, but it also seems to me that if you do your homework; if you present deals in a way that creates a "win-win" situation for all; and if you are honest in your dealings, success will come. As we used to say in the Navy, "the cream always rises to the top." Frankly, nothing scares me more than a hit to my personal reputation. Money comes and money goes, but I will always carry the same name. Thanks again for all your comments. They are most appreciated!

Thanks Ned. I just went to one in Oakbrook a little more than a week ago, but found that most of the people were like me... starting out and looking for more info. I'll try contacting the leader of that group. 

Hey folks. I've found a couple of nice properties and am ready to move on one of them, but need a good lawyer to help guide me through the process and answer some questions. Any suggestions in the Plainfield, IL area?

Each of us has our own moral beliefs and I side on the more conservative. That said, marriage is a commitment, as are the promises we make to our sellers, buyers, and team members. The issue at the forefront is one of character. Quite frankly, if one is willing to cheat on his (or her) spouse (most likely the most sacred and serious commitment and promise you'll ever make), then what's to stop them from cheating on any of those with whom they work. As my dad used to say, "if you're going to be with a girl that cheated with you, you've got to expect that at some point she's going to cheat ON you." I believe the same holds true in business.

Mindy, I concur - ergo the reason I was asking. I am new to all this, so that was the reason for my questions. If in fact the formulas are fairly standard, it appears as though this will be the hit that most owners will take - at least those who are represented by an RE agent.

The short answer to your question is that the seller is a motivated seller, but I'm not sure they'll be that motivated. 

Thanks Simon. That's what I suspected. 

So with that in mind (given my example of the $500,000 home), Is that enough room to still negotiate a win-win situation for the owner? I mean, after you figure in the 30% profit (500K X.70 = 350K), less $20K in repairs and my Wholesale Fee (let's say another $5K), my Maximum Allowable Offer will be roughly $325K (or 65% of ARV). So the owner gives up 35% PLUS the commission of $25-$30K (depending on if it's 5 or 6 percent commission)?

I've got to believe my computations are off somewhere. That means the owner (whom I'm trying to create a relationship with) is giving up a total of ~40%? Am I correct?

Thanks Joel for the response. So are you saying that I don't have to account for the commission anywhere in my figures? On a $500,000 home, 5% commission is $25,000 dollars... Are owners willing to pay that kind of money AND at a reduced price? 

Don't mean to ask what seems to be a silly question, but I'm new to the investing world (I'm sure - quite obviously). :) 

Looking for some guidance… In a wholesale situation where you're using the MLS to find a home, how does the agent get paid? For example, I found a home that I think meets the 70% criteria I'm looking for. I figured out the ARV, factored in the 30% profit for the buyer on the back end (ARV X .70) and the estimated repairs for the Cash Buyers Net Purchase Price. I then added about 10% in Misc. Expenses and my Wholesale fee for a Maximum Allowable Offer. What I'm not sure of is how (where) to figure in the Real Estate Commission the Listing agent should receive?

On a related note, would it do me any good to negotiate directly with the seller, and/or the bank in this situation? Seems to me that if the property is listed on the MLS with and Exclusive Right to Sell, the listing agent is going to get paid anyways, correct?

Sorry... anyhow, my my wife and I own a home in Virginia so we're definately interested in Long Distance.

Hattie - appreciate the info on how-to-guide. Getting ready to download it now!