Wholesaling: flat fee or difference? What am I missing?

Question

I'm a broker in Oregon and Washington, and I'm trying to wrap my head around wholesaling. Please point me in the right direction of a post that answers this, or chime in. These are the steps, as I understand them:

1. Identify a property that can be acquired at a discount for whatever reason (benchmark 60% ARV)

2. Negotiate "transferrable purchase agreement" with homeowner, price at that 60%+/- ARV number; contract for long escrow (90 days to 6 months, as possible)

3. Identify actual buyer who is willing/able to pay at least negotiated price, plus finder/transfer fee ($5-10k, for example); create a contract with end-buyer that identifies finder/transfer fee, agreement to complete purchase, and assigns difference (if any) of contract price and end-buyer price to self

4. Open escrow with homeowner, end-buyer, and self; self transfers contract to purchase to end-buyer in Title/Escrow, and provides T/E with end-buyer's contract with self: agreement to purchase, and fee instructions for self ($10k + difference if any) to be paid out of closing escrow

5. T/E informs self of release from obligation to buy; wait for closing/recording and get paid.

Am I missing anything?

Cheers!

Adam

Jonathan Greene · Answer

If you are looking to wholesale yourself, there are barriers to doing it with a license as the brokerage must be compensated on all deals involving real estate per your license. Wholesalers are a good resource as an agent for investor clients and when you know them well, you know which ones have buyer comp and which do not.

Stephen Montez · Answer

Hey Adam that sums it up! Only thing I would add is that there are certainly investor friendly T/E companies that have worked with wholesalers before and I would look to use them if it were my first transaction as they can be really helpful in walking you through it once you actually have a deal in place. Best of luck!