Wholesaler Taking Too Much Pie....?!?

Question

Do you care how much the wholesaler is taking from the deal?.....

When you get a deal, does it make a difference to you how much the wholesaler is making?

If so, how do you know how much he took for his cut?

Aaron Mazzrillo · Answer

It is irrelevant what the wholesaler made. Only greedy chumps get upset about such petty nonsense. If the deal works for the investor, why get upset if the wholesaler made $1 or $100,000? That is one deal the investor didn't have to do a thing to find.

Should we all get upset about how much the gas company makes off us for a tank of gas? The grocery store over a gallon of milk? The dealer on a new car? The company people work at for the hours put in?

Fastest way to get no emails from me ever again is to complain about my fee. I just wholesaled a house to a guy that has a $55,000 wholesale fee on it. The buyer said he was going to go have a celebratory lunch. Not because of the fee he's paying. He's going to celebrate because he was sitting in his office, got a text message, and now he has a potential $30K check in his future on a deal he didn't have to spend a dime to find.

Aaron Mazzrillo · Answer

We all make dumb business decisions. LOL If I were on that panel, I'd be very tempted, and most certainly would lean forward, look over at him and tell him he's an idiot. The wholesaler can only make $10K, but he can make whatever he wants on the deal?

Not sure if you ever heard the lecture I gave with this dude Ryan at the BP Summit. Someone in the audience asked us "How much should you charge for a wholesale fee?" Ryan started on this rambling dissertation about wholesale fees, but I cut him off and said, "The correct answer is, as much as you can get."

Personally, I don't like my wholesale fee to be less than $25K on a deal.

Ned Carey · Answer

@Atwan Kwan I am curious who that speaker was. I agree with @Aaron Mazzrillo who is right on spot, The guy is an idiot.

So if I had a property that only cost me $100K but it was worth $1,000,000 AS IS he would only offer me $110K max?  A good question for that speaker would have been "will you buy all  my lousy deals if I only make $1,000.00 a piece?"

The issue is; "Is it a good deal for the end buyer?" If it is, then how much the wholesaler makes is irrelevant. e

Aaron Mazzrillo · Answer

Apparently, you've never heard of the internet. You think that little old lady hasn't checked out her house on Zillow? Come on. This is the same type of thinking that people use to scare wanna be landlords, "You want to be plunging toilets at 4am?!!"

Complete nonsense.

Darwin Crawford · Answer

Great thread!

As we say around my office, "we charge a fee for working with incompetent people"...

I'm with the "if the deal makes sense, who cares?" camp.   As someone who started very distrustful of the wholesale industry, and now in the thick of it, I appreciate much more what it takes to close a wholesale deal.

Sellers to wholesalers are an unholy pain in the rear to deal with.  Daily, I solve problems for them related to lifetimes of poor decision making, bad financial decisions, and unpaid bills.  Paying for moving vans, cash advances for apartments, and a little side of credit counseling are all in a day's work.  Coming from the Buy/Hold world, I'd have told most of these sellers to pound sand.

If I as a wholesaler do my job correctly, the investor I sell to thanks me.  If I make a dogs breakfast out of a deal, I shouldn't get paid, and the investor should tell me as much.  So yeah, the wholesaler is worth whatever the deal supports.

Mike Cumbie · Answer

For investment purposes I couldn't care less how much a wholesaler takes from an investor and moves to another investor.

The problem comes in when it's a little old lady who has no clue what the house was worth and casually mentioned at Bingo that she was thinking of selling it because her husband passed and he took care of all that stuff. The person next to her sends over some guy who tells her that her house is worth 80K and he can get her that when in reality it is worth 220K.

I understand that there are many people here who praise this and hail that wholesaler as a god in the business doing what he should be doing.

That little old lady had nobody looking out for her and she was taken full advantage of period. Everytime that happens though it gets the regulators more fired up and they will clamp down tighter on the business as a whole.

Atwan Kwan · Answer

@Aaron Mazzrillo I appreciate what wholesalers do.

Just food for thought.... At one of the large baltimore REIA meetings, they had a keynote during a panel on investing, exclaim he would "NOT do business with any wholesaler making more than $5k per deal, at most $10k if big enough"

Brandon Stewart · Answer

Everything is negotiable. If he is not counter offering with a price he is more comfortable with, I'd say he is losing out. Looking for the win-win should be the end game, am I wrong?

Wholesaler Taking Too Much Pie....?!?

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