Working with agent and wholesaler a good thing? Milwaukee, WI

[Chris Semklo]

Hi there!

I am currently working with a great agent, but I'm learning that it's very difficult to make the numbers work when making offers using the MLS. The market in the Bay View/Fernwood neighborhood of Milwaukee is hot and duplex's that need to be completely gutted are selling for $150k and up. 2% rule is out the window, but I feel I can get close with 1.5% if the purchase price is right. My strategy is to 'house hack' using the FHA 203k loan.

 I know there have to be better deals out there. I'm thinking about looking for a  wholesaler in my area or even doing the work myself if I have to (i.e. mailers, going door to door) to find the deal that makes sense.

My question is, will wholesalers work with agents and will I have to pay the agents 2.4% commission, if I find the property myself or if I find the wholesaler with a deal myself? I don't even know how to present this idea to my agent? I don't want to offend anyone with my ignorance of how things work in the real estate industry...

Any and all thoughts are appreciated.

Thanks!

[Svetlana Foley]

Agree with @John Newhall.  Many times you should be able to buy from the wholesaler directly - make sure its someone experienced and had been doing it for a while; occasionally it is still a good idea to pay extra and have a realtor handle the paperwork/legal ramifications, depending on the property.  Many times the realtor will negotiate the seller paying a commission out of proceeds, sometimes it would be you if the numbers still make sense, sometimes it would be a split between you and the seller.  On properties under 100k we are not talking immense amounts of money for commission.  I always negotiate my own commission when my buyers buy wholesale, and will help even if I don't get paid.  There are many excellent and experienced wholesalers in Milwaukee that have attorneys look at the paperwork if needed.  You should definitely let you agent know about your plans, and he/she may be willing to look at wholesale properties for you as well.

Another thing to consider - there are a few foreclosures in Bay View that are in absolutely atrocious shape, but foreclosures are not a good deal right now, banks are very greedy. You can ask your agent to write multiple low-ball offers on those, both HUD and Homepath, knowing that majority will be rejected, but you may get lucky with 1 out of 60 on average. That is a lot of work for your realtor for nothing, and you would want to have some sort of arrangement with paying a very small sum for simply writing an offer - if will be worth it if you are able to get a deal.