Buying from a wholesaler with an almost 100% assignment fee

[Magesh R.]

The wholesaler is charging ~40k as assignment fee for the property. This is almost 100% of the contracted sales price(40k). The property is worth more like 120k and with some rehab (25k) can go up to 145k so it still makes sense to buy from my perspective but I think this is very unusual. 

Can you guys please weigh-in on whether anything is wrong with this picture? I am not necessarily worried about the wholesaler making money(though it looks too high in this case) but whether there is anything more to it that I need to worry about with such a low contract price. 

[Bryan H.]

Who are we to say how much a wholesaler can make on a deal? And you have no idea how much he is actually making on a net basis. either way, it shouldn't matter to you. 

Seems like all the flippers are OK making $20k-$100k on a flip, so long as the wholesaler only get's their $5k assignment fee. 

Do you want your end buyer seeing that you bought for $80 and selling for $145 to question why you should make so much money? I mean $65k profit?!?! That's too much! 

No. If $145 is the retail price, that's what they pay. They have no idea how much your net profit is and it shouldn't matter. 

Think it's easy to be a wholesaler and get a slamming deal like that? Jealous of their profits? Then do it yourself.

And no, I'm not a wholesaler, I buy and hold. My last purchases were from other investors. One investor bought at a tax auction, for $8000, a year later I paid $45k for a rehabbed, rent ready house that rents for $875. We are both happy as the deals met our investing objectives.  Do I wish I could buy for $8000, rehab it and rent for $875? Absolutely. Did I care how much he made on the deal? Nope. I have no idea how much he put into the house.

Your wholesaler needs to start doing double close so his customers stop feeling bad about his profit. 

And if you think 100% markup is bad, check out this infographic