$2,750,000 40 Property Package Sale???

Question

Hello Fellow Investors

My curiosity is driving me crazy. We have such a diverse mixture of knowledge and business savvy here. In brief, I have a wholesale deal pending on a 40 property package deal ($2,750,000).

I am curious as to what other investors would request for a birddog and wholesale fee? The thing that really intrigues me are the possible answers that could come from all around the country.

After several investors respond I will reveal exactly what I am charging as a wholesale fee, and what I would charge for a birddog fee.

Let's have some fun guy's (and gurl's).

Jeff

Bill Gulley · Answer

Don't let having a contract throw you, the seller is paying, that is not a contract assignment arrangement, that's a fee paid to sell or arrange a sale. You could get to a closing to learn you get nothing, otherwise, do you look good in orange? LOL

Jon Holdman · Answer

Assuming that when you say "yes the properties are under contract" you mean there is a purchase or option contract with you as the buyer, then I think 4% is a pretty fair cut.  If you're that invested into the deal, I would assume the buyer is expecting you to close, one way or another.  And that you have some earnest money on the line.  And have a strong incentive to actively work to find a buyer.

I think bird dogging or just referring a buyer to a seller is worth much less.  Less than 1%, maybe more like 1/2 %.  Depends on the sitaution.  I've seen lots of crazy posts here from people supposedly selling bulk REOs where they think they can repost an e-mail and tack 3% onto the deal.  They probably got the email from someone else who thinks the same thing.  Their total value is making some posts on the internet.

Braden C. · Answer

He said the properties are under contract in one of his posts above.

Patrick L. · Answer

Assuming you are just a "wholesaler" and not a licensed agent or broker how would this not fall under the category of practicing real estate without a license (a felony in most states)?   I understand if you have one house under contract and want to assign that contract but trying to broker a sale of 40 properties for a commission sure sounds like practicing real estate.

Jeffrey Tucker · Answer

Hello Ben

No, this package is literally spread all over the city, and they must sell as a package deal.

Ben Reiss · Answer

Do these properties happen to be mostly in the Point breeze area?

There was a guy looking to liquidate his stuff (about that many) in that area but I think he was selling off a few at a time also if he could. This was about 2-3 months ago when I was buying a lot in Temple area

Jeffrey Tucker · Answer

Hey Jon

How are you? Yes, actually it is the same deal. Sorry, I am new to the site and should have read rules before posting it in forum. Anyway, yes the properties are under contract. In the past I have also used a flex option.

The seller is paying the 4% in this deal, which needless to say is worked into the asking price. Would you also say that Birddogging and Referrals is also the same job?

I must admit that I do have these pipe dreams of 5% - 10% on occasion, but contrary to what Gordon Gekko preaches, greed isn't good.

Jon Holdman · Answer

Is this the same package you describe here:

http://www.biggerpockets.com/forums/517/topics/86949-40-income-property-package-in-philadelphia?

Are you charging the buyer 4% on top of the $2.75M?  Or, is the seller paying that?  Do you have those properties under contract?  4% seems reasonable for a wholesale deal where have the property under contract and are committed to actually finding a buyer, as you would be if you had it under a contract to purchase or a listing contract (wholesaling and brokering are the same job, IMHO.)

Birddogging, OTOH, usually involves much lower fees.  When birddogging, you don't have any sort of contract nor any obligation.  You have contact with someone, presumably the person who's actually going to sign at closing. You, and others, are spreading this info around trying to find a buyer.  But no contractual obligation or risk.  Other than the risk Wayne Brooks that you might be accused of brokering without a license.  Wholesalers, in theory, avoid that because they have a contract to purchase, an option, or some other agreement with the seller.

Jeffrey Tucker · Answer

Hey Deriane

Thanks! I was just curious about what other investors were doing in other areas. Actually, I went with 4%. Good luck to you...

Wayne Brooks · Answer

I will assume you don't have the POF or preapproval for a purchase this size, so no experienced seller with let you control this with a contract.  That eliminates "wholesaling" and leaves you with bird dogging, which is generally illegal for purchases in most states.  Aside from that, I think you would be very lucky to get a 1% referral fee.  5-10% is a ridiculous pipe dream.