Finding wholesale deals through agents

Rental Property Investor · Duluth, MN · Member since 2021 · 127 posts · 38 votes

I've been looking for a question for a while, but it's hard to find because it's more nuts and bolts. So, if we have an agent bring an off-market deal specifically for wholesaling, how does that process work? Specifically, do we use my contract or the agents? (both are possible) Secondly, do we pay commissions or a flat fee? I know there is no right way to do it, but if someone has done it and they could help visualize the process, that'd be greatly appreciated.

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Scott E.

Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes

Maybe I'm missing something, but what agent in their right mind would give a lead to a wholesaler? If they take the listing themselves, they are going to make more money (commission) and they will do better for their client (the seller).

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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
4y
If it's a wholesale deal through the agent, you should only be paying for the property and he or she would get the assignment fee in the middle (although their brokerage will not like that and it is an issue). If the agent sends you wholesale deals from someone else's list, you ask if the wholesaler or seller is offering a buy-side to the agent and if not, you will pay the buy-side fee to get the deal most likely.
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Lydia R.
Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
4y
@Noah McPherson Talk to the agent and find out what they want. Some agents just want a commission because they arent comfortable receiving a wholesale fee. Its easy to ask someone how they want to be compensated. Some of it will depend on whether you are buying the property for yourself or if you are planning on wholesaling the property. You could do a JV with the agent (most expensive option) or pay a flat fee (least expensive option) or anything in between. Take into account the lifetime value of a referral source. If someone is going to keep bringing you deals then make sure its worth their while to do so.
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Duncan Hayes
Investor · Austin, TX · Member since 2019 · 229 posts · 229 votes
4y
my first deal came from an agent. I haven't done one with an agent since though. I met the agent, she was a new agent and I was new to wholesaling. she was sending me leads daily. one day she sent a lead that ended up being my first wholesale deal. my assignment was $7k, I gave her $1500 cash for sending me the lead.
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Scott E.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
4y
Maybe I'm missing something, but what agent in their right mind would give a lead to a wholesaler? If they take the listing themselves, they are going to make more money (commission) and they will do better for their client (the seller).
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Noah McPherson
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Rental Property Investor · Duluth, MN · Member since 2021 · 127 posts · 38 votes
4y
@Scott E. Some people build entire wholesale businesses based on agent relationships actually. Agents being them what's called a pocket listings. However, I do see your point and many people think the same way as you. Also, another thing to note, is that this would be a dual agency. The agent is representing me aswell trying to get me the best price.
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Noah McPherson
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Rental Property Investor · Duluth, MN · Member since 2021 · 127 posts · 38 votes
4y
@Duncan Hayes that's how I figured would be the best way to structure that. So it'd basically work like it always does but paying an agent a finders fee.
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Noah McPherson
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Rental Property Investor · Duluth, MN · Member since 2021 · 127 posts · 38 votes
4y
@Lydia T. Thanks for opening my mind to that. The JV thing might be a good idea. It'd take an enterprising agent I bet tho
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Lydia R.
Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
4y
@Noah McPherson Surprisingly there are more and more agents learning about and considering wholesaling. Its not an overwhelming majority but its become a lot more mainstream than it was 5-10 years ago
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Noah McPherson
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Rental Property Investor · Duluth, MN · Member since 2021 · 127 posts · 38 votes
4y
@Jonathan Greene Yeah, you're right, their brokerage is not going to like that. I find that agents aren't very fond of wholesalers and vice versa. It's probably because they compete, but many wholesalers do honest business and help solve people's problems.
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Aaron Gordy
Real Estate Broker · Austin, TX · Member since 2012 · 1k+ posts · 1k+ votes
4y
Its really a question of who do they represent. The agents have a fiduciary duty to place their clients interest above their own or they could lose their license. If they have a pocket listing then they are still representing the seller and are bound to get them the best deal. The agent needs to be absolutely clear to all parties of who they represent. Their career is in jeopardy if they make the wrong move.
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