First offer submitted

[John Walston]

Just submitted my first offer in a property listed for $100k. 1,300sqft, 3 beds 1 bath. Roof and slab condition unknown. I found the ARV to be around $180k+ for my area, so it made sense to put in an offer at $73,000. We negotiated a 2% earnest fee and 1% option with 30 days.

Is this a strong offer, and do I have enough room to raise the price for my wholesaling fee later? if they make a counter offer, the highest I will go is $75k.

Finally, what should I be looking to sell this house for to my cash buyer later? I am hoping to set my wholesale fee at $10-20k. Is this feasible?

[Lydia R.]

Here is the problem with trying to wholesale a listed property. Well there are actually a lot of problems. The first one is the fact that anyone can find this opportunity. You arent bringing a buyer something they couldn't have gotten without you. Because of this, there are many buyers who refuse to pay a wholesaler for a listed deal. They will just ghost you leaving you wondering why no one is responding to the deal you have. The second issue is showings. Let's say you have 5 or 6 investors interested in the property. How do you get them all in and out of the property without raising suspicions of the agent and the seller? Lastly, you say your highest offer will be $75,000 and you want to make a $20,000 fee? You realize that's $95,000 for a house that was originally listed for $100,000. You see the problem with this right? Thats not a deal. You havent actually brought anything of value to the table. a $5,000 discount is not even worth mentioning. You also havent mentioned the repair cost. I'm guessing if the property ARV is 180K and the seller is offering it for 100K its because the house needs a fairly significant amount of work. Which can make the margins pretty skinny on deal that may sound great on paper.

My biggest advice is that you should try to find off market opportunities. As for this specific property, I would highly recommend that you find buyers who don't mind listed properties. Also, you are going to need to secure a solid proof of funds. Next step in this process is proving you have the funds to close this deal. Agent is going to insist on this. There are some hard money lenders that will provide this POF for you to secure the contract.

Good luck on this deal. I think you need to be more realistic on your target assignment fee and more aggressive on your offer price, but that's just my opinion based on the information you provided.