Does my alternative wholesaling strategy make sense?

[Shubham Aggarwal]

I am a licensed realtor in Florida looking to start wholesaling. Instead of wholesaling, I am thinking of a "double-dip" listing strategy that has less risk than wholesaling. Let me know if the below makes sense. I am aware the execution of this plan is much easier than writing, but just brainstorming.      

1. Find a distressed seller that is looking to sell (obviously the hardest part)

2. List the property on the MLS for the standard 2.5% - 3.0% commission.

3. Market the deal to cash buyers/fix and flippers.

4. Once I find a buyer, offer to represent the buyer in this transaction. Since dual agency is prohibited in FL, I will transition to a transaction broker that will represent the transaction (i.e. limited confidentiality to the buyer and seller).

5. As a transaction broker, I am eligible to receive both sides of the commissions, effectively doubling my commission. I would be willing to reduce the overall commission for the seller (maybe by 1% or so) so that it is a win-win for both of us.

Pros of this strategy: 

1. Eliminate risks related to wholesaling, such as finding a buyer in time, earnest money, potential low margins.

2. If I am unable to find a buyer, I will at least make the listing side commission, so I virtually have no downside risk.

3. Do not need to get an inspection, estimate repair costs, etc.

4. Peace of mind. Do not have to worry about an upcoming inspection period deadline or closing date.

5. Potentially build relationships with cash buyers that are willing to let me represent them, creating a win-win for both of us.

6. Reduced legal risk. I will be acting in the capacity of a licensed agent, so I can market the property freely without legal consequences (unlike wholesalers that sometimes act like they are selling the property instead of the contract).

7. Maybe less predatory toward the seller? I am not trying to buy their house, but instead helping them with a difficult situation and getting them market value for the current state of the property.

Cons of this strategy:

1. Upside of the deal is limited to 5-6% of the purchase price. If a wholesaler could get an 8% assignment fee, I am losing out on those additional dollars.

2. Buyers may want to use their own buyer's agents. This will limit me to the listing side commission.

So, am I talking out of my *** or does this make sense? Any additional cons that I need to watch out for? I do not know the reality of how sellers and cash buyers actually act in real life. I am just trying to create a plan in theory, so I would greatly appreciate any insight at all. Thank you!

[David Ramirez]

Even if you are acting as a transactional broker, you can only represent one party, which in this case would be the seller, because you have a listing agreement in place and must act in the best interest of the seller. If you encounter a buyer not represented by an agent, you could potentially submit an offer on their behalf. However, if they are experienced, they might request that the buyer's commission be deducted from the purchase price and choose to submit an offer themselves.

About 90% of our sellers don't want to list their property or pay agent commissions, and most want a quick transaction. In my opinion, you are much better off wholesaling off-market properties, especially if you're already targeting distressed homes/sellers. Additionally, my average assignment fee is 12% of the assigned price, which is twice as much as what you might typically earn if everything goes as planned with your strategy.

Finding a buyer on time is the least of your worries, trust me!

Please feel free to reach out with any questions.