How negotiable are wholesale deals?

[John Weidner]

Im a broker and have full access to the MLS. As the inventory is tight in my area I've reached out to a few wholesalers and have seen a few deals pass though my email the past few weeks.

Nothing too impressive so far. Kind of bottom barrel stuff and alot in war zones Im not interested it.

As I've never bought a property wholesaled, for those of you have what kind of profit margins are these wholesalers making on average? And how negotiable are whole sale deals? Is it a back and rorth negotation or are they normally priced pretty accurately right off the bat.

Appreciate the info.

[Belinda Lopez]

It's going to vary with the deal and wholesaler as to how much they want to share with a broker. If you're buying for yourself and you show a good wholesaler that you can close quickly, then they will start bringing you better deals. I often get calls from brokers/agents on my wholesale deals asking if they will still get paid their commission! And these are non-MLS deals. I have no problem offering a quick $1k finders fee or more depending on the deal but don't expect a regular commission like on an MLS deal. Some brokers/agents are offended others are fine. Others are paid by their Buyer since they are working for as a Buyer's agent.

On SFH the wholesale margin can be from $1k - $10k (on average) but since the market is pretty tight right now, a few thousand is not too bad. However, now that I'm doing Mobile Home & RV parks, we're talking about $50k or more per deal so in those cases I'm happy to work with a broker/agent for a larger cut. I've found that one of the reasons Sellers don't want to work with agents is to save them having to pay the commissions. On under $100k homes there's not alot of room for commissions. And on more expensive properties, i.e., a $2.25 million RV Park we did recently, the Seller absolutely did not want to pay 3% to someone just for listing the property and then another 3% for a buyer's agent.

We had a call from one broker who was indignant that he might "only" get $10k if he bought in a buyer. He said it wasn't worth his time. I said, fine, but the contract was already written, the Seller was partially owner financing under great terms and there was really nothing for a buyer's agent to do other than show the deal to his client. And he wondered why investors didn't want to work with him as a Broker. To each his own, I suppose.