Wholesaling to a Retail Buyer

[Dave Savage]

I have a good handle on wholesaling distressed properties to cash buyers. Right now though I am getting a number of leads of retail ready properties at 90% of Retail pricing for a strong multi-family market in Rochester, NY. I also have realtors with owner occupied buyers who are looking for these types of turn-key properties but their buyers need to get a traditional loan.

This results in two questions:

1. Can I wholesale a property to a retail buyer that needs to get a traditional loan? Not sure if a bank would look at an assignment contract as acceptable for writing the loan.

2. How should I compensate the real estate agent, as in NY they can not get a referral fee or commission if it isn't a listed property (I have heard)

Is there a way that others are doing these types of deals?

[Dave Savage]

Any ideas?

[Elio L.]

You won't be able to use your buyers cash to fund the A-B transaction so you'd need to use your own money, private money, or transactional funding. The banks con

I believe that you can pay the realtor a referral fee for bringing the buyer in.

[Ted Akers]

A conventional mortgage lender for your end buyer will not fund on a contract being assigned. They would require you to be in title and for that sale contract to be between you and the end buyer. You would need hard money, private capital, or transactional funding. These are workable but expensive and a challenge to fund for transactional funders because the funding amount is noticeably higher than a hard money loan (less equity cushion). Transactional funders need to shift that risk by requiring you to have the end buyer very financially committed to the deal (higher than typical non-refundable earnest money in the 5-10% range depending on the specific deal) and no remaining contract contingencies at the time we would fund your purchase.

[Dave Metsker]

You want to develop a list of wholesale buyers, who pay cash. This avoids the problems with retail lenders who want to buy from a person that shows on title as being the owner of the property. If you use transactional funding you can close A-B side with the funder's money, and next day close B-C to your cash buyer, keeping the spread.