Determining how much you make on wholesale deal?

Question

Everywhere that discusses wholesaling talks about being able to make $500-$20000+ on wholesaling deals.  Common basis for pricing things out is of course the 70% ARV less repairs.  My question is how you go about determining what you will get paid for the deal?  Is it just a matter of feeling things out and trying to maximize it without being excessive, do you do a certain % of the overall cost, or something else?

Ned Carey · Answer

How much are you able to buy below 70% less repairs? That is your spread. Of course if different investors use a different formula or estimate ARV or  repairs less then you, then that will affect the wholesale fee you get.

Anthony P. · Answer

It absolutely depends on the deal and how you structure the deal.  If you're are presenting a deal that is actually at 70% ARV less repairs, the investor will not care how much you are making on the assignment.  I go into every wholesale deal with the expectation  that my cash buyers net more profit on their flip than I do on the assignment.

The HUD will reflect the assignment fee.  I have been at every closing where I have assigned a contract over.  I have never had a homeowner question anything.  Be transparent at the front end with everyone and the closing will go smooth.

BTW if you come across any 70% deals in Raleigh, PM me.  I don't care how much you make on the deal.  If it's in my target area,  I'll take it...

Ned Carey · Answer

The seller may not even notice the assignment fee because it is on the buyers side of the hud-1. They are looking at what their fees are, not the buyer's fees. I often wind up double closing so the seller never sees the fee anyway.

Account Closed · Answer

Thanks for all the input, this definitely answered my question!

Account Closed · Answer

@Colleen Chapin @Ned Carey thanks for the thoughts!  Do you often find that the seller gets upset when they see a high 'fee' if you do an assignment, or do they usually not take much notice? (and if they do get upset can they pursue anything with it or are you still solid because they've signed already?)

@Roland Paicely thanks!  Just a matter of feeling out each situation individually then?  Might get in touch with you in the future with a few questions about the Raleigh area if you don't mind

Arktavious Sally · Answer

Make as much as you can and still be able to deliver investor a great deal. 
Your wholesale profit will be determined by your ability to find and negotiate killer deals.

Collin Goodwin · Answer

Daniel, I like to have a basic template showing my wholesale fee's based on the amount of equity in the deal. This way, the better I do, the more I get paid. As a result, my buyers recognize the added benefit and can anticipate their fee's.

Ryan Harthan · Answer

One of my friends bought a house for 30 and sold it for 90.  I bought one for 43 and sold it for 80.  MLS deals are going to be skinnier because there's more competition but I see people making better than 10% of purchase price on off market deals.  Also comes down to your strength as a negotiator on the front side and the strength of your buyers list on the back end.

Determining how much you make on wholesale deal?

Most Popular Reply