Buyer mad at wholesaler profit?

Question

I want to start wholesaling houses and I think some buyers would have a problem with me making money from them buying the house. They would most likely just want to cut me out as the middle man and buy straight from the seller once I've shown them the property. Is it possible for me to hide how much money I'm making on the sale?

Steven Leigh · Answer

One other tip: When people want to be put on my buyers list I generally say, "I just want to let you know, that I make a lot of money on my deals, and I leave a lot of money in the deal for you as well. Are you okay with that?" They will always say yes, of course, but now if they start to complain about it later you can remind them of this conversation.

As others said, if it's a professional, they won't complain about what you make. They might grumble to themselves a little bit, but they will come back for your next deal.

Russell Brazil · Answer

You need to learn some dialogue to explain the costs.  The amount of money you are making is gross, and is nowhere close to the net profit to you, business operating costs, self employment taxes etc.

Steven Leigh · Answer

I agree with what others have said above, but also wanted to add one thing.

"They would most likely just want to cut me out as the middle man and buy straight from the seller once I've shown them the property."

No they wouldn't, because you have a contract to purchase the property. If the seller tries to sell directly to the buyer, you could take them to court. Would you actually do that? Probably not, but you could threaten it if needed.

The other thing to realize is that buyers who go behind a wholesaler's back tend to do that ONCE. Then all of the wholesalers in the area stop sending them deals and they get freezed out. They also might get kicked out of the REIA, other networking groups, etc.

As others have said, this is just fear talking. Your fear is trying to find ways to convince you that you can't do it, or that it's not a good idea, etc. Just power through the fear and keep learning and taking action.

Jeff Filali · Answer

I buy a lot of properties and some are through Wholesalers.  I don't care how much they make if I want the property at the price we agreed upon, but if you're worried, you can do a "double close".  I know a lot of Wholesalers say they do a double close if they're making more then $5,000.  If you do a double close, the end buyer will not know what you made.  Good luck!!

Jay Dewberry · Answer

I would have to agree with many of the statements above. If you're dealing with someone that has a problem with your cut...get another end buyer. However, from what I've read and understand, the general consensus is if in the neighborhood of $6k or less...straight close. If above 6k...utilize the double close method in order to minimize the previous data on the HUD-1. But in my opinion, if a wholesaler has left enough profit tied in for the end buyer, there should be no reason to complain. If so, perhaps you're dealing with an inexperienced and/or greedy end buyer.

Eric F. · Answer

Double close if you really want to "hide" what you make but the real answer is deal with professional investors. I wouldn't deal with someone who would cry about what I was making. I also would not deal with someone who I was worried would go behind my back. I know I would never do that to someone else.

The only thing that should matter to the buyer is if they are happy with the price. It doesn't matter if you are making 2k or 22k.

Ned Carey · Answer

If you are offering a good wholesale deal then you don't care if someone walks on a deal because you "Are making too much," because if you are doing it right another buyer will step into their place.  If another buyer is not quickly ready to step into the first buyers place, you probably are trying to make to much money.

Ronald Starusnak · Answer

The price you have the property under contract for has absolutely nothing to do with what the buyer is paying. They're going to be buying from you because you gave them a good price they were comfortable with. Get them under contract to buy before you expose the price. The entire wholesaling industry exists because people want others to find them deals. Fix & Flippers often seek out wholesalers and they know the wholesaler is trying to make as much as possible. They're not going to squeeze you if they're experienced.

Jimmy Cantave · Answer

double close

Buyer mad at wholesaler profit?

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