Determining wholesaler assignment fee

[Nicole Williams]

I really need your help BP, I am fairly new at wholesaling properties even though I quite a few under my belt. Recently another wholesaler told me I was selling myself short on assignment fees. He (the other wholesaler) said you can assignment however much you want. Just for reference, he has wholesaled over 80 properties. I use the formulas of 10-15% of the contract price or a standard 5k assignment fee. I feel assignment 10k on a 20k contract is just greedy in that case I would use the 10-15% route. Keep in mind I'm trying to build a successful real estate investing career, not just grab some quick cash. I feel like at the end of the contract when people are feeling the 'Did I just get robbed" feeling, they less likely to refer me to someone else or come back and have me find another property for them but if I give them a fair deal, then referrals and repeat business will come naturally. On the same note, I don't want to sell myself short.

So my question is how are the more seasoned wholesalers determining their assignment fees?

[Toris Diggs]

Most wholesalers have a hard time selling their deals because they not don't even know the formula.  

1st find out how much there asking price is because their asking price might be lower than your MAO.

MAO = MAXIMUM Allowable Offer (ARV x .65) - Repairs = MAO but not your 1st offer. Your assignment fee is the spread between how much you buy it for vs how much you sell it for. Most investors want a .70 discount.

Example:  

ARV = $200,000

Repairs = $30,000

(200,000 x .65) = 130,000 - 30,000 = 100,000 MAO... You have to get the seller to sell it to you for less than $100K.

or

(ARV x .70) - Repairs - Your Fee ($20,000) = MAO

(200,000 x .70) = 140,000 - 30,000 - $20,000 = $90,000   So you need to buy it from your seller for less than $90K.   

or 

This is what most new investors do.  The owner wants $150K and they'll just get it under contract for $150K and you want $20K Assignment Fee = $170K and It's only worth $200K an they haven't even checked out the comps yet or gotten a repair estimate then they wondering why they can't find a buyer?