I would like a little understanding

Member since 2019 · 46 posts · 5 votes

Okay I don't understand lets say for example a house ARV is 319,000 and the house need 35,000 in rehab and I get it down to 94,200 the (MAO) on the purchase and sale agreement. Then I find a buyer and sell the contract to him for the house for 188,300

What I want to know is the seller gets paid 94,200 dollars and the buyer pays 188,300 to own the house and the buyer pays me for getting them a good and no money comes out of the sellers pocket I am asking if I got how things go right

Also if a seller ask me how I get paid exactly what should I tell them the truth or something else I am worried that if I get a very large amount of money (hypothetically) they will feel they are being tricked I would like to be honest because I have no intention of cheating anyone out of there money.

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Brian Van Pelt
Specialist · Owings Mills, MD · Member since 2017 · 485 posts · 415 votes
7y
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Brian Van Pelt
Specialist · Owings Mills, MD · Member since 2017 · 485 posts · 415 votes
7y
@Account Closed
What you are describing is call "practicing real without a licence" and can and probably will land you in court , if not in jail.
If you are going to look for sellers,find buyers and receive payments, you may want to do it right and get a RE Licence

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Adam Mitchell
Rental Property Investor · Richardson, TX · Member since 2019 · 120 posts · 82 votes
7y
@Harold Smith your description is accurate and what your describing is a wholesale transaction. You found a seller with a need to sell a home and you sign a contract to buy that home with the option of assigning that contract to a partner “another end buyer investor”. I would lay out our numbers to the seller if they want to see them (some do, some don’t) and explain your business. If you buy properties with cash explain how you get to your number, if you partner with other explain you facilitate or match up buyers and sellers. Being straight up is the only way to grow a successful business and your integrity will be in tack.
If you are wholesaling you have to be a little careful about your description. After you sign a contract with a seller, You are ONLY selling a CONTRACT (the rights to buy a house), not a house. If you promote “selling a house” you could get dinged for brokering which you don’t want.
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Barry Pekin
Specialist · Purcellville, VA · Member since 2015 · 1k+ posts · 841 votes
7y
Don't mislead or lie to your seller. They will eventually know what you're making when it comes time to closing. If you're making a bucket of cash, as you're describing in this deal, they could get upset if you haven't communicated well with them. If they get upset, it could cause you some issues, though not legal ones if you're doing things properly.
It is true that you have to do your homework. You should not be acting as an agent, but if you're doing things properly, then this is not a problem and you have nothing to worry about. Laws vary from state to state, so make sure you have an attorney on your team to bless your methods. If they don't, check with another attorney. If they all agree, you might not be in a good state. There are only a few of them, so definitely do your homework.
Also, it's not so much that the buyer pays you for finding a good deal. The buyer is paying for the contract. You have a price you've negotiated with the seller and a price you've negotiated with the buyer. Your fee, or rather profit is the difference.
You need to establish a rapport with both the buyer and the seller. The seller needs to know that you will earn money on the deal based on the negotiated amount with them and the buyer, and that could be a lot or a little depending on how things go. If you're doing things right, the seller is motivated to sell based not on dollars, but on other factors, and they shouldn't be too concerned with your profit. They should be happy they had their needs met, and you should have already addressed their needs.
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