DC Wholesaling Fee Question

[Emily Segal]

Hi BP,

Does anyone know what a "normal" wholesaling fee would be in the DC market? I have recently met a developer in the area and brought him information on two property leads without sharing the exact address. He is interested in the properties and would like to go see them in person. As of now, I do not have either of them under contract.

The developer has sent me a template for the contract that he uses for finders fees and asked me to fill it out, including the amount in the compensation section. This is my first time working on a potential wholesale deal so any advice would be appreciated! 

Thanks,

Emily Segal

[Barry Pekin]

@Emily Segal,

The very, very, very first step in wholesaling is to contact the owner and determine their motivation for selling. There are waaaaaay more non-motivated sellers than motivated ones, and without that, you have nothing. Then, after getting to know them and what they need and how you can HELP them, you get the property under contract through negotiation. Now, armed with all of the information you need (ARV, repair cost estimates), you know roughly what it will sell for. This is what you can expect from your cash buyers. By the way, it's a negotiation with them, too. Generally they will pay 70% of ARV less repairs, but everyone estimates those numbers differently. So what is your fee? It's the difference between what you pay and what the buyer pays. It's not a set amount. Would you do it for $1000? $5000? $15000? $50000? All of those are potential fees. It comes down to seller motivation - what you can buy it for, and buyer motivation - what they will buy it for.