Wholesaling a LISTED property

[Samantha M.]

I am looking at a home right now that I intend to wholesale. The owner just signed a listing agreement just earlier last week. However, they are very motivated and willing to accept under list price.

They are asking for 60k, and they are willing to take 40k for it. If I make an offer I have an addendum that states all offers must be presented through your realtor if you have a valid listing agreement.

If I were to get it under contract can I still get an option period on it and such even if the property is listed? I figure as long as the realtor still gets there 3% it doesnt matter one way or another.

Thanks

[J Scott]

Originally posted by Samantha M.:

J Scott Thanks. The next question I have is if they already agreed to give the realtor 3% how does that work? For instance its listed at 60k and I might get it for 40k. Would I give the realtor 3% at my contract price or 3% of the listed price: (contract)40k = 1,200 3% of (listed)60k = 1,800

First, you're not giving the agent anything...the agent's commission comes from the seller, not the buyer. Of course, the seller needs to factor that into the equation, so it may impact what he's willing to accept, but ultimately, all the commissions come from his proceeds (or his pocket), not from you.

Second, the commission is based on the sales price, not the listing price (or even the contract price if for some reason that's different than the selling price). So, in your example, the agent would get commission on $40,000.

Now, you might be thinking, "The agent is going to be very upset only getting commission on $40K when the list price is $60K and is going to try to talk their client out of it." But, in reality, if you don't have an agent on your side, the listing agent will *likely* get 6% of the sales price ($40K), which is more than she'd have gotten had the sale gone to a buyer at $60K with another agent.

All that said, the commissions shouldn't factor into what advice the agent gives the client, but in reality it often does. Make sure you remind the agent (not that you'll need to) that she'll get 6% on the sale...