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All Forum Posts by: Roy K.

Roy K. has started 5 posts and replied 21 times.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Belinda Lopez Thank you for that, that raises other questions with the buyer and the seller, but it's one more strategy to have under your belt

@Jon Holdman Will consider that for my next deals. Solid advice.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Jon Holdman Thank you for the advice and the concern, Jon. I work closely with an attorney, so I'm pretty confident in my dealings. I'm not breaking laws, and I don't see any reason I would find myself in front of any judges.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Billy Hills I think I'm going to do that. You're totally on point :) Thank you for the great advice.

@Wayne Brooks I'm not violating any state rules, it's all done legally and it's a consulting fee for accompanying an international buyer investor. No need to be hostile, it's my first wholesale deal and I'm learning.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Jon Holdman I think you're right. Certainly don't want that. Maybe this isn't a wholesale deal after all.... :)

Maybe next time I should either let the parties know this in advance, or just do a double closing.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Jon Holdman There's no fraud. The buyer is an investor, who doesn't live here, and told me to find him a good deal on a property and he will pay me Y% of the purchase price. This is an outside agreement between him and myself. It doesn't appear on the HUD or anything related to the deal, meaning he can't even attribute it to capex on the property. It's like you would say, "here's $2000, go find me a good deal".

I have no side deal with the seller. For the sake of the example the Seller wanted say $50,000. My investor was willing to pay that. Then I went back to the seller and said, "would you be willing to do $45,000?" and the seller agreed. So now the investor is willing to buy at $50K and the seller is willing to sell at $45K. I saw an opportunity to make $5K for myself. Bear in mind, the seller at this point doesn' know that the buyer is willing to pay $50K and the investor buyer doesn't know the seller is willing to sell at $45K.

The seller wouldn't mind me making the $5K as long as he got what he wanted. The dilemma was how to structure it with the investor buyer so that he doesn't feel "cheated".

I think @Wayne Brooks touched upon it that I should have gone to the buyer and said, "if I reduce the price, will you split the difference with me?" I think that would be the smartest thing to do.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Jon Holdman Thank you for the comment. I may not have stated the case clearly enough so I'll try to elaborate further:

The seller knows I was looking for a buyer for him. The deal with a buyer was along the lines of "find me a good deal at no more than $X, and I'll pay you Y% of the deal." The Y% is very thin, as is the assignment fee, but both are a sum I can live with. The legality of our original agreement is not an issue here.

The buyer was willing to pay the full amount to the seller, after which I negotiated the deal further with the seller, who was happy to receive less than the full amount.

I thought if the buyer doesn't mind paying the full amount and the seller doesn't mind getting less than the full amount, why not take the difference for myself as an extra assignment fee. But if the buyer would find out about it, he'd want to "enjoy" the extra savings, thinking he's already paying me the Y% of the deal we agreed upon earlier.

The dilemma was how to get the buyer to still pay (happily) the full amount, have the seller get his reduced price, and let me make the difference, while the buyer doesn't feel as if I "cheated" him by making extra money on top of our agreed upon fee.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

Thank you everyone for the help and the quick replies.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Ned Carey Thank you for the advice, Ned. What would I tell the buyer then?

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

@Keving Brown I agree. Double closing wasn't an option here, since the amount is too small and woudl get substantially eaten up by the closing costs.

@Jon Holdman Thanks Jon, the buyer is paying cash. The agreement outside of the deal states a bird-dog type of commission, not shady at all. I agree with the being upfront about everything though.

@Wayne Brooks That's a very good idea. I think I will implement that strategy next time, that way everyone is happy and I don't need to hide anything.

Post: 1st Wholesale Deal - NEED Answer ASAP

Roy K.Posted
  • Investor
  • Chicago, IL
  • Posts 21
  • Votes 28

Thank you guys!

I'm not trying to be shady at all. I had a buyer for a certain price and then I negotiated the deal with the seller to reduce the price, but the buyer was still willing to buy at the higher price. I convinced both parties to stay at their prices, but the buyer is paying me a commission outside of the deal. Just thought I'd make more money out of the deal, and keep everyone happy....

I just want to do it in a way in which nobody feels like they could have gotten a better deal.