All Forum Posts by: Shubham Aggarwal

When assigning a contract to a cash buyer, I assume the cash buyer will put up a deposit. I have a few questions about this process. Let me illustrate an example:

I (the wholesaler) go under contract for a property and put down a $5,000 deposit. I have a 10-day inspection period. On day 5, I reach an agreement with a cash buyer and we execute an assignment of contract. I request a deposit of $5,000 from the cash buyer. My questions below:

1. Who does the cash buyer make the deposit to? To the escrow company or to myself directly? I assume the escrow company but wanted to confirm.

2. How long should I give the cash buyer to make the deposit? 1 day, 3 days, 3 business days. What is typical?

3. If the cash buyer makes the deposit immediately, the escrow company will now have $10,000 in deposits. Will my $5,000 deposit be refunded back to me immediately? Or do I receive it back at closing?

4. Should the cash buyer's deposit be refundable or non-refundable? I assume their deposit will be refundable through the 10-day inspection period, just as mine was. I see a lot of wholesaler ads asking for non-refundable deposits, which is why I am wondering.

5. Does the cash buyer's deposit have to be the same as mine? Or can it be greater? In this example, can I ask for a $10,000 deposit?

I know this a bunch of questions but I cannot find any online sources that explain this so any insight would be very helpful. Thank you!

I am a licensed realtor in Florida that is looking to get into wholesaling. I understand that I will have to disclose that I am licensed to the seller/agent/buyer. My main question is:

Since I am licensed, so I have to use the state-regulated FAR/BAR contract? Or can I use any contract I want? I have seen a bunch of great wholesaling contracts that are out there for free (Jerry Norton, Jamil Damji, etc) that I would like to use, but I am not sure if my license will prevent me from doing so. I will reach out to my brokerage but wondering if any of you had experience in this in Florida (or anywhere).

Quote from @Jerryll Noorden:

Here is my issue with this...

The whole point of motivated sellers (the term distressed seller is not accurate at all. About 80%+ of my motivated sellers are not in distress) is that they for what ever reason do not want to list. Hence, looking for a cash buyer, hence avoiding the MLS.

The whole point of a motivated seller is they want to avoid agent fees, repairs to make, walk-throughs, the uncertainty of getting the house sold, and the length of time it takes with buyer financing.

So you ignored all the reasons why a motivated seller is motivated but still want to find a motivated seller to agree with listing it.

That may be hard in my opinion.

Understood, very helpful! Looks like listing on the MLS will be a back pocket option rather than the most likely outcome.

Quote from @David Ramirez:

Even if you are acting as a transactional broker, you can only represent one party, which in this case would be the seller, because you have a listing agreement in place and must act in the best interest of the seller. If you encounter a buyer not represented by an agent, you could potentially submit an offer on their behalf. However, if they are experienced, they might request that the buyer's commission be deducted from the purchase price and choose to submit an offer themselves.

About 90% of our sellers don't want to list their property or pay agent commissions, and most want a quick transaction. In my opinion, you are much better off wholesaling off-market properties, especially if you're already targeting distressed homes/sellers. Additionally, my average assignment fee is 12% of the assigned price, which is twice as much as what you might typically earn if everything goes as planned with your strategy.

Finding a buyer on time is the least of your worries, trust me!

Please feel free to reach out with any questions.

Thank you, David! Will definitely reach out to you with more questions. One question for now: if I decide to do straight wholesaling, do I need to disclose to the seller or buyer? Does having a license help me or hurt me in anyway?

I am a licensed realtor in Florida looking to start wholesaling. Instead of wholesaling, I am thinking of a "double-dip" listing strategy that has less risk than wholesaling. Let me know if the below makes sense. I am aware the execution of this plan is much easier than writing, but just brainstorming.      

1. Find a distressed seller that is looking to sell (obviously the hardest part)

2. List the property on the MLS for the standard 2.5% - 3.0% commission.

3. Market the deal to cash buyers/fix and flippers.

4. Once I find a buyer, offer to represent the buyer in this transaction. Since dual agency is prohibited in FL, I will transition to a transaction broker that will represent the transaction (i.e. limited confidentiality to the buyer and seller).

5. As a transaction broker, I am eligible to receive both sides of the commissions, effectively doubling my commission. I would be willing to reduce the overall commission for the seller (maybe by 1% or so) so that it is a win-win for both of us.

Pros of this strategy: 

1. Eliminate risks related to wholesaling, such as finding a buyer in time, earnest money, potential low margins.

2. If I am unable to find a buyer, I will at least make the listing side commission, so I virtually have no downside risk.

3. Do not need to get an inspection, estimate repair costs, etc.

4. Peace of mind. Do not have to worry about an upcoming inspection period deadline or closing date.

5. Potentially build relationships with cash buyers that are willing to let me represent them, creating a win-win for both of us.

6. Reduced legal risk. I will be acting in the capacity of a licensed agent, so I can market the property freely without legal consequences (unlike wholesalers that sometimes act like they are selling the property instead of the contract).

7. Maybe less predatory toward the seller? I am not trying to buy their house, but instead helping them with a difficult situation and getting them market value for the current state of the property.

Cons of this strategy:

1. Upside of the deal is limited to 5-6% of the purchase price. If a wholesaler could get an 8% assignment fee, I am losing out on those additional dollars.

2. Buyers may want to use their own buyer's agents. This will limit me to the listing side commission.

So, am I talking out of my *** or does this make sense? Any additional cons that I need to watch out for? I do not know the reality of how sellers and cash buyers actually act in real life. I am just trying to create a plan in theory, so I would greatly appreciate any insight at all. Thank you!

Hey! I'm a couple years out of college and I'm just getting started on personal real estate investing and wholesaling. Since you are already in school, I would focus on getting internships and learning what you want to do for a full time job. A full time job will give you a good, steady income, and you can keep working on wholesaling/investing in your free time. Once and if you get a good number of deals, you can then focus on investing full-time. But since the wholesaling income will be very sporadic and uncertain especially in the beginning, I think it will be very beneficial if you have something steady as well.

And since you are interested in real estate, get a full-time job in commercial real estate! Could be in acquisitions, development, brokerage, capital markets, etc. I work a full-time job on the commercial side and I learn a lot of things that I can use for myself personally. There is a lot of CRE/finance opportunities in NYC.

Quote from @Ray Hage:

It would depend on what type of listing agreement you signed with the seller. You will need to transition over to a transactional agreement if you initially signed a single agent agreement. However, all that being said, discuss this with your broker before moving along further.

Thank you, Ray. I signed a single agent listing agreement. I spoke with my brokerage and they said I could proceed with the buyer receiving no representation, but I would not be able to take additional commission from the buyer's side. To receive the full commission from both sides, it is best to transition to a transactional broker and represent the transaction. Although the seller loses full confidentiality, I should be able to convince them with reducing their overall commission.

I am currently the listing agent (single agent) on a property, and I have been approached by a cash buyer that is looking to purchase without representation from an agent.  As a single agent, can I be a non-representative broker to the buyer? The buyer will be submitting his offer and taking care of himself. 

This will be beneficial to me and the seller because I can take a piece of the buyer's agent commission and then pass the remaining savings to the seller.  But I want to make sure this is legal. Or do you think I should transition to a transaction broker and represent the transaction (i.e. both the seller and buyer)?