Flipping a home to a buyer that is using conventional financing

Bird Dogs, Wholesaling
1

I have property that I am wholesaling but unfortunately only getting buyers that are using conventional financing.

I just spoke to a title company and they advised me that I would:

  1. have the buyer and seller go into contract directly

  2. the sales contract would include my “consutation fee”. (so if I bought it for 65K and wanted to make 5K, the contract

price would be 70K)

  1. Place in the contract that I would be paid 5K.

Also another title company advised me not to place my “consultation fee” in the purchase contract because that could throw a red flag to the lender. They said that it would be placed on the HUD but dont do it on the contract. I would do a separate agreement with the seller stating that I would be paid 5K at closing for my services rendered.

Is this correct?

2

Hi George,

The 2 deals I have done where my buyer was using conventional financing, I had to have my buyer sign a new contract directly with the seller, and I got paid outside of closing.

Are you a realtor? If so, I think there is a way for you to add your assignment fee as a commission. I can find out the details for you if you are interested- I have a few friends who are wholesalers/realtors who I can ask.

Steph :cool

3

Having a seller pay you for selling their house is acting as a realtor. Be careful about that unless you are licensed.

4

Hi Tom,

The buyers paid me the assignment fee outside of closing, not the seller.

Not sure if that makes a difference or not.

Steph :cool

5

Yes, that’s definitely a great way to do it. Buyer’s paying assignment fees are very typical in the real estate investor community. It might be a tougher sell for a non-investor buyer on a property they are moving into.