I am a newbie to wholesaling and just out of luck I called a realtor who was very nice enough to give me a property that isn’t on the MLS as yet. Lets say the it’s a 2 Family and the asking prices is 30K. Needs about 10k repairs. The questions is "Do I advertise the property for about 35k? (that is 30k asking price and 5K for myself) (this is just a ballpark figure for myself). Do I have to pay the realtor commission or a compensation fee. I’ve never worked with a realtor before. Any advice/suggestions is greatly appreciated.
Let's use your example:
$30,000 - Price
$ 5,000 - Assignment fee
$ 10,000 - Repairs
$60,000 - FMV / ARV (This is 30% above cost’s)
So if this property is worth at least $60k then it is reasonable to buy and assign for $30k plus a $5k assignment fee!
I hope you have a buyers list? Advertise it?
Seller pays listing commissions which includes buyers agent commission!
Start Building a buyers list before you do anything!
Ok, This is totally off topic, but I just wanted to point out to Tammy that the site also has a great articles section as well. i come here to the forum so much that I often forget that the site is more than just that. LOL.
Glad to hear you’re moving forward!! Good on ya!
Hello Gold River,
I have been advertising the property and yes I do have a buyers list. I add a few persons every day.
Thanks for the info Rogelio
I haven’t much luck in working with realtors - well I take that back, I did buy two properties last year that were foreclosures off the MLS so they got paid by the seller. But in regards to wholesaling, where I’m trying to resale the property quickly by an Assignment of Contract, realtors can’t really help you there. It seems to be against their DNA to anything non-standard and wholesaling can be tricky.
The best wholesale properties I’ve found were on Craigslists, abandoned properties, those with back taxes or in pre-foreclosure using yellow letters. I’ll be trying Bandit Signs starting next month. I did find a few realtors who are willing to do Flat Fee listings for $199 so if I do need to sale a house through the MLS I can just pay that fee instead of the standard 6% commission.
I’ve also not had much luck in getting a realtor to help pull comps other than those who do it in return for a small fee. Many agents just don’t like working with investors which is too bad b/c they can make money working us - many just don’t know how!
I’m currently studying to get my RE license simply b/c I hate depending on them for comps or full MLS access. Many of the wholesalers in this area did the same for the same reasons. If some is going to get a commission if we want to list or buy a property off MLS, it should be us!
Remember you always go backwards. First thing you need to come up with your own ARV. Your realtor can help you with that but is always better you calculate your own since they can use the wrong comps. Once you have the ARV and the repairs you use the following formula to know you MAO (maximum allowable offer)