So iv found a great house to “wholesale” which is 5,000 below market value. And I have a great list of potential buyers. But this seems like too many transactions. and a lot of transactions= a lot of fees. what about the fees for an attorney fees, commisions (if your dealing with an agent. Is it worth it?
Im not afraid to get started but I want to be educated.
whos going to pay all of these fees?
i appreciate ANYONES input.
Ben, typically when I’m looking at deals that are available through wholesalers, I’m looking at getting a house that is at 65-70% of market value. Of course the homes that wholesalers are sending me are in need of rehab. So, if the house is in a market where other homes are selling for $100,000 and I can purchase the house for $65,000 (less a pre-determined amount to rehab), then I’ll look at the deal.
If a house is $5000 below market value it just isn’t enough below market. After taking into consideration closing costs 3-5%, that $5000 is gobbled up.
A buyer (from a wholesaler) needs to take into consideration possible rehab costs, holding costs, cost to resell (6% commission) into their equation.
You do not pay double the fees to wholesale a property. $5k is too low of a profit margin unless you are selling a nice home to a homeowner. You may be able to pull it off then. Just ask for $5k wholesale fee and let them assume your contract and pay the closing fees. Even if you do a double closing it should not cost very much on your side, usually just the escrow fees. Here is a tip: Get the title company to deed the property directly from the seller to your buyer in a double closing to avoid double attorney fees for preparing the deeds.