Wholesaling is a Service
I hate to say it, but it's been my observation that most real estate Wholesalers go about calculating their fee backwards.
Many decide in their minds right up front, hmmm. . . I want to make $20,000 per house. They think of themselves first, buyer and seller last. WRONG!!!!! Wholesaling is a service. Whether you like it or not, it's a fact! Fail to provide a service for your Cash Buyer or the seller, and you'll soon find your wholesaling career cut short.
The most successful Wholesalers solve the problems of both the Buyer and Seller. Making life easy for both will cause the money to flow into you bank account. Can't tell you how many would-be Wholesalers approach me with the frustration of having all their offers rejected by sellers. Worse yet, being stuck with a house under contract because buyers ain't interested. I have said it a hundred times. Find a way to give the other person what they want and you'll get what you want.
Your Wholesale fee is a result, not a cause. Here's an example. A house is worth $100k after it’s repaired. The seller is asking $40k as-is, and it's ugly. Your buyer figures her repair and carrying costs, decides she can pay you $47k to make it work for her. In that scenario you just made a $7k wholesale fee.
Let's change it slightly. Now if the seller is stuck on getting $46k and your buyer is stuck on paying $47k, your Wholesale fee just went down to $1k. You must decide to take the $1k or perhaps find another buyer who knowingly can make it work with slimmer margins. If not you may decide to move on to the next deal. Far too many wholesalers will try to make the second senario work anyway. They agree to give the seller the $46k, then attempt to squeeze a buyer into the tight margins by asking $53k to get that $7k Wholesale fee. What happens next is usually ugly. The Wholesaler finds himself stuck with a contract no one wants. Or he muscles, tricks, and deceives an inexperienced buyer to take the deal. The "wet behind the ears" buyer takes a bath on the deal (loses money). Word gets around town; beware of this Wholesaler, his deals are no good.
To better approach the situation, make sure your sellers get a fair price they can live with, and make sure your buyers make a profit from your assignment deals. As a result, your name will soon be the one everyone goes to for deal solutions! Sellers will brag about you to their family and friends. Cash Buyers will pursue you like mad because your deals save them hunting time, and puts money into their bank accounts.
Once you develop the reputation and relationship with your Cash buyers (as I insist), you'll be the one they call first when they need a property in a hurry. That buyer may be willing to buy on a slimmer margin depending on her current situation. She may need to place new private money she just attracted before losing out. She will call you, agree to buy a the deal for less profit for herself, knowing you will take care of her next go around. As the Wholesaler, your function is to solve problems for others. Make their lives easier, less stressful, and you'll have more business than you can imagine.
Finally, think of your self last when Wholesaling. Instead, determine which seller needs your help, which Cash Buyer(s) need your service, and I promise you, the money will follow you like the Pied Piper. Take Action!
Much success to you.
Go to http://www.thewholesalewizard.com/ for more information.
I hate to say it, but it's been my observation that most real estate Wholesalers go about calculating their fee backwards.
Many decide in their minds right up front, hmmm. . . I want to make $20,000 per house. They think of themselves first, buyer and seller last. WRONG!!!!! Wholesaling is a service. Whether you like it or not, it's a fact! Fail to provide a service for your Cash Buyer or the seller, and you'll soon find your wholesaling career cut short.
The most successful Wholesalers solve the problems of both the Buyer and Seller. Making life easy for both will cause the money to flow into you bank account. Can't tell you how many would-be Wholesalers approach me with the frustration of having all their offers rejected by sellers. Worse yet, being stuck with a house under contract because buyers ain't interested. I have said it a hundred times. Find a way to give the other person what they want and you'll get what you want.
Your Wholesale fee is a result, not a cause. Here's an example. A house is worth $100k after it’s repaired. The seller is asking $40k as-is, and it's ugly. Your buyer figures her repair and carrying costs, decides she can pay you $47k to make it work for her. In that scenario you just made a $7k wholesale fee.
Let's change it slightly. Now if the seller is stuck on getting $46k and your buyer is stuck on paying $47k, your Wholesale fee just went down to $1k. You must decide to take the $1k or perhaps find another buyer who knowingly can make it work with slimmer margins. If not you may decide to move on to the next deal. Far too many wholesalers will try to make the second senario work anyway. They agree to give the seller the $46k, then attempt to squeeze a buyer into the tight margins by asking $53k to get that $7k Wholesale fee. What happens next is usually ugly. The Wholesaler finds himself stuck with a contract no one wants. Or he muscles, tricks, and deceives an inexperienced buyer to take the deal. The "wet behind the ears" buyer takes a bath on the deal (loses money). Word gets around town; beware of this Wholesaler, his deals are no good.
To better approach the situation, make sure your sellers get a fair price they can live with, and make sure your buyers make a profit from your assignment deals. As a result, your name will soon be the one everyone goes to for deal solutions! Sellers will brag about you to their family and friends. Cash Buyers will pursue you like mad because your deals save them hunting time, and puts money into their bank accounts.
Once you develop the reputation and relationship with your Cash buyers (as I insist), you'll be the one they call first when they need a property in a hurry. That buyer may be willing to buy on a slimmer margin depending on her current situation. She may need to place new private money she just attracted before losing out. She will call you, agree to buy a the deal for less profit for herself, knowing you will take care of her next go around. As the Wholesaler, your function is to solve problems for others. Make their lives easier, less stressful, and you'll have more business than you can imagine.
Finally, think of your self last when Wholesaling. Instead, determine which seller needs your help, which Cash Buyer(s) need your service, and I promise you, the money will follow you like the Pied Piper. Take Action!
Much success to you.
Go to http://www.thewholesalewizard.com/ for more information.
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