Everything You Want To Know About Real Estate Wholesaler Fees

I've been getting quite a few questions about how wholesaler fees work, how much they are, whether I need to be licensed or not and so on. So, I figured I would take some time to address these questions formally in an article.

What is a real estate wholesaler fee?

The fee a wholesaler earns is the difference between the price you, as the wholesaler, put the house under contract for, and the price you sell it for to your end buyer (whether that is an investor or a retail buyer). So, if you put a house under contract for $100,000 and sell it to another investor for $110,000, the wholesale fee is $10,000.

Do I need a real estate license to earn these fees?

If you are putting the house under contract yourself and then selling your rights to the contract, then it is my understanding that you do not need a real estate license. I am not a lawyer though, but that is how I understand it.

Do I earn a commission on the sale?

No. Commissions are for licensed real estate agents or brokers. You earn the difference between what you put the house under contract to buy it for and what you ultimately assign the contract for.

If I am part of your wholesaler program, do you get part of the wholesale fee?

Not automatically, no. You can use the articles, tools, and courses that we have on the Wholesaler Control Panel (part of the Wholesaler Network program) to learn how to wholesale and not pay us anything. So, you can wholesale the deal completely on your own and not pay us a thing.

This is optional: If you want us to send the deal out to our list of investor buyers, you must agree to pay 3% of the total sales price (not to be confused with the wholesale fee you collect - these are very different) to an agent that brings the buyer. Whenever someone inquires about a deal submitted by a wholesaler from the website, we send that buyer with a licensed real estate agent representing them to buy the property. The 3% commission goes to that agent. In case you are wondering, we are usually, but not always, paid part of the agent's commission.

This is also optional: If you want us to participate in the deal and help you via the telephone, then we do offer that on a 50/50 split of the gross wholesale fee. This is primarily for new wholesalers that want someone to walk them through their first deal (or two or three). It is not required in any way, but if you need someone to walk you through the process, we do offer this as an option. We will NOT do it for you; this is for you to learn how to do it and we then split the fee. I can do these types of deals on my own and earn 100% of the wholesale fee so there is no incentive for me to do it all for you.

How do I collect my wholesale fee?

There are several variations, but you can collect it directly from your buyer or, more commonly, collect it from the title company at closing.

Until my next post,

James

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This entry was posted on July 29th, 2008 at 03:21:30 pm and is filed under Articles.

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14 comments

Comment from: Javier [Visitor]

I have a scenario.

Customer A is buying a home from Sister (Customer B) in her name; for unspecified reasons she agrees to help out relative (A).

"A" is trying to sell home and has got a signature from "B" for a quick claim deed and ad "A" to Title of home; "A" is currently not on title or loan for the property, but has been paying on the loan property for the last 2 years. "A cannot qualify for loan to purchase from "B".

"A" wants to sell property and receive the check from escrow paid to him directly and not in "B" name. "B" might want to keep the money.

These scenarios are very common with in this culture to help out relatives in search of a home when they cannot get one on there own.

If you can offer me some advise, what do you recommend that "A" do in his situation?

Thanks.

Javier

08/08/08 @ 11:41

Comment from: James Orr [Member]

This is really not a wholesaling question and it sounds like you need legal advice.

There is conflicting info above. You say you're not on title, but that you have a quit-claim deed. Maybe you meant that you have not filed your quit-claim deed.

Call an attorney to get advice on this particular situation. I know how I would handle it, but I don't feel comfortable advising you to do what I would do.

Sincerely,

James

08/08/08 @ 12:01