A real estate wholesaler is a SOURCE OF REAL DEALS for other investors who have the cash to close on those DEALS. The wholesaler collects their “assignment fee” from the investor who actually steps in and buys their DEAL. They are like wholesalers in any other industry-middle men who source product for their client.
“Assignment Fees” get their name from the way the agreement of sale is structured in a wholesale DEAL.
A wholesale DEAL goes like this:
1. Wholesaler Contracts the DEAL -The wholesaler negotiates the deal with a seller and puts the property under contract-they sign an agreement of sale with the seller with their name (or company) as the buyer. Their name appears like this, “Wholesaler name, and/or assigns” as Buyer-giving them the right to “assign” their rights in the agreement to another “Buyer.”
2. Wholesaler Assigns the DEAL-When the wholesaler finds the end buyer willing to pay their contract price + assignment fee, the wholesaler and End Buyer complete an “Assignment of Contract.” The “Assignment of Contract” assigns all the rights to the original DEAL & agreement with the Seller over to the End Buyer.
3. DEAL goes to Closing-The Seller and End Buyer go to settlement directly and the Wholesaler receives their fee at closing. When I assign my contracts, I collect my assignment fee “off the sheet”-which means I receive a check that is not listed on the HUD 1 and the Seller is never aware of my assignment fee.
The reason the word DEAL is displayed in CAPITAL LETTERS is to highlight the word. Investors are always in the market searching for the next DEAL. There is a BIG DIFFERENCE between a “house for sale” and a legitimate DEAL. Everybody in the business is seeking a DEAL-not just a house for sale. Many would be wholesalers with little experience often “shop” “houses for sale” hoping to collect an “assignment fee” on houses that are NOT DEALS.
Why are Successful Wholesalers SO VALUABLE to You as an Investor? Wholesale spices
A successful wholesaler will provide you with a steady source of OFF MARKET DEALS that are usually the LOWEST PRICED-HOTTEST DEALS you can find.
Once you buy your first deal from a successful wholesaler, they will continue to call you with future opportunities.
How Can You Keep Wholesalers Working Hard for YOUR Investing Business?
Most wholesalers keep a mental “VIP” buyers list in addition to any email buyers list. The VIP Buyer (this should be You) receives the phone call about the deal the first day it is available-in order to maintain your VIP Buyer status, go view the DEALS immediately and give the Wholesaler either a “Yes”, “No”, or “Offer to Purchase” the same day they call. Do this and you will always receive first shot at their deals.
Do You Want to Become a Successful Wholesaler? Master these 3 Skills:
1. Negotiation-Your job as a wholesaler is to BE THE SOURCE OF REAL DEALS. You’re success is built on your ability to negotiate and contract DEALS that are SO VALUABLE that other investors don’t even think twice about paying your assignment fee.
*Keep in mind that investors are seeking DEALS that are 65% of the Retail Value MINUS Repair Costs. You need the contract DEALS for LESS than that number to account for your assignment fee.