Wholeselling and agent commissions

[Immy]

Hopefully this is the right forum to post this question in.  As I am reading Bronchick's and Myer's books, I have to keep remembering that initially I would be working as a wholeseller or dealer of properties to investors, since alot of the information is written for investors who want to rehab and then sell for profit.

My question is if I find a property and want to make a purchase offer on behalf of an investor I have lined up, do I need to include (i.e., subtract from the ARV price) the agent's commission if indeed one found me the property in the purchase price offer?  I'm assuming yes.  Also, how does this get paid at closing if I'm doing a double closing?  The investor then pays the agent, or I do out of my profits?

At all times I want to keep my cash - and risk - as minimal as possible as a wholeseller so do I also include my earnest money deposit  (i.e. "subtract from") in the purchase price offer or is this something that goes into escrow and is returned to me when the investor closes and takes title on the deal?

(In my own personal experience, the only home I have ever bought for myself was new construction bought directly from the homebuilder with a VA loan with the funding fee wrapped in so I have never laid out my own cash.  Still in that house today but hoping to move up and out in 2 years or less.)

Thanks for the help!

[TheWholesaler]

Hey whats up,

Sorry I don't have an answer for your question but I see that you are reading Bronchick's book. I thought his book would cover wholesaling from start to finish because i was gonna buy that book.

[TheWholesaler]

Wait Sorry

I read your post incorrectly. I appologize

[Roger J]

Immy,

Your post is a little confusing.  Are you currently a RE agent, or planning on becoming one?

You say, if you find a property and make an offer on behalf of an investor...
Where did you find the property?  On the MLS?  If you're making it on behalf of an investor, then it's not a wholesale deal but rather an agent/client transaction, so there should not be a double closing.

Earnest money would/should be held by the listing office, or broker's office, or the closing agent/attorney.

Raj

[Immy]

I am not an RE agent nor do I plan on becoming one at this time.
I know it's not worded clearly and I apologize.

What I was trying to say is that if I am not planning on buying and holding for myself (if it's listed I obviously would pay a commission in this case), but rather doing a double closing or an assignment. . . if the property is listed with an agent do I have to worry about deducting the agent's commission out of my maximum purchase offer.

So if the house was 100k and an investor would buy it from me if the LTV was 75%. . . so I offered 75,000 and it was accepted who pays the commission (say 6% is $4,500) if I'm flipping this?

I did find something on MLS where there was a very motivated seller, we didn't get the house but the investor told me to see if they would take a verbal offer on his behalf and then he'd come and do the deal on paper and pay me an assignment fee.  Or I could get it under contract myself and do an assignment to him.

  If you're making it on behalf of an investor, then it's not a wholesale deal but rather an agent/client transaction, so there should not be a double closing.

If it can't be a double close, then what could it be if it's on behalf of an investor?

I think I'm getting to bogged down in the terminology.  I need some Robbology here!!

[Roger J]

You're definitely too bogged down, but it's not the terminology.  It's what you're trying to do.

If your investor is a true full-time investor, then he/she should have at least one, if not more, agents working for him.  So you're not really finding anything that the investor wouldn't already know about if you're trying to find properties on the MLS to birddog.

However, if you're just trying to birddog, then all you need to do is tell the investor about the property and let them do the work on it (making the offer, etc.)

If you're going to wholesale it, then you need to make an offer on it yourself.  You can try to put in an assignment clause, but most MLS offers will be rejected if an assignment clause is in it.  If you're not an agent, then it's possible to do a double closing.

Really, you're going to have to determine what you're trying to do, first.

Hope it helps,

Raj