As investors, it is important to remember that the "asking price" of a house is not the same as the sales price on a piece of merchandise in a retail store. While there are those among us who will negotiate with anyone, anywhere - most of us just don't feel comfortable haggling with every salesperson that we meet (especially those not paid commissions). The majority of us realize that unless there is something wrong with the item, then an hourly employee just isn't in the position to offer us a discount, even if crm for real estate investors we are a world-class negotiator.
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This simply is not the case when it comes to the asking price for a house. It really is just what the seller is "asking" for. As buyers, and especially as investors, we may reasonably ask the seller to accept a lower price, because he does have the power to say, "Ok, I'll give it to you for that much."
You can think of asking price in this way: when a house first comes on the market, the seller prices it at the high end of what they expect the market will pay. Over time, if their price isn't compelling enough to force a sale, then they will lower it. Sometimes a house is reduced in price many times before it finally sells. Wouldn't you be doing the seller a favor by making your lower offer in the beginning and giving them a chance to sell their house right away rather than after months of letting their house languish on the market unsold? Of course, many sellers will say no, but you needn't fell shy about asking.
My big picture advice when it comes to asking price: it is not some fixed magical number. It is an educated guess of what the seller (and his/her real estate agent) thinks the market will pay. There are many factors that can cause this number to change. So don't be afraid to ask for the price you want!
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.