$125,000 (ultimate resale value) – $15,000 (repairs) – $7,000 (wholesale fee) = $103,000 (max offer) If you work through this formula and the deal seems to be possible, it’s time to see the house in person. Of course, there are usually unexpected expenses that come up in renovations, but by seeing the property for yourself, you’ll be able to get a better estimate about potential repairs. After you’ve done this, rework the formula, then figure out an offer. It’s often advantageous to offer less than your max so there’s room to negotiate, if needed. (Or maybe you’ll even get it for that price, which means more money in your pocket!)
Closing
Before I continue, it’s important to understand what exactly happens during closing. The buyer signs closing documents, including papers that allow the money to be released to the seller (which will happen within a few days). Then, the seller signs the deed over to the buyer. The buyer will get a title insurance policy. This proves that the property title is legal. Finally, the County Recorder’s Office will record the deed and other pertinent documents. One option for wholesaling is assigning the contract. In this process, you never actually buy the property, although you do put down an earnest money deposit. Also, not only is the seller aware that you’re selling the property to someone else, but they will also know who that is and what your profit is. The contract with the seller will state your name; however, it will also say “and/ or assigns” for the buyer. You will also assign the contract with the buyer, which means the buyer assumes all of the contractual obligations, not just the purchase price. This contract states your assignment fee, letting
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