Do buyers on my dispo list need to see my assignment fee?

Question

I have been sitting in on a wholesaler's dispo calls for about six weeks and he does it two different ways depending on who he is talking to. With his regular buyers he tells them the contract price and his fee straight out, so a buyer knows the seller agreed to 88 and the wholesaler wants 8 on top. With new buyers off a marketplace he just sends a price and answers questions about the property.

When I asked him why, he said the regulars have seen his numbers for years and it saves an argument, and the new ones will fixate on the fee and forget to look at the house. That made sense right up until a buyer on a call figured out the spread from the tax records and got audibly annoyed about it, and the deal went sideways for two days over a number that had nothing to do with the property.

The argument for showing everything is that it comes out anyway in a lot of places, the buyer trusts you next time, and you are not defending anything. The argument against is that your fee is your business, a buyer either likes the price or does not, and volunteering it invites a negotiation on the wrong thing.

Worth saying that what has to be disclosed to whom is a state law question, and I am asking about the ordinary practice choices on top of whatever the state requires. I want to know how the room actually plays it.

marcus_hale41 · Answer

I buy from wholesalers a few times a year and I want the fee on the table, though probably for a reason your guy would not expect. I am not trying to talk him down. I am trying to work out whether his contract price is anywhere near what the seller would have taken from me directly, because that tells me how much room there is if the rehab scope comes back worse than the photos. A wholesaler who shows me 88 plus 8 has told me something useful about his sourcing. A wholesaler who shows me 96 flat has told me nothing and I price in more uncertainty, which usually means I bid less.

The annoyed buyer on your call was annoyed about being managed, not about the 8. Those are different problems and only one of them is fixable by hiding numbers.

One thing to check with an attorney in your state rather than with the room. In a good number of states sale prices are not public at all, so the buyer figuring the spread out from records is not something you can count on either way, and disclosure duties can depend on whether the person marketing the deal is licensed.

laurenkim53 · Answer

Price point changes this a lot. In the rural markets I look at, houses trade at 55 to 90, and a 9k fee on a 62k contract reads very differently from 9k on a 380k contract even though the work is the same. When I have seen the spread on a cheap house the reaction is always the same, which is that the fee looks like a bigger share of the whole thing than it is of anybody's actual risk. So on low price points I understand why an operator leads with the all in number and lets the buyer decide whether 71 works for them.

What I would not do is show it to some buyers and hide it from others, which is what your guy is doing. Buyers talk. The regular who has seen his fee for years is going to mention it to the new one at some meetup, and now the new one thinks he was being handled. Pick one and live with it.

Do buyers on my dispo list need to see my assignment fee?

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