A case study in dispo pay structures gone wrong: 900 dollars on 19 contracts over four months
Consider a wholesaler on the buy side who cannot move contracts, bringing in a dispo partner on a 35 percent of net spread basis, no retainer, no floor, the dispo partner treating the buyer list itself as the real payoff. Over four months, 19 properties get put under contract, all 19 get marketed, six close, and gross pay on those six comes to 900 dollars. Worth breaking down where that goes wrong, step by step. First, the contracts are priced wrong. Sellers signed at 82 to 88 percent of ARV on houses needing 40k in repairs leaves no buyer at that price in most markets, and in this scenario nine of the 19 are dead the day they're signed, each one costing hours to prove out. Second, net spread is never defined beyond an email agreement. Marketing costs, a cold caller's commission, and a price reduction given to keep a deal alive all get deducted before the split, so two closings that should have paid out net to spreads under 1,200, with 35 percent of that landing around 420 combined. Third, the one strong deal, a brick ranch in a decent B neighborhood with a 22k spread, gets assigned to a buyer the wholesaler already knew, sourced before the dispo partner came on, and pays nothing. Defensible under a loose arrangement, but it exposes the gap: no clause covering deals marketed that close to a buyer already in the wholesaler's pocket. The fix for anyone structuring this kind of arrangement: underwrite the contracts before agreeing to market them, and reserve the right to decline a file. Define spread as the difference between the seller contract price and the assignment price with no deductions, or price a flat fee instead. Put in writing that any deal marketed pays out regardless of where the buyer came from.
