First contract at 1.2M or first contract at 120k, which one actually teaches you the job?

Question

I've got money set aside and no deals, and I'm reading the luxury assignment numbers with real suspicion. The pitch is that the spread scales with the price, so a single distressed estate over a million can pay a fee in the 75k to 150k range, where the same effort on a cheap house pays five or ten. If that's true, why would anyone grind out twenty small assignments?

The case against is that everything harder about luxury lands on a beginner at once. Comparable sales are thin because there aren't many 8,000 foot houses trading in a given year, renovation numbers at that level are big enough that being 20 percent wrong eats the whole fee, and the buyer pool is small. You can find a motivated owner of an expensive house and still have nobody to assign it to. On a 150k house you can be sloppy and survive it.

The counter to that is that a cheap deal teaches you cheap habits, and the relationships that make luxury work take years to build, so starting late costs you those years.

I genuinely don't know which way I'd go if I had to pick this month. Where does the room land, and if you've done both, did the small deals actually transfer?

devon_pierce · Answer

I'm list-building right now and I've split my list in two, so I've thought about this more than I want to admit.

The part that pushed me toward starting small is that the skills don't overlap the way people say. On a normal wholesale deal the hard part is finding the seller. On the expensive ones the hard part is finding somebody with a couple of million in cash who wants a house with a failed foundation and a pool full of leaves. Those are two different jobs. Doing forty cheap deals makes you good at the first one and teaches you almost nothing about the second.

So the honest sequence for me is small deals for the contract mechanics and the conversations, and simultaneous slow work on the high-end buyer side, which is basically just meeting people. That second part doesn't need a deal to start.

One thing I'd flag for you, meridian, since you're on the capital side: the deposit sizes are what would scare me. A seller with a 1.5M house and an attorney is going to want real earnest money, and that money is at risk in a way a 2,500 dollar deposit isn't. Ask whoever's holding it exactly what releases it, in writing, because escrow practice varies by state.

First contract at 1.2M or first contract at 120k, which one actually teaches you the job?

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