When one state supplies most of a virtual wholesaling pipeline and changes its advertising rules

Sitting at zero deals so I have no business advising you, but the line that stopped me was $37,000 net on eleven months and 14 contracts. I have been telling myself the fee is the outcome. Can you break out what the cost per signed contract actually was? $31,900 over 14 is roughly $2,280 which is more than I budgeted for anything.

@jordan_ellis2 that $2,280 is the number I keep trying to pin down too and nobody posts it. Thicket, does the $4,100 for walkthrough people cover the 3 that died in the inspection window? Because those are dead marketing dollars plus dead labor dollars and they should probably load onto the 9 that closed. That makes it closer to $4,200 of cost per closed assignment against an $8,400 fee, which is a 50% gross margin business, not the 90% margin business the courses imply.

I hit a version of this ceiling at about the same place. Two shallow markets kept me from ever getting to the point where local buyers called me instead of the reverse. If B is where sellers answer and you already have an attorney there and nine contracts of history, the $1,000 a month is cheaper than starting your reputation over in A from five contracts.

@aliyah_b is right about the loading though. Run your numbers per closed deal, not per contract, or you'll pick the wrong market.

That utility-schedule problem shows up at every scale, just with different zeros. A four unit with a gas meter set eleven weeks out runs into the same wall as a single tenant shell waiting on interconnection. The utility runs the schedule, and everybody else on the deal tends to act as though they do.

I'll ask the dumb one. What does the licensed local partner actually do that you can't? Is it that they can legally advertise the property, or is it that they take the seller-facing role? Those seem like different jobs with very different price tags.

How do you vet the seller from a distance? Three dying in the inspection window makes me wonder whether some of those were people who couldn't actually convey clean title in the first place.

Your three dead deals are the part I'd dig into before the compliance question. In my experience the buyer's contractor walks the property, finds $18k of work the photos didn't show, and reprices or walks. Photos hide roof decking, subfloor, and anything behind a wall. If your local person is a $75 photo guy and not someone who can write a rough scope, you are handing your buyer a repricing lever every single time.

Fix that and your close rate goes from 9 of 14 to maybe 12 of 14, which is worth more than the 25% split you're arguing about.

@jessreyes12 I had the same question. And what does the written disclosure to the seller actually look like in practice? Is it a paragraph in the purchase agreement or a separate signed page?

Worth asking about direction rather than the split. Owning rentals already and having a cheap market where sellers answer the phone raises the question of why contracts get assigned to other people instead of the good ones being kept. Nine contracts in eleven months in a sub-$200k market is itself a buy box, and taking title to the property removes any concern about marketing-language rules entirely.

Drop B. I say that as someone who runs thin margins on purpose.

$8,400 down to $6,300 before marketing, minus your $2,280 all-in cost per contract, and you're working for about $4,000 a deal in a state where the rules just moved once and can move again. Every state that has passed one of these has amended it later. You'll be paying the attorney to re-read it every legislative session.

@samantha_ruiz I get the reputation argument but reputation in a market you can't legally advertise in isn't an asset.

Before deciding, two documents matter more than the marketing question. First, the assignment clause. If a purchase agreement does not clearly permit assignment and name the fee mechanism, the exposure runs deeper than an ad photo. Second, whether the state's new requirements attach at contract signing, at advertising, or at assignment, because that determines whether pending deals are already caught. Which of those applies depends on the statute's language and how the state applies it, so that is a question for an attorney in that state, in writing, not a forum answer. @bmoreno23 disclosure form practice differs by state. Some states specify content, some just require it be written and signed before the seller executes. Ask for the current statutory text, not a template someone sells.

@omar_haddad nailed the operational part. The difference between photos and a documented scope tends to run about $200. A documented walk with video and moisture readings on anything suspicious typically runs $150, with line item numbers closer to $350. If a $350 report saves one dead deal it pays for eleven of them.

How are the closings funded? If any of the nine were double closes rather than straight assignments, the transactional funding cost belongs in the $4,200 per deal, and it also changes the compliance picture since title briefly changed hands. Worth knowing what that money cost, if so.

On the $1,000 a month plus 25%, retainers structured that way tend to break down over unclear scope. Whoever is licensed and sitting on the seller-facing side carries real risk, and that risk gets priced in the first time something goes sideways. Getting the scope written down now, including who talks to the seller after the contract is signed, heads off a renegotiation in month four.

Nobody has asked which title companies in B will actually do the closings under the new rules. In my experience the title company's underwriting counsel decides this in practice long before the state does. Call the two you use and ask directly whether they'll still close an assignment for a non-resident with your disclosure in place. If they say no, the $1,000 a month buys you nothing and the decision is made for you.

Also remember roughly a dozen states don't make sale prices public, so if B is one of those, your comps are coming from your local partner too and that raises what they're worth.

On the advertising question, if a state limits how the property itself can be advertised while the actual transaction is an assignment of a contract, the distinction between marketing the property and marketing the contract can matter a great deal, and it's worth getting a straight answer from counsel in that state rather than assuming either way.