Working with wholesalers can be a fast way to find real estate deals, but it’s important to understand the real costs involved before you jump in. Wholesalers often charge assignment fees—these fees can range from a few thousand dollars to much more, and they get added on top of the property price. That means a deal that looks cheap at first might actually cost you more than expected once fees are included.
When you buy through a wholesaler, you’re usually not purchasing the property outright but instead taking over the contract through an assignment. This adds some risk because the wholesaler holds the original contract. If they miss deadlines or the seller backs out, your deal can fall apart. Because of this, it’s essential to be cautious and understand exactly what you’re signing.
Due diligence is key. Don’t rely solely on the wholesaler’s information. Always verify the property condition, check for liens or title issues, and study the local market yourself. Skipping these steps can lead to costly surprises down the road.
To protect yourself, request a clear breakdown of all fees upfront, confirm the wholesaler’s reputation, and insist on reviewing the original purchase contract before you commit. It’s also wise to work with a title company or attorney to review all documents. And remember to budget for unexpected expenses.
In short, working with wholesalers can speed up your deal flow but comes with hidden costs and risks. Knowing what to expect and doing thorough due diligence will help you protect your investment and keep your projects profitable.
If you need help evaluating wholesale deals or securing funding for your next project, reach out. We’re here to support your success.
