What Happens If you are a Wholesaler & Get Property under Contract you can sell?

Question

Hello I am New to the real estate wholesaling side i was wondering What Happens If you are a Wholesaler & Get Property under Contract you can sell?

What would you put in your contract to protect you ?

Another big question i have is with a contract do most people do a double close ? If so what happens if your credit is bad or you owe debtors or have liens or judgements against you would you not be able to put the property in your name to move ?

I have a few business partners who are asking theses questions as well so i just would like some friendly advice.

Thanks

Bill P. · Answer

@Alex HoltWholesaling is under attack I the State of Ohio by the Division of Real Estate. Remember to sell your contract, not the house. To do otherwise might be construed as practicing real estate without a license if you get the ire of the Division. Just make sure to word your contract correctly and don't hang out your sellers to dry. Use a reasonable period of time to find your cash buyer but using a long time for your benefit doesn't benefit the seller and they could start a complaint at the Division for your unprofessional contact. BTW, most wholesalers focus on the property and not the contract and that is their Achilles' heel if they every had to go to court. Of course, this is not legal advice; only something to think about and to discuss with an attorney.

Ryland Taniguchi · Answer

Regarding inspection contingencies, everything in real estate is negotiable. Being a good negotiator will be critical for wholesaling. In my area in Seattle, standard purchase and sale contract have a default 10 days.

Ryland Taniguchi · Answer

When you get it under contract, be sure to add "and/or assigns" after your name. We'll usually say that we need to assign it to an LLC created just for your property and so we need to add "and/or assigns" to the contract. After you know a contract will be signed, it's also good to let the seller know that you plan to partner to get the rest of the cash to purchase their property and let them know that you'll need to show the house to your partner(s).When you wholesale, an issue will be how to get your end-buyers access to the property. It's better if you can get a construction lock-box set-up and set expectations that a partner or potential investor will need to also look at the property.Find out from the title and escrow if they do double-closes. We used to do it all the time, but no title/escrow do it anymore in my area in Seattle. You probably don't need to do a double close as you just get an assignment contract with the end-buyer prepared by your lawyer. We just use a standard contract for the purchase and sale agreement.If you have bad credit, it really shouldn't matter for the assignment. If you don't purchase the property, you don't own it and so judgements and liens shouldn't matter. One thing to keep in mind is that your end-buyer can't get conventional or FHA financing on an assigned contract. I've called everyone and no lender will do it. You need a cash buyer or someone borrowing hard-money.

Alex Holt · Answer

thanks you very much great advice . If you don't mind me asking when you say inspection this is just to come up with a reason of why not to buy it if something happens because we all know inspectors come up with something . Also how long do you tell the sellers it take 10 days 30 days 60? Also earnest money usually what percentage do people want down ? Last question about the Attenory I'm a little confused on that part is that just saying I want my Attenory to look over it before I purchase the place and then find a reason not to buy property ? If so is this only a real estate Attenory ? Thanks in advance and thanks for pervious help this site as been a big help I come from business industry where most people won't help the next person I'm glad real estate seems to be different .

James Lehmann · Answer

Once you have the property under contract you can market the deal to your cash buyers. The protection you should have in your contract is an inspection and attorney review period so that if you cannot find a buyer you can still back out and get your earnest money back. I use 10 business days for each, and the attorneys usually don't have a problem extending if need be. As far as double closing, I have never done it. I have a purchase contract with the seller and a separate assignment contract with my buyer. However, if you want to do a double closing and lack the funds then you should research transactional funding. Most I have seen will give you the money for 48 hours just for the closing. Hope that helps!