Questions about Purchase & Sale Assignment Contracts

[Ryan Adams]

Hey everyone. I've decided that I want to get into wholesaling until I can build up enough money to start buying and flipping. I'm doing my homework before I actually attempt to find sellers/buyers so that I know what to do and don't make myself look foolish and to make sure I don't get in any legal trouble. That being said, I have a question.

I understand that when you find a seller you have to fill out a Purchase & Sale Contract and within that contract is where you state when you'll have the home sold to a buyer. So what happens if you aren't able to sell the home within the alotted time frame? 

Is there a way to "back-out" of the contract or are you just up a creek without a paddle?

That's my biggest fear because I don't have the funds to buy a house if that happens. Can someone educate me on this??

[Caleb L.]

Hi @Ryan Adams, that's a great question! 

In my state, there is a place in the contract that you can write a "back-out" clause. 

Any contract is customizable, and your attorney should be able to write up the perfect contract. 

Usually, you would have a time frame to assign the contract, 15 or 30 days is the usual time allotted for assigning the contract, it's your choice.

In the clause, you can write that you are able to terminate the contract for any reason or no reason at any time before the closing date, and all earnest money be refunded, and all responsibilities between you and the seller be terminated. 

If you have 30 days until closing and if you can't find a buyer, just terminate the contract before the 30 days is up. 

BUT, please talk to your attorney! They will be the one to give you the most accurate information and write you the perfect contract.

Good luck!