wholesaling & 'under contract'

[Jaxi West]

Hi guys
I completely understand how the wholesaling strategy works, but for the fact of my one hang up -putting the home 'under contract'

here are my questions to that specific:

1. what exactly does that mean - both legally (what am I then legally responsible for) and what is on that form that makes it a legally binding contract?

- all keep hearing is people say "you put the house'under contract' and then you find a buyer or investor."

-but they never tell you what that contract constitutes or why you have to have it or any of the legal ramifications of it or what if you can't find a investor/ buyer (can the seller then sue you ? ) or any of all that.

- And why would a person turn their home over to a stranger -even if only on paper - that they don't know you, and not get any money up front for such a valuable asset other than maybe the $10 earnest money?

2. Some have taught you need to have earnest money - even if only $10. But others don't mention this. If you are taking some tangible assets equitable rights, i would presume some sort of $$ exchange has to happen, even if it's $5. Am I correct? Or does it vary by state laws?

3. What is on that contract that is different from a standard home buying contract that identifies it as you being 'not a buyer of the property? Can anyone show a form - have a contract that you can specify what would be filled out, etc.

4. Why do some teach 'under contract' and others teach 'under Agreement'. What is the difference? Again, does this vary by state law?

5. Why is it so important to have someeone's equitable rights in order to go out and find money for them?

- If I had a friend and they were a homeowner and they were in a bind and needed to get out of their house, I'd just ask around to some people I know - I wouldn't think to do this entire 'under contract' process. I would just get the money and give it to them. So would that be illegal? (i really don't have this friend, etc. - just attempting to understand the weight/merit of this contract that isn't so binding it seems for the person shopping the property to others.

The other reason I want to know these things is because if I need to explain it to the motivated seller, and I don't want to give them an answer of 'because this is the way it's done'.

Thanks so much. Again, this has been the thing that is my stopping point from doing anything with wholesaling cause I don't get the purpose of this piece of paper if there is no real money changing hands, it isn't having you take on the property, you aren't guaranteeing them anything, but you can get their equitable right?

Thanks so much. Oh, and if you can explain all these things like I am a 3 year old, I would super appreciate it - eliminates the need for more questions or more clarification later on this.

Jaxi :)