Executing paperwork when not represented by an agent/broker?

Question

I own several residential properties and am now looking to buy apartments, but to date, I have always had an agent or broker represent me and execute the paperwork on my behalf.

How would I go about directly submitting offers to apartment owners or submitting them to the selling broker when I have no one representing me in the transaction?

• What contract do you use to make an offer?
• Is there a standard purchase agreement for each state?
• When do you get am attorney involved?
• What is a reasonable earnest money deposit (EMD) on a small (5-20 unit) apartment?

Also, I recently met the owner of a property that I didn't want to buy, but I know someone who would and at what price. I want to put it under contract and wholesale the deal to the other buyer. However, I don't know how to do this paperwork either.

• When wholesaling, how do I submit an offer to a property owner without an agent/broker?

Thank you for your help in answering these logical questions about getting deals done!

Andrew Cushman · Answer

@Caden Hill, see my comments inserted between your questions:

What contract do you use to make an offer?

>>You don't.  You submit an LOI, which stands for Letter Of Intent.  There's no set format for this, and everyone does it differently.  It's just like it sounds - a letter that lays out the terms of your offer and your intent to purchase the property under those terms.  The LOI is not binding.

Is there a standard purchase agreement for each state?

>>Most states I have worked in have them, but I have never used them.  I always hire an attorney to draft the Purchase and Sale Agreement (PSA).  Each deal and negotiation is unique, and you want a solid contract that addresses everything relevant to the deal.

When do you get am attorney involved?

>>When I have a signed LOI and need a PSA drawn up.

What is a reasonable earnest money deposit (EMD) on a small (5-20 unit) apartment?

>>1-2% of the purchase price.  I always start at 1% and only go higher (which is rare) if I need to in order to get the deal executed.

When wholesaling, how do I submit an offer to a property owner without an agent/broker?

>>Wholesaling can be a bit trickier in the commercial world, and I candidly have not done it.  With that said, I would just get an executed LOI, have the PSA drawn up, and then make sure in the PSA there is a clause that lets me assign the PSA to someone else.  That's the easy part.  The harder part is finding someone to assign to on a larger deal, especially considering you could be on the hook for a large deposit, and failing to close will quickly get you a bad reputation in the multifamily world.

Andrew

Caden Hill · Answer

Hi Andrew - These answers are extremely helpful. Thank you for your clear instructions. I have acouple follow-up questions about residential wholesaling, because I have an opportunity to do this in a hot neighborhood where I own residential investment properties.  I want to move into commercial investments now, but I recently met a tired landlord willing to sell to me at a great price and I am confident I could reassign the contract it other investors that are actively buying in this area.

1. When wholesaling on single family houses, how do I submit an offer to a property owner without an agent/broker? Do I use a standard state purchase agreement?

2. Do you literally print off a hard copy of it and bring it to the owner for signing? (I've always e-signed docs when working with realtors.)

3. Do you then call the title company to notify them of the purchase agreement, or do you wait to do that until you have identified the investor who is wants the contract and is willing to pay the assignment fee/

4. What is the lowest EMD you think one could offer when submitting a purchase agreement during a single family wholesale deal?

5. Is the entire deal able to then close via the title company without getting  real estate agents involved, thereby saving the seller 6%? (Or, are realtors required for some steps of the wholesale process?)

Thank you very much for your knowledge and help!