Wholesaling to Retail Buyers - Phil Pustejovsky

[Kyle Cabral]

Man, do I like this guy Phil and his videos and I'm definitely buying his integrity and the fact that he really cares about people learning and succeeding.  But obviously, he's a business man, a very successful one at that so he knows how to make his money and his 50/50 strategy really is great for people who want to go that route... Just feel like with hard work, research, and using mediums like bigger pockets I'm in control of my own real estate destiny.  That being said... there's one concept he threw around in this video, that is very interesting to me.

Basically he says people leave money on the table far too much with respect to wholesaling and don't have to reinvent the wheel. Get a property under contract and since you have equitable interest, there's nothing wrong with listing the property and basically collecting the difference as an "equitable interest" fee. By using the MLS and other sources, you can get a far greater return.

My question, how does this look from a contract perspective? Are there people actively using this strategy and if so, how is it done in a clean transaction?  My thoughts...

1. Locate motivated seller, get property under contract and gain equitable interest with your $10, $100 or whatever deposit

2. Based on region, MLS network, etc. ensure there are no restrictions and that a non-owner can post a listing on MLS. So the language on MLS is "seller" as opposed to "owner".

3. Find a buyer and .... what's next : )

[Phil Pustejovsky]

DISCLAIMER: The following is NOT legal advice. Consult an attorney if you have legal questions.

With the disclaimer out of the way...

(1) Make sure your contract clearly communicates that the buyer is obtaining equitable interest and may market the property on the MLS by representing its own interests and not those of the owner of record.

(2) Make sure it is clear in the listing remarks that you are representing your own equitable interest and NOT the interests of the owner of record.

(3) Once the buyer makes you an offer, you then have to decide who is going to counter sign that contract...the original seller or you? Or do you assign your original agreement? Those are the three options and each deal is different and the best choice depends on the particulars of the deal. It can get a bit complicated here.My team and I spend considerable time helping our Apprentices decide the best course of action once the offer comes in.

If you do this technique wrong, at worst, you can get into big trouble with the real estate commission (and perhaps invite lawsuits from sellers and agents as well) and at best, you will get cut out of the deal and basically help the seller make a ton more money. 

If you do it right, it can be MUCH more profitable than traditional wholesaling and it reduces the risks of closing on it the traditional way and then re-selling. My apprentices and I have made a fortune applying this technique across the country.