I have my first two houses possibly under contract. Now what?

Question

I made a deal with two highly motivated sellers, they're ready to go. I threw in a low number for both places and now we're moving forward. This is an incredible deal as I was able to get well below 70% and am excited to not mess this up. The listings were both with the same realtor and she has agreed to represent me as the buyers agent as well. The houses were both cash buys from the seller years ago. This means no bank, no REO and the realtor says the contract can have an assignment. I know with this listing being with an agent that she will use her own contract and we will move forward with hers. Here are my questions:

1) Where do I add my assignment fee? Can I add this to the price of the home when emailing investors?
2) I requested for her contract for it to have 10 days of an inspection period. She agrees that would be fine. Is this good?
3) What are some things I should watch for in her contract?
4) Once I have the contract do I just shoot an email to all the investors to let them know or one at a time to see if they're interested first? I also have pictures from the viewings and repair estimate costs. Do I include all this in the emails or only in the emails of interested investors?
5) If an investor is ready to go, what next? Do I send my assignment contract to them and then send that to the realtor once completed by both parties?
6) If I can get an investor wanting to purchase asap, how do I have them pay the EMD?
7) If they are wanting proof of funds for the cash offers, how do I do this if I'm moving the contract to someone else?

David Ramirez · Answer

1) Where do I add my assignment fee? Can I add this to the price of the home when emailing investors?

Yes, you should add your fee on top but make sure you have a marketing clause in your P&S Agreement with the seller allowing you to promote it. If you don't add your fee to the price investor will negotiate based on how much you are making on it.

2) I requested for her contract for it to have 10 days of an inspection period. She agrees that would be fine. Is this good?

Yes, that's okay.

3) What are some things I should watch for in her contract?

Make sure you have "and/or assigns" language and a marketing clause in it.

4) Once I have the contract do I just shoot an email to all the investors to let them know or one at a time to see if they're interested first? I also have pictures from the viewings and repair estimate costs. Do I include all this in the emails or only in the emails of interested investors?

Before sending details make sure your email template has all the info the investor will need to analyze the deal. I wouldn't send an email blast because most of the time they go to the junk folder or other wholesalers get them and daisy chain your deal without permission.

DO NOT GIVE REHAB ESTIMATE - That's not your job. Let them analyze the deal and run their rehab estimates because it would vary drastically per investor depending on their exit strategy.

5) If an investor is ready to go, what next? Do I send my assignment contract to them and then send that to the realtor once completed by both parties?

If they are ready to go, after receiving the POF you will send the assignment agreement with a copy of the executed purchase agreement to the end buyer for signature. When you get it signed you will forward that to the title company - NOT THE REALTOR.

Remember you are acting as a principal in the transaction and assigning your right as a buyer to a new buyer.

6) If I can get an investor wanting to purchase asap, how do I have them pay the EMD?

Your assignment agreement should specify the amount of EMD you require and the timeframe for it to be deposited. I require $5k Min (only refundable if we can't deliver the title clean and insurable) and 24hr to deposit after signing the assignment agreement.

David Avery · Answer

Selling Real Estate without a license .

Must be very careful.

Well do you have someone that got you started ?

They should direct you

J.D Alexander · Answer

congratulations Heidi, conduct all the right inspections, secure financing, finalize the terms of the agreement, prepare for closing... and you should be on your way.

Robert B. · Answer

@Heidi Duren Wouldn’t mind taking a look at the two…I’m already looking at turnkey rentals in Jax….Drop me some info?

David Ramirez · Answer

P&S means purchase and sale agreement. It's not a different contract. In wholesaling, you are acting as a principal (buyer), so you will need to sign a purchase and sale agreement with the seller. Make sure your contract includes 'and/or assigns' language and a marketing clause to be able to promote it. Without the property being under contract, you do not have the right to promote the contract or property. Once you have a buyer, you will need to sign an assignment agreement with them. Through this assignment agreement, you are transferring your rights to purchase the property to your buyer for a fee.

Samuel Qandah · Answer

Hey David, I appreciate your response with this! I'm new into getting into wholesaling, is a P&S a typical form/ is that different from a contract you would put in with the seller that you would then do an assignment to buyer for, or is that done in addition to a contract?

Austin Beveridge · Answer

1) Where do I add my assignment fee? Can I add this to the price of the home when emailing investors?

=> Depends on whether you're in a double-close state or not. Assignment fees usually come in between the spread of what you're going to get the property for, and what the end buyer is willing to pay. In non double close states, the investor knows what you're getting it for and what they're paying so don't be greedy. Yes, add it in the price.

2) I requested for her contract for it to have 10 days of an inspection period. She agrees that would be fine. Is this good?

=> Yep, assuming you are in a double-close friendly state this is great. You typically have 30 total days to assign a contract (state dependent)

3) What are some things I should watch for in her contract?

=> I'm not a lawyer and this is not legal advice, I would not sign a contract that has a "no assignment clause" in it.

4) Once I have the contract do I just shoot an email to all the investors to let them know or one at a time to see if they're interested first? I also have pictures from the viewings and repair estimate costs. Do I include all this in the emails or only in the emails of interested investors?

=> Send it to all of them. With the details of the deal, the estimated repair costs and the ARV.

5) If an investor is ready to go, what next? Do I send my assignment contract to them and then send that to the realtor once completed by both parties?

=> I would get a local lawyer spun up on the situation when the investor is ready to go. They should be able to walk you through the process, but TL;DR you'll assign the contract.

6) If I can get an investor wanting to purchase asap, how do I have them pay the EMD?

=> depends on the investor, sometimes you'll have to fund the EMD, other times they'll fund the EMD

7) If they are wanting proof of funds for the cash offers, how do I do this if I'm moving the contract to someone else?

=> This is a sticky situation, its also why you'll typically want to line up the end investor before you get the property under contract (just don't tell them all the details or they'll side step you).

Heidi Duren · Answer

This is not selling the house, this is for the wholesale contract.

I have my first two houses possibly under contract. Now what?

I have my first two houses possibly under contract. Now what?

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