Order of Operation as End Buyer

Wholesaling
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Order of Operation as End Buyer

Account Closed
Member since 2024 · 22 posts · 7 votes

Can anyone point me to a step-by-step guide for end buyers working with wholesalers? There are a few things I'm specifically interested --

- Do wholesalers actually enter into a PSA? Or is it a trimmed down agreement (option to purchase)? I'd like to be aware of what the wholesaler's obligations are should they assign us the contract. If it is a trimmed down option agreement, do we then enter into a full PSA with the property owner?

- Assign vs. double close. What is typical? I'm assuming assign.

- Non-refundable EMD: For the most part, we are fine with this provided we receive marketable title. Should this be sent directly to escrow? I've seen posts say it goes directly to the wholesaler, but how do we get that money back should there not be clear title? Based on what I'm seeing in some FB groups (don't intend on buying here), there appears to be a lot of scammers. I'm assuming it works by using this non-refundable EMD or they are simply daisy chaining.

Ultimately, how can end buyers be most protected from fault of the wholesaler or property owner? 

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  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    1y

    There isn't a step by step guide....bc everyone does it differently. 

    -I've done it both ways. It depends on whether it's an assignment or double close. If it's an assignment, then it's a "trimmed down" agreement as you mentioned. If it's a double close, it's a full on contract to purchase. 

    -I have preferred to do assignments as I think it's easier. The larger wholesale outfits in my area always do double closings. I have done both. The end result is the same. Double close if you don't want an end buyer to see how much you're making. I personally don't care. If the deal works, it works. I paid 95k once for a wholesale deal. It ended up being my best deal i've ever done. 

    -EMD that's non refundable is perfectly fine and makes sense. If you're worried about being scammed, then request to put it in escrow. The wholesaler also has an obligation to perform, not just you.....

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  • Account Closed
    OP
    Member since 2024 · 22 posts · 7 votes
    1y
    Quote from @Luka Milicevic:

    Thanks for your reply!

    With the trimmed down agreements, are you then entering into a full contract to purchase with the owner? If so, I'm assuming you write a check directly to the wholesaler and they are out of the transaction? Then deposit EMD for transaction with property owner?

    For double close, how do you ensure the wholesaler is in contract to purchase? They obviously won't want to share that unless they redact the purchase price.

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  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    1y
    Quote from @Account Closed:
    Quote from @Luka Milicevic:

    Thanks for your reply!

    With the trimmed down agreements, are you then entering into a full contract to purchase with the owner? If so, I'm assuming you write a check directly to the wholesaler and they are out of the transaction? Then deposit EMD for transaction with property owner?

    For double close, how do you ensure the wholesaler is in contract to purchase? They obviously won't want to share that unless they redact the purchase price.


     No, none of the above. 

    You enter into an agreement with the wholesaler (contract), the wholesaler is in a contract with the seller. You have nothing to do with the seller. 

    I've always been presented with the contract between the seller and wholesaler to make sure they actually have the property under contract. They just remove the price which I'm fine with. 

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