Newbie..First Possible Assignment Deal in 24 hrs. Steps with Contract?

Question

Hi guys,

I just recently joined the bigger pockets community about 2 weeks ago because I had been researching wholesaling and assignment contracts. On my way home from work I started writing down addresses of "for sale" properties and I sent letters out offereing to find a buyer for their homes using an assignment contract.

Turns out that one of the owners I sent a letter out to was a business ( LLC) and they had quite a few properties. They gave me a call and he agreed to allow me to find a buyer however he did not want to do the assignment contract deal because he didn't want to " have said acquisition tied up as they have a cash buyer lined up at 55k." Which i can understand if he can But still offered me the opportunity to go and find a buyer. (at this point there is no contract so im worried about circumventing). I advertised the home as Ive done for other items like cars, televisions, etc.not knowing I could take this assignment contract route in real estate. I posted it for 61k. and I have 2 buyers wanting to schedule a viewing of the home. The guy who has the home, myself and the 2 potential buyers will be there. I dont personally think I should be there but because I dont have the home under any legal documents saying I will be paid, I think I should either meet with him before to have something signed.

Problem is: I dont have a contract at this point but I have 2 possible cash buyers ready to see the home. The viewing should happen in the next few days. What contracts do I need to have filled out to guarantee I will not lose out on my portion of the deal. Should i be at the viewing of the home? Which contracts do I need to have filled out? Would you make any changes in the way I have set up the deal so far? How should this negotiation take place up until the closing and a check arrives? Any advice would be greatly appreciated?

Thanks

Any suggestions?

Account Closed · Answer

Thanks Guys, For all of your replies. Im really fortunate to have access to a resource where I can get the right info and best practices. The last thing I want to do is get a bad reputation and be breaking the law. Ive completely backed out and let the parties know Im not experienced enough or knowledgeable on the rules and regulations to proceed. Everyone makes it look so easy! but I see that paying close attention to detail and each step in these processes this is really serious. Im thinking you guys saved me a ton of legal issues and set backs. Ive been reading books and watching a lot of videos but it seems that no two deals are ever the same. Id like to get into real estate long term so Its definitely important Im getting all the proper information. How did you guys start, if you don't mind me asking. What did you do to Get the ball rolling? Did you start on your own based on what you read or did you have experience with a knowledgeable investor, rehabber, etc?

Manny Cirino · Answer

Brandon, the first question does he even own the property, is he the homeowner or other wholesaler? yes if you want to control the deal you must be there other wise your pretty much giving him your buyers and he can freely legally take them. you want to be careful with Marketing on craigslist at $61k if he already listed at $55k that is a red flag to real buyers. If he is a wholesaler you should leave the deal at $55k and have him split his assignment fee. You are marketing with an interest(contract) in the property there for if you show and market the property that can be brokering with out a license(not good) I am in Lakeland and can assist you with research if you need. but do not let your buyers out of your site!

Darrie W. Bennett · Answer

Brandon - You are moving too fast! Go back to BiggerPockets and click on "Start Here". Especially read the article entitled something like "Don't start wholesaling until you read this". Build a strong foundation first. Don't get a bad reputation from the start.

Dev Horn · Answer

Patrick is right here. Unfortunately, you have gotten the process OUT OF ORDER here and that can be dangerous. Step 1 is to get the property under contract so that you have the right to market it. Step 2 is to find a cash buyer and ASSIGN your contract to them with a separate assignment agreement. By marketing the property without a contract, you are indeed attempting to be a broker without a license. Back up and get a contract in place - if he is not will to sell it to you via a wholesale agreement, do not market the property. "Its not the will to win, but the will to prepare to win that makes the difference." ~ Bear Bryant

Antonio Chasten · Answer

Manny and Patrick are right about everything especially Manny about Craigslist. That happened to me once when I first got started and I got an earful from 2 buyers...let me tell you, not fun! Always find out if the seller is the actual owner of the property of if they are another wholesaler with the property under contract with interest in the property but need a cash buyer to sell the dang thing. If it's another wholesaler...have them sign a marketing agreement or a JV agreement between you two and then you send it to the title company to make sure your name goes on the HUD and you get paid. Good job on taking action and putting yourself out there. You keep this up everyday, you'll be cashing checks in not time....all the time!

Patrick L. · Answer

What you are doing at the moment is practicing real estate without a license. a felony here in FL (and every other state I've looked at). You are marketing a property and looking for a buyer hoping to make a profit without any equitable interest in the property. I'd worry a lot more about that than the seller not paying you. If you had the property under contract and were looking to collect a fee to assign the contract that would be one thing, but at this point you're breaking the law.