What Contracts are neeed for Wholesaling

Question

hello everyone i have a couple of questions to ask about wholesaling

1- what contracts are needed to do wholesaling? is it just a nice purchase agreement with many exit strategies (contingencies), and a assignment contract so i can assign the deal to the end buyer.

if there are any other contracts besides these two will someone please let me know what they are, and explain how they work.

2- what do you guys think about purchasing these contracts i may need from say an online site like UsLegalForms? the reason why i ask this question is because i've read some post that stated using a lawyer and etc to draw up contracts which cost alot to the investor starting out with little funds, but forgot to mention or comment on the purchase of these U.S State specific contracts from well known online sites

3- in a wholesale transaction once you have the contract signed (the purchase agreement) with the seller how do you protect your self from the seller or other investors from going behind your back to make a deal? now i've heard that once you have a signed contract with the seller to record it at your local court house which they say will put a cloud on the seller title which will show your interest in the property and will make it hard for this problem to happen, is this true and is this how all of you do it.

4- and my last question, from my research on wholesaling what the investor is really do is turing their purchasing agreement into a option agreement, so my question is what strategies and tactics do you guys use in your contracts or conversations to by time to find a buyer for the property ((which i know your suppose to have a buyers list but sometimes your buyers may not be interested or are to busy with other projects and etc))

i even read some past post were people said they wouldn't even go into a contract with the seller if they didn't already have a buyer lined up for it, now i know i'm a beginner but to me that can be smart but also very stupid, especially if you know your getting a great deal on the property (see all property and property conditions are different, for example you might not have buyer/investor in your list that likes rehabing burnout places and etc), so if your not risking much on the earnest money deposit i think who cares and just tie the property up and search for a buyer

the reason i ask this question is because from my logical way of thinking, i think the seller of the property would think if you were interested in their property and their price and you have cash, why don't you just straight out buy their property a.s.a.p instead of waiting at some later date, so what are some ways to explain your late closing date to them so you can hold up a closing before your contract expires to find a buyer

i hope i'm not asking for to much info, i will appreciate any response. thank you

Anthony Sulecki · Answer

I use an option to purchase real estate contract for the seller, and a purchase agreement for the buyer. Options dont pull the house off the market until a buyer is found, and if one is never found, it expires at the date you assign. I usually do 90 days. When I find a buyer, I take his earnest money, and give the seller our agreed upon amount, to pull it off the market. He also gets a purchase agreement at that time. If it falls through, the seller keeps the agreed upon cash amount to pull the house, and I keep the rest, as earnest money is non refundable. I like doing it this way, because the house is never really yours, you dont have any responsibility, and dont need cash. You are simply moving it.

Chris Jones · Answer

thanks for the reply, i really appreciate you taking the time to actually answer my long list of questions. well anyway i just have three short questions to ask you 1. how do you get paid by your buyer when he buys your contract? now i know the buyer must have cash because a conventional loan from a bank won't work because of the seasoning issues, so how do you get paid, like do you get paid up front in cash (wire) before you assign the contract, or do you assign them the contract and then wait to get paid in cash (wire) at the closing between your buyer and seller 2. how do you deal with these type of properties when they're listed with a real estate company, because for me its extremely hard because the agents want large earnest money deposits and proof of fund letters before you can even think about getting the property under contract, so what do you do 3. in one of your responses you had mention a "Note or Memorandum", i'm sorry but i didn't understand you when you said i need this, so could you please explain again what this is, and why i need it

N/A N/A · Answer

I will try and answer yours questions and if I miss one you can re ask it. I use a simple purchase contract when dealing with the homeowner. I always believe that you don't need a big jam packed contract as you are not the one purchasing the house. You just need to use an offer to purchase with the homeowner. It's what I have done and it works for me. I then take that contract and assign it over to my buyer. The new buyer takes that offer to purchase between me and the seller. Him and I sign an assignment contract that goes over how much I get paid when I get paid and that he received the offer to purchase. The buyer will then go and sign a contract and purchase the property with the seller. You tell your buyer that you are using an offer to purchase because you need to do your due diligence and inspect the home etc. I usually tell them I can close within 14 days. Most of that time is spent working with my buyers to get them to buy the home. The homeowner shouldn't have a problem with this. I like to work on vacant homes so I can go in and out of the property as many times as I please. I can also bring all of my buyers into the home also. Oh.....about buying those online legal forms...I don't know. I have never tried to buy them so I can't say what they are really but going to your local attorney all lawyer will probably be your best bet. But to be honest with an offer to purchase what I use is simple..It just covers all the details of the property and purchasing price...its not a contract so it doesn't have to be all inclusive. But again I am not a lawyer so you should check first. If I remember correctly it is a Note or Memorandum that you file with your town. It costs about $14 usually. You use a popular escape clause that a lot of investors use... "This offer is subject to review, inspection and written approval of my financial partner within 14 days of Sellers acceptance of this contract. If Buyer does not give written approval, this offer is withdrawn and any earnest money shall be returned within 3 business days." Something like that should do for you, but again you need to consult a lawyer as I am not one and I don't know whats the best for you. Also you should always have a list of buyers ready to buy of course. But if you find a good deal and don't have a buyer then still put it under contract and get out there and work hard to get your buyer. There's a lot of money on the line so that should fire you up. Hope this all helps! Brandon