In over my head? What is the next step?

Question

So I found a motivated seller in the Memphis area.  3/2 in a fair neighborhood, a lot of rentals.  We've largely agreed on a price and I'm going to meet with him this weekend, take some pictures, maybe video, assess repair costs, and sign a contract.  I intend to assign the contract to someone else (though I don't know who, yet).  So I've got some questions about my next step...

Can I use a generic real estate sales agreement or do I need something specific in order to assign it to someone else?

Once the seller and I have signed a contract, do I need to do anything with it or can I just start searching for a buyer?

I assume that there is some other assignment agreement that I will need once I find a buyer.  There is a generic one that I got from BiggerPockets (here) , is that all I need?

Any advice, tips, tricks, or assistance you can provide would be greatly appreciated.

Thanks

Ben

Ammon Brimhall · Answer

I'm going to second, third, and fourth all the WELL DONE'S others have shared -- WELL DONE!! You've taken a step forward and reached out for support -- two VERY good steps.

First, really helping you in detail with contracts is really a big task for a post like this, but here are a couple of tips:

1. Make sure your earnest money does NOT go to the seller but to your title attorney

2. Make sure you give yourself a good inspection period with clear instructions that if the inspection fails you get out of the contract and get your earnest money back. Stating that the inspection is based on the "buyers sole discretion" gives YOU the veto power - i.e. it means that YOU get to say the inspection didn't pass.

3. Make the inspection period as long as you can

4. I've had better luck by making sure my contracts include a clause the openly states that "This contract may be assigned at the sole discretion of the buyer" to make it very clear that I may assign it. Also, finding tactful ways to make sure the seller is aware of my intentions can help them be prepared to accept the fact that I'm making money on their house. In other words -- sellers know how much you make in an assignment and if you didn't prepare them to see your wholesaling profits sometimes they can get upset. If you need any tips on this let us know and we'll all help you out!

5. When you assign the contract here are a couple of tips: a) often the buyers will not pay your full assignment fee until closing -- HOWEVER, it can be helpful to get a non-refundable deposit from a buyer just in case the flake out (the amount of the deposit will be subtracted from the amount they will owe you at closing) b) Make your assignment contract such that your buyer has to close before the end of your P&S with the seller -- this way, if your buyer flakes out you will have an opportunity to find another buyer and/or raise the money yourself.

Now -- two other tips that I think you need:

1. STOP waiting for deals to build our team!!!! Start NOW to get ALL rehabbers and landlords in your area on your contact list so you aren't scrambling for buyers. Get on the phone, meet people, get referrals, go to club meetings and talk to EVERYONE!!! By getting a deal first it's almost like you ran into the battlefield butt naked and then screamed to your buddies to get you a gun and bullet proof vest.

I'm being dramatic, but I hope you get the point -- build your team NOW!!

2. Get a copy of several P&S  Agreements as well as assignment agreements and read them all several times.  Then take your questions about them to your team. In a word - STUD Y them now so you are  better prepared for the next  one.

Again, GREAT WORK!

Lidia Popa · Answer

Hi congrats! Make sure you put on your contract "and or assign" that way you can sell the contract to our buyer.

Jay Hinrichs · Answer

@Curt Davis  too funny I just send closing docs to Claire 5 minutes ago.. nice people

Gordon Cuffe · Answer

@Ben RobertsThe hardest part many times is getting the home under contract at the right price. You can use a very simple sales contract and assignment contract. I would say just get it under a contingent contract for a 30 day period so that you can find a buyer. It looks like you have a couple interested buyers already.

Steve Kiser · Answer

Ben,  Congrats on the contract.  I am looking to expand my holding in Memphis.  Please feel free to contact me.

BTW - how do you get that little @ 'persons name' in the response boxes?

Derrick Craig · Answer

@Ben Roberts

Congrats on your first deal that is very exciting news!!

Keep me posted about the deal as well I am an active buyer and I have active buyers looking for great deals no financing needed!!!

Matthew Forbes · Answer

@Ben Roberts- Sounds like a huge first step Congrats!  I would spend time finding a very seasoned Wholesaler you can bird dog this with and learn everything from start to finish.  50% of a closed deal with a lot of education is well worth 100% of a deal or 0% of a deal with out.  Just my thought.

Curt Davis · Answer

@Ben Roberts

Please let me know about the deal as well.  I will buy the home all cash and close fast as I am the buyer.

You can use a generic contract between you and seller and then use a generic assignment contract for the assignment.

You might check out Saddlecreek Title, ask for Claire Hurlburt.  You can look up their contact info online. They have better pricing then anyone else you will find, they are centrally located in the Poplar 240 area and most investors work with their company.

Let me know what you get!!

Ben Roberts · Answer

Thanks @Douglas Skipworth!  I will most certainly keep you posted.  I don't have a closing attorney just yet.  Can you ( or anybody else ) recommend someone in the Memphis area who handles these type of wholesale deals?

Lidia Popa · Answer

to your buyer :)

In over my head? What is the next step?

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