Details about the agreement between motivated / desperate seller and wholesaler?

Question

can anyone explain in detail what the arrangement is between the original seller and the wholesaler? Do you tell them you're a wholesaler or do you initially lead them to believe you are interested in buying the property yourself?

Also, what is the agreement you make with them? I understand there is a contract of sorts but can anyone provide details? Does this contract give you exclusive rights to sell the property for a given timeframe (ie the seller can't sell it to someone else and just give you your deposit back, if he finds a better offer?) If so, how long is this period? How much of a deposit do you need to give them, and do you give it directly to the seller or is it in escrow somehow?

Brian P. · Answer

Corey

At this phase of your investing career I want you to do 7 things,

1. Get a library card and read every single real estate investing book in the library twice.

2, Go to the bookstore and read every new book twice,or until they throw you out.

3. Find out everything you can on straight options and focus on them as the first tool in your new toolbox. Hit the Internet and start a notebook.

4. Start building a buyers list, find out if what kind of investor or buyer they are and what they might be interested in if you were to find it?

5. Start learning the territory you plan to invest in, don't bit off a large chunk just add additional territory when your ready.
know whats for sale, whats for rent, whats just sold, whats empty and why.

6. Start a script book to use until the day you don't need it. "Mr Owner, I'm a real estate investor, I buy and sell real estate for a profit while solving real estate problems for people. I may do many things to accomplish that, work with you, work with other investors that I work with, find a buyer more suitable for the project, Or I  may or may not buy the property for myself, it all depends upon how the numbers work out, If it looks like I can do something for you and make a profit great, but If it looks like I may lose money then of course I would have to reject the project for me because I can't lose money and stay in business, but at the least I can give you any suggestions that I may think of that might help you to do what it is that you want to do, that's fair isn't it?"

7. Go for it.

Corey Demuth · Answer

now, after signing this contract with the seller, what happens if I am unable to locate/match a buyer?

Jorge Caicedo · Answer

If you can't find a buyer(although one should be set up in advance) tell the seller that your partner(s) didn't care for the prop or just simply changed their mind.    Now having said that, you want to  have an Addendum to the Purchase Agreement and have the addendum state that you the buyer can w/draw your contract at any time for reasons deemed worthy..i.e, bad location, buyer found problems after the fact etc....
                        
                        Maybe I should put out my own wholesaling how-to guide..lol
                        I'll send a copy to Ryan Webber and Preston Ely...

Minna Reid · Answer

I never lie to sellers. If I intend to resell their property I tell them thats what I will do. It also gives backing to your very low offer. You're not moving in, so you have more costs involved - holding, rehab, resale costs. If they're really motivated they're not going to care as long as their problem is solved.
Your contract is going to be specific to whatever it is your trying to do with the property. There is no one size fits all contract.

Corey Demuth · Answer

The goal is to resell their property to an investor who will rehab and then either hold and rent or resell it. I just don't know where to even get started with these contracts

Corey Demuth · Answer

So once we do that, is it my job to show the house to the potential investors? Naturally, I want to avoid having contact between the investor/s and the seller, as they could cut me out of the equation in theory. (if they did do this, I could sue the seller though--right?)

Also, for all of this, I do not need any kind of real estate license?

Jorge Caicedo · Answer

Corey, most investors will do a drive by on the property and inspect it themselves..most investors won't cut you out of a deal but if you think they will, record your contract at the courthouse..this way it'll show that you were the original buyer. A license isn't necessary b/c you're not acting in a Realtor capacity. This has been explained elsewhere in this forum.

Jorge Caicedo · Answer

Corey, put a 30 day time frame on the contract..you will rarely need earnest money unless you're doing an option.
If you have to give earnest money, tell him/her it'll be deposited in an escrow acct. w/ your title company. Once you seller signs the contract, he can't back out and go w/ a better offer. Some investors might tell you otherwise but i've found that rarely to be the case.

Jorge Caicedo · Answer

Corey, a simple Purchase Agreement will work fine..I left another response for you in another section, please read it.