Got my first wholesale deal! Now how to close it? Yikes!

[Nadirah Dawson]

Hello All, So I found my first deal! Kept driving by this house that showed the signs and finally got the nerve to speak to the owner. He is an older man (so sweet) who just can't maintain the property anymore. Now here comes the work... I got a GC to come to the house get an exact scope of work for repairs. I originally thought the house would need about $40k for repairs but after speaking with the owner several times, I think it's going to be more. But I don't know what steps to take first, please help! Now my question is, 1) where do I get a purchase and sale agreement WITH an "and/or assign" clause? 2) when I present it to the owner, do I just give him an earnest deposit in his hand? I was told u can give as little as $10. How do I record such deposit? 3) once he accepts the offer (hopefully), then do I send purchase agreement to my Title company ? 4) then do I shop the deal around? I did speak to 1 cash buyer who gave me her specs so I will present to her first. But I will give the cash buyer the assignment agreement to sign. 5) here is the big twist! The owner said he will need about 60 days to move all his stuff and find a new place to stay. Can this time be given to him for this type of transactions? Will a cash buyer be willing to wait that long? Was thinking to tell the owner that he will be responsible for the taxes as long as he stays in the home. 6) how can I protect myself from being swindled if the cash buyer wants to see the house, which mostly he/she will. Will the owner and the cash buyer just try to deal with each other even though I brought them together? So here is the "deal" ARV:$384,600 / it's in a great neighborhood! (6 bedrooms / 3 baths) according to the owner. Offer: 196,812 (384,600*.7= $269,229 - $40K(repairs) - $10,000(estimating closing costs) - $12,408 (estimating realtor fees 6%) - $10,000 (my wholesale fee) The cash buyer could easily make $115,392 from the property. But I need your help with this. Are my steps correct? Kindly advise and many thanks'

[Account Closed]

Hi Nadirah, first of all congratulations! The answers to your questions are as follows;

1.) You can get a Real Estate Purchase contract, or a REP-C from local office supply places, such as Staples. Or you can get them online, I've gotten them off of lawdepot.com in the past. Regardless of if the contract states it is unassignable, you can put "And/or Assigns" in the buyer name, and if he signs the contract it  is considered prior written approval. So for example where you would write your name or company name in the buyer field, it would read "Nadirah Dawson and/or Assigns"

2.) You will state in the contract what the ernest deposit amount is. I would recommend $100 if you think you can get away with it. NEVER give the ernest deposit directly to the seller, it goes directly to the escrow/title company with the contract.

3.) Yes it goes directly to the company that will be doing the closing.

4.) After the title company has your contract and ernest deposit you can start finding a buyer for the property.

5.) You'll write in the contract how long escrow is, so if the seller needs 60 days, then I would put the closing date 60 days out + your inspection period. Also write into the contract that your inspection period will start after the seller has completely moved out. This gives you the 2 months plus your inspection period to find a buyer. But if you think the seller will try to break contract when you try to show the property to your buyers, just tell the seller that they are partners of yours, or contractors looking at needed repairs. You must be clear with your buyers that you are under contract for this property, and if they try to cut you out of the deal by negotiating directly with the seller that you will never work with them again in the future. I've told my buyers in the past that they are simply not to talk about terms or price until after they've looked at the house and left the residence.  Most buyers understand, and would rather have a good wholesaler who's bringing them lots of deals, instead of saving a few grand on one property and getting X'd off your list.

I don't think i missed any of your questions, and of course these answers are based on my experience here in CA.

All the best!

-Chelsea