should I Sign the Real estate agents contract?

Question

I've been dealing with a realtor on a house i'm looking to wholesale. The seller is asking for $50,000 and is ready to sell. The agent is drawing up a contract for me to sign, of course i'm not going to sign until I have my attorney look over it and I'm going to look at the house with my GC Saturday for a rehab estimate, but my question is, since i'm wholeselling the property should I make the agent aware of what I plan to do with the property or is this normal to receive a contract from the seller also. This potentially could be my first wholesale deal and i'm kind of nervous and don't want to look like a fool or like I don't know what i'm doing.

What should I expect to happen between me and the agent if this becomes a good deal?

Wayne Brooks · Answer

The way you make an "offer", is to submit a signed contract to the seller's agent. The agent already knows you don't have any experience.

Account Closed · Answer

Tony, it's your first deal. You will look like a fool. Don't worry about it. Just get the property under contract and do your due diligence.David

Braden Smith · Answer

Hey @Tony Osborne. I'm a local Realtor and investor in the New Orleans area. I think I can add some insight for you. First, all contracts in Louisiana area assignable. The standard contract from LREC is assignable. However, most Realtors do not know what wholesaling is and don't understand it. Because of this many of them will try and tell you it is illegal. It is not. But if you surprise the agent with your plan I think you will have some issues. The agent seems to be writing the offer (contract) for you to sign thinking they are going to be dual agent where they represent both sides and get the whole commission. If they find out last minute that you are not actually trying to buy the property I am certain they will be very upset.In my opinion, you shouldn't be trying to wholesale properties listed on the MLS. You need to find off market deals where you can deal directly with the seller.

Mike Cumbie · Answer

Hi @Tony Osborne,My guess is that the agent is the listing agent and he is going to be using a standard contract for that area. I'm not trying to be rough at all, but keep in mind the selling agent has it listed on the MLS (I'm guessing) for 50K. That means every agent in the great state of Louisiana has access to it and has seen it. It also means that every agent (and most wholesalers) have sent it to their list of cash buyers and for some reason it is still there. I am also guessing that he is writing up a contract thinking you are buying it (Helping you out and all, I'll write it up, don't worry, just sign here...). I do not know the contract in that area but I am also guessing it has a non assignable clause. Once you try and change that, the attitudes will change. My recommendation is to find another Wholesaler in the area who has had success. Bring them something that is not listed and have them work with you. You will most likely give up a big chunk of cash on the first few deals (call it tuition) but you will learn years of experience and have a contact. As cutthroat as this business is in my experience most players understand the value of a deal and are willing to work with you on one.Agents are a little different, but not much. I deal with agents from other brokers all the time. I have my client and they have theirs, but both of our goals are the same, get our clients to the closing table in acceptable terms that meet their best interest. Trying to wholesale something on the MLS is hard to do and one of the more difficult things you will find. Finding an unloved property that needs a new home.... now that is the goal.Good luck in your hunt!

Brandon Johnson · Answer

@Tony OsborneDo you have a buyer lined up already? Is this your agent or the seller's agent?If you don't have buyer and are just going to be attempting to wholesale a listed property without the agent understanding that is your intention and that agent is relying on a closing for their pending sale, then you could really burn some bridges if it falls apart and you end up backing out. I'm not trying to discourage you, but tying up a listed property under contract for your first attempt to wholesale doesn't sound like a good idea, UNLESS you have the intention of closing the sale yourself even if you don't find a buyer.See you at the top!

Leslie Cambre · Answer

As Braden said, if the property is listed on mls, then all buyers would be able to buy it at the listed price. What would make a buyer buy from you? The listing agent is looking to be a dual agent. Also, that agent will be looking for proof of funds from buyer upon signing of the contract.Start looking for a house that has not been listed. Then look at who has been buying houses in that price range. Once you find the house, those buyers are who you bring the deal too.

Mike Wood · Answer

@Tony Osborne I agree with others, if the house is listed on the MLS, it is not a wholesale deal. Keep in mind that the MLS data is searchable and anyone that is doing some do diligence on your deal will likely find the property listed on the MLS.

Brian Spatz · Answer

Like a few had mentioned above, there is a high probability that the listing agent is writing up your offer with a standard contract. I personally only work with one standard contract in my area, however it seems like most contracts around the US now include a clause that would PROHIBIT you from assigning your position over to someone else. For this to work, you can have the listing agent represent you both, he'll love it because he'll get both sides, but you'll have to CLOSE on the property yourself (ie cover the full purchase price plus any extra costs/fees) and then you'll be able to have a second close with your end buyer.

Alexis Guini · Answer

Hi Tony Osborne, if you are the one buying you have to send the offer and make them sign it. Also, always check it with a real estate lawyer. I don't know how it is in your state, in mine, the contracts used by realtors are approved by the Association of Realtors and there is section that you have to mark that it allows you to "assign" the contract to another person. Remember: you are not buying the property, you are assigning a contract. Good luck my friend!

Brandon Battle · Answer

Tony Osborne,I am not trying to insult you in anyway.I am also new to investing and as a fellow newbie I must tell you that you need to spend time with a practicing wholesaler and learn the job throughly before attempting to get other people involved in a potential deal.You need to learn to build a list of firm cash buyers that can buy your contracts quickly and pay you cash immediately upon assignment.You also need to to learn how to do double closings,deal with real estate agents without them getting in the way,write contacts that are legal and assignable to others and with exit clauses to keep you out of financial trouble,etc.You can't really learn all that from a book or website.You need a teacher who can take you by the hand and shows you step by step how it's done.