Closing a wholesale deal

[Lucas Gibson]

Hi everyone, Can anyone address if the proper process to close on a wholesale is to: 1) have seller sign letter of intent (LOI) to get under contract. Does there need to be some sort of exchange of money here to make document legal? 2)have seller sign option to purchase 3)have buyer sign assignment contract with finders fee. 4) ??? What is the purpose of a title company for simple wholesale deals? I hope someone can shed some further light for me. Thanks in advance everybody.

[Steven Leigh]

Here are the basics:

1. Agree to a price and sign a Contract to Purchase with the seller.

2. Find your buyer and agree to a higher price, and sign an Assignment of Contract with the buyer. This assigns your Contract to Purchase to them. It's a good idea to collect a non-refundable deposit from your buyer that you keep if they back out ($500-2,000) but it's not required to make it legal. You keep the difference between the original price and the buyer's price as your assignment fee. Usually the deposit just applies forward to this when you close.

3. Register both contracts with the title company and have them open up escrow and start the purchase. You want a title company who understands wholesaling and assignment fees or they might screw it up.

The purpose of the title company for "simple wholesale deals" is that you can't really buy and sell a house without a title company. :) There is a lot that goes into the process, including making sure the house is actually owned by the seller, handling all of the money, having an attorney do the title transfer, etc. Were you planning to do all that yourself? :)