Use a Joint Venture/Partnership agreement to do a wholesale deal?

Question

Can a JV/Partnership agreement ,between, you and the seller, be used to conduct a wholesale deal instead of using regular assignment contracts? I was thinking about doing this if all i am doing is getting a firm ask price from the seller and then locating a buyer. My fee for locating a buyer would be an agreed upon "buyout" percentage if the deal closes.Thank you, Dan

William Bronchick · Answer

What you described above sounds and smells and lot like a net listing agreement, which could get you into hot water with the state commission if a realtor complains.

Bill Gulley · Answer

Yes, if you are astute enogh to pull it off. The owner deeds you an interest by quit claim, like 5% and then you move on to the sale. This was a technique popular with some years ago. I'm not sure how it would play in a SS or for the seasoning requirements for any new lender. The title company will catch the date of the last title activity and they may ask about it. If you do this I would suggest that both you and the owner execute all contracts, not one with a POA or other agreement. Now, I'm sure you would need a reason for doing this before the property was sold which should be unrelated to the transaction....in today's environment, this is an interesting strategy to explore.

Maybe one of the attorneys here will chime in. Has anyone had a SS with anyone recently been added to the title? James? Nick?

Bill Gulley · Answer

William, you chimed in right before I did, yes it does, and Realtors can't enter into a net lsiting. State law elsewhere might include mere mortals as well, but not in Missouri. And, there is no reason for a Realtor to go this direction, simply list it and do the deal.

I also see the facilitation of a real estate transaction without a license. There needs to be a reason why the interest was conveyed besides to facilitate the deal.  I did something similar to this a couple of times but it involved funding improvements and agreeing to sell/buying an interest.

Something to explore, as I see some real possibilities if we clear up the investor's role.

Dan Krause · Answer

William Bronchik: This would be for properties that are FSBO. Dan

Bill Gulley · Answer

LOL, Simply expanding on the technique. In a wholesale deal, I doubt the title change would trip many triggers, carrying this further where there become more compliance issues, such as in a SS, there could be issues. Sorry I didn't make that clear. Bill

Steve Babiak · Answer

Bill,

I don't see anyplace in the OP with the term "SS" or "short sale" ...  Seems you're getting things confused somehow here.

Use a Joint Venture/Partnership agreement to do a wholesale deal?

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