Wholesale contracts explained to a newb

[Dimas Garcia]

I'm reaching out for help from the BP family because I have what's commonly referred to as 'analysis paralysis', a particularly debilitating case. I can't get started because while I have the general knowledge and theory down, I'm not comfortable with the details of the actual contracts and I wouldn't want to meet with a seller and 'hem' and 'haw' my way through a pitch.

My question has to do with two ways of getting a home under contract to wholesale. One of the things that has me confused is the seemingly interchangeable terms that are used for an option to purchase, purchase options, purchase and sale agreement, etc. I've read many times about this so-called 'one page' option to purchase, but I can't find a template or copy of it anywhere. Just so that I can make sure that I understand it correctly, this is a one or two page agreement between myself and the seller that states I have an agreed upon amount of time to control the property in order to sell this option to a cash real estate investor, yes? Also, here is where I'd state something to the effect of there being a $100 (or any other sum) good faith deposit. Is this correct? Also, how do I go about conducting this transaction with an investor? With an assignment, you would use a title company and perform a double closing, but I'm not sure about the option.

The assignment of contract is just that. An actual purchase contract that is used in everyday real estate transactions with the added clause of allowing the contract to be assigned and adding the 'and/or assign' to the buyer signature block, yes?

I've done a lot of researching here, and everything I've read is extremely valuable, but it's difficult to convince myself that I've totally grasped the situation without getting any feedback. Thanks for your help everyone!

Dimas

[Will Barnard]

Dimas, I think you will find that sellers will be most comfortable with a PSA (purchase and sales agreement) as an option contract is just that, an option in which you may not excersize, leaving the seller hanging.
Plus, the PSA is simple to explain and go over with your seller. I recommend you use the statndard state PSA. Using it will allow you to inform the seller that teh contract you are using is the state approved one used by all RE agents. This should make them feel comfortable (that warm and fuzzy is a good thing). With any PSA, in the section where you fill in the buyer, simply write your name (or that of your entity) and add "and/or assigns. That simple. Now you have an assignable contract. Just to be even more clear, under the special provisions section, you should also write in that "This contract is assignable"

If asked why you are adding this in, simply explain to your seller that you do many RE transactions each year and your accountant has advised that you never have too many properties in one entity at one time. As such, in the event that occurs, you can "assign" the contract to your other or new entity. You may also add that in a circumstance where you get too many deals all at once, it will allow you to bring in one of your other "investor partners" to the deal because "I always perform for my sellers no matter what".

Hope that helps.