Wholesaling
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated almost 6 years ago, 02/04/2019
Wholesailing first deal
Hey @Nicholas Groover always ask questions. Best way to learn. Given that at closing your attorney will ask theirs attorney for a separate check for your assignment fee. However, here is the concept you need to understand. For a wholesaler the contract is an extreme important instrument to structure a wholesale deal. It is where you control the deposit you put up; communicates your “out clauses” to protect yourself (here is my out clauses “ This contract is subject to partner approval”) in the evident you can’t find an end buyer. It is where you communicate your need for access to the property. This is just to name a few. The point I want to drill home here is that it is all about control. My rule of thumb is that if I am making 5k or less on the deal I will use an assignment. If I am making over 5k I will use a simultaneous closing. Here are the benefits and drawbacks of each wholesale deal closing. If you are closing using an assignment the benefit is that there are no closing costs. The drawback is that the buyer knows exactly what you paid for the property and the seller know how much you are selling the property for. This may be a problem if the seller or buyer thinks you are making too much money on the deal. If you are closing using a simultaneous closing the benefit is the privacy that seller does not know what you are selling the house for and the buyer does not know what you bought the house for. The drawback of a simultaneous closing is that you will have to pay closing costs when you buy the house and closing costs when you sell the property. Hope this helps.
Not a dumb question at all! You wanna do everything with an escrow company that works with wholesalers ( not all do). Regardless of which close you do, an assignment or double escrow, it should all be done through an escrow company. They will disburse the funds accordingly to everyone once they receive it from the buyer
@nicholasgroover yes yes they are title and escrow company are the same
@Nicholas Groover - There is a third way. You can assign the agreement in ADVANCE of taking the contract to the title company. This method requires a lot of trust between you and the end buyer, because they provide you with a check before the deal is closed. Of course, you would honor that trust by refunding the wholesale fee if the deal fell through.
I find this is one of the better methods, because the end buyer gets to choose their own title company and there are fewer moving parts.
In ANY of these methods, you want to make sure your paperwork/contracts are excellent.
@Brandon Krieg I haven't heard of this method before but it makes sense! This would probably be after you have done a few deals with the buyer though, you think? I doubt someone would do this when its their first time doing business with them?
@Shanai Rogers - This is easier after you have an established reputation, or have worked with someone before. However, if you want to go this route, and don't have the same level of trust, you can always set up a small escrow account with an independent third party (such as an attorney). If the deal goes through, the cash gets released to you. If it doesn't, it goes back to the end buyer.
This can be a good way to use this method if you haven't established a trusting relationship with the end buyer yet.
@Brandon Krieg I got my first property under contract in mid December 2018 and did not even know you had to take it to a title company. I thought that waiting untill you have both contracts was the standard method. Seems like all the people teaching this game just say hey go get contracts signed then that's it you can market the property and forget to even mention basics like these.
@Brandon Krieg ok ok I see! Thank you so much for this insight