A Hypothetical Scenario

[Carmen Lewis]

I am looking into my first deal. Let's say a seller agrees to sell me their house. I get the property under contract. I reach out to some cash buyers. What is stopping a buyer from going around me and buying directly from the seller? Do sellers ever default on a purchase and sales agreement, and what happens if they do? What are some ways I can protect myself as a wholesaler so that I don't get screwed?...

[Lydia R.]

@Carmen Lewis I guess I will be the one to give a helpful answer here. If you have the property under contract and one of your potential buyers goes around you then you have cause to sue them since you were under contract with the seller prior to their hijacking of your deal. Typically the guys who do that take advantage of the fact that you are new and you probably dont actually have the money to sue them. In that case you are SOL, its like having a gun and no bullets. I would suggest working with reputable buyers until you have the money/confidence to defend yourself as needed.

Yes sometimes sellers will get cold feet/get offered more money and try to back out of your contract. Again you have to made the decision on whether its worth it to take legal action against them. If you have a good relationship with the seller and you do everything you have told them you would do, you maintain communication/updates on progress throughout the deal and you havent strong armed them into selling for next to nothing then they are much less likely to back out of the deal.

Protection? You wont like my answer but here it is. Wholesalers dont have much risk in their deals if they are doing assignments. Therefore there isnt a whole lot of actual protection if you cannot truly defend yourself. Being a wholesaler with out some kind of funding behind you is like having a gun without bullets. You are defending yourself with a bluff. Sometimes it works sometimes it doesnt. Deal with reputable people, dont be shady and you will more than likely have more positive experiences than negative ones. But negative experiences come with the territory. You have to determine if thats something you can handle or not. Most newbie wholesalers give up/quit/lose money within the first 12 months. This is just my advice/insight. Do with it what you will. Good luck!!!