Wholesaling - risk of not finding a buyer

[Account Closed]

Hey BP - I have been working on setting up my wholesaling business for the past several months now and I have a list(s) of sellers and cash buyers that I am about to start marketing to. Before I do so, I want to make sure that I am prepared for the worst case scenario where I get a property under contract, but I am unable to find a cash buyer to invest. What are the legal ramifications if a deal falls out of escrow and are there clauses that I can put into my agreements to protect myself if this does happen? I have heard a lot different takes on this and wanted to know the actual penalties.

I have made sure to do my due diligence so this scenario doesn't happen, but wanting to make sure that I have all my bases covered. Thanks in advance!

[Brian Van Pelt]

@Account Closed, contracting with no intent of purchasing is Fraud

Creating an ad hoc contact by asking random people for random clauses is begging for trouble. You need a RE Attn To review your contracts. 

Wholesaling is by definition buying property,goods or services then reselling them at a profit.

Most RE seminars bring a group of people together by offering "free seminars" in "wholesaling", what they end up teaching is not Wholesale Property Buying, but "Contract Assignment" which is contracting a property and then assigning the contract to another party at a higher price. In some states this is not only unethical but illegal and could land you in jail.

So if your intent is to contract to purchase a property without buying it you need to be upfront with the seller and make it clear that it will only close when you find a Buyer. In some states this can be considered practicing real estate without a licence, which may also be illegal.

The best wholesalers are capitalized enough, so that if they have to purchase a property they can do it.