Contracts and Transaction Phase

[Kyle Clark]

Been listening to some podcasts and reading some posts recently on wholesaling. While Ive learned a ton about marketing and whatnot, most of the $1 ebooks, the CDs and podcasts Ive listened too didnt go too deep into the contracts and transaction part. Thats definitely the part Im most interested in right now because I dont want any trouble and it seems like it could happen. Im in California if it matters.

Is a double close entirely safe/legal? I asked my mom who was a escrow agent for 20+ years, a loan officer and is now a broker, she said at first that it is illegal. I pressed her for more details, specifically for details about the law and she just said that you have to disclose you are making a profit. From all Ive read I think she is just trying to discourage me. I havent started looking for a friendly double-close escrow company yet, figured Id run some questions by the community here first.

Ive kind of got mixed up on the wholesaling thing because theres different methods. I think I just took too much in in a short amount of time and am still learning. Let me try to ask a couple questions and hopefully they come out smooth.

-Is there any trouble with doing double closes like mentioned above?

-For wholesaling using assignment will I be using a standard California buy contract and make it assignable then send it to the title company after the buyer signs? The seller always knows how much you are making with this method, correct?

-Ive heard of wholesaling using sub2 and lease options which sound a little more complicated. I just familiarized myself with these 2 concepts but am having a little trouble understanding if they are good for wholesaling. Sub2 I believe I heard isnt good for this because of the small risk of the lender calling the loan. As for lease options I Im supposing you just sell the option?

-California apparently passed a law not long ago that realtors cannot pay unlicensed people referral fees, is there any way around that? I mention this because I bet theres a lot of underwater sellers that I could send over to realtors in my family for shortsale.

Thank you so much should any of you answer. Hopefully someone can help me clear up some of the confusion Im having. Thanks again.

[John Jackson]

Kyle Clark double closings, aka simultaneous closings, are legal, it's just a matter of a title company that will do them. The one I use requires the A side to fund, so we can use transactional funding for that. You can find a private money lender for that. That's easy to do.
I drafted my own docs for wholesaling and the assignment, and made sure the title company was good with them. I didn't want to use the promulgated docs, as I felt they didn't protect me properly.
Lease Options are easy, and keep in mind there are some conceptual similarities as well as differences between wholesaling and lease options.
With wholesaling, you are trying to get the lowest price, then assign that contract to the end investor. (or the double close if you don't want the investor to know what you are making)
With cooperative lease option assignments, aka lease option flipping, wholesaling lease options, link options etc (all the same thing), you are setting the numbers so the seller is getting essentially top price and you are assigning your lease option contract to an end buyer, not an investor.