All Forum Posts by: E J

Thanks for that post Bill. You bring up some great points. I do agree with you and I think that how you are perceived by the sellers is probably a self-fulfilling prophecy. Act confident, and they will think you know what you're doing, and will accept what you say. Act like a newbie, and they will feel like they're the ones teaching you, and definitely not trust you to buy or wholesale their house.

I actually have been using "we" on my website and marketing materials, for the exact reasons you say. This will definitely make other people think that we are a legitimate business, we have combined experience, and that if other people have agreed to work along with me, then the plan must work. This is also an important way to describe my buyers, because what a wholesaler does can be described in two opposite ways. You can describe it like you're an agent and say you will try to sell their property by finding a cash buyer who's interested. Or, you can describe it like a professional investor and say your partners will be providing the funds to close on the deal, which is why they will be at the closing. Which way sounds more promising? Also, if the seller tries to offer any terms you don't like, you can say "it's against OUR policy to do that", like you wish you could do it, but you just aren't allowed. For example, if they demanded a bigger earnest money deposit (although I've read this is rare), I would say I can't do that it's against our company policy, rather than saying I really don't want to put any more money into this deal.

But as far as the appointment goes, I will just make sure I do my homework on the property before I go, show up with a contract and probably some info on recent comps, then get that contract signed. If anything else needs to be done, it can be done the next day so I can go ask my attorney what else if anything he will need from me and then report back to the sellers which anything I need them to do right now.

Excuse me but before I respond to the rest of what's been said, I must first firmly reject Bill's statement that the reason I want a simple contract is because I lack the knowledge in the subject matter. I have absolutely no problem understanding this contract or legal terminology in general. I have taken several law courses, some entirely dedicated to real estate. We have gone through several court decisions which interpreting was far more difficult than the language of a standard contract. I have also completed the majority of our state pre-licensing class in addition to several other college real estate courses. Therefore, topics such as forms of ownership, easements, landowner rights, liens, tenancy, mortgages, escrow, brokerage, appraisal, etc. are nothing new to me. I'm not sure where I come off as stupid to you, but I can assure you that my reasoning for the 1-page contract, as you said, is to gain a competitive advantage - not because I don't know what the standard one says, which by the way is 12 pages here. On the other hand, I would not expect somebody who doesn't specialize in real estate or law to understand the contract without it being carefully explained.

Continuing on, I can definitely agree with what was said about the presentation of the offer. This is something that will require practice no matter what contract is being used. I am sure the full contract, which I have read over several times studying, can be explained in a matter that would serve to build trust between the seller and buyer. But once again, if a process can be simplified, why not do it? My biggest pet peeve has always been when things are done in an inefficient way. I honestly think it's terrible how legal documents use such ridiculous language to accomplish things which could be just as easily spelled out in plain English. That way, EVERYONE could understand what they are agreeing to, not just lawyers or other highly educated individuals. So in addition to the possible marketing advantage, I suppose part of my desire to use the short contract is the result of wanting to "stick it to the man" and show that contracts don't have to be so complicated and that everybody could and should be able to understand them.

Anyways, my gripe with the standard contract is it comes with a lot of terms that I don't want to agree to. I'm basically going to 'X' out most of the paragraphs anyways. Like for example, the inspection paragraph in this contract has written into it that there is a 10 day inspection period where the buyer may cancel the contract based on the inspections. I want to allow myself the right to inspect, but I don't want to have a 10 day contingency. Therefore, I'm going to have to cross this paragraph out and put in my own with the terms I want. I'm really surprised they didn't leave blanks on these kinds of things so that the contingency period can be any number of days you want. And then of course, this paragraph is followed by a HUGE paragraph about mortgage contingency, which of course won't be applicable dealing with cash buyers. So right there I've just crossed out an entire page. I think it's silly that every single time I sit down with a homeowner, I am crossing out what I don't want and adding in what I do want. Why not just make the changes permanently written in and print it that way?

Lastly, I do have an important question, and this is an area where I see my attorney's concern. In Illinois, it is written into the contract that the seller's attorney will pull title and prepare the closing. When I told my attorney how I wanted to receive payment via an assignment fee at closing, he told me that the seller's attorney will not know to include the assignment fee on the closing statement, or even know the deal was assigned at all. There is no mention in the contract about an assignment fee, so how would the seller's attorney know what to put? Do I need to contact them and send them a copy of the assignment of contract? Should I rewrite the clause so that the buyer's attorney will pull title (at the seller's expense) and prepare the closing documents? I could even play this off like I'm doing the seller a favor. Like saying oh don't worry about dealing with your attorney or getting title insurance, I'll take care of it for you since I already have a team in place to do it. I can just give you the bill instead and that way you don't have to worry about a thing. And as long as title comes in clear or gets cleared, you will be refunded for the insurance at closing. Since I already factored closing costs when I made my offer, they're really still paying for it ;)

I like this discussion and I hope that someone who does us a 1 page contract regularly will chime in and share how they think it has affected their dealings. Any legal problems? More agreeable sellers?

True that may happen but you also need to consider how many offers were accepted because of the simple contract where the deal may have been lost if the seller requested time for their attorney to review a complex contract, allowing other investors time to come make a better offer.

If you do know which specific contingencies have caused the problems you know of, I would be interested in hearing them so I can include simplified versions of them in my contract

I think J Scott's response really explains my thinking. I do want the contract to be valid in that it will fulfill the necessary requirements for a closing to take place. Therefore, based on criteria #4 listed by J Scott, it would still make sense to care about correctly entering the legal description of the property even if I do not care about other clauses which would serve to protect my $10 earnest money deposit.

And the contract still seems worthless to me. Yes it is the basis to settle a dispute, but if that contract stipulates that in the worst case scenario, I lose an immaterial earnest deposit for breach, then I really don't feel too obligated in a legal sense. If the seller breaches, I really would not take legal action against them. I would rather move on to the next deal than go through a long and expensive legal process to possibly claim an assignment fee. Therefore, it appears that either party can back out of the deal at any time prior to closing without incurring any real repercussions. In my area, the seller customarily pays for title insurance and survey.

Morally, I would only intend to tie up the property if I thought I had a legitimate chance of finding someone to close on it. Otherwise, I would end up making no money and I'd have wasted my and the seller's time while hurting my reputation. But let's not forget- it's the seller's free choice to accept a contract with such minimal earnest money that the buyer wouldn't have a shred of skin in the deal. Unfortunately, the seller's alternatives often look so bleak that they don't have much say in the matter. Also, I'm not sure where you get the idea of fraud from...

But back to the contract itself, it seems like if I include all of the requirements for a VALID contract, and then add on to that any clauses from the standard contract which I feel are important or will offer me protections, I should be fine. My attorney is old and traditional. I would not disagree in any way that using the standard contract is the safest way to go. But if I can accomplish the same thing with a short contract that a seller can understand without seeking outside guidance, that can be signed on the spot, and is sufficient enough to carry out the transfer of real estate, then why should I not use it? I DO want to avoid legal issues, but it is going to be clearly written in the contract that the seller agrees in the event of breach of contract by the buyer, the seller's liquidated damages are limited to the earnest money deposit.

It's Friday... time for the bandits to come out! I was planning on putting out my first campaign of bandit signs, but I see thunderstorms on the forecast tonight and tomorrow. Does this ruin the signs or reduce their effectiveness since people will be distracted by the weather while driving? I very much want to put them out and start getting calls, but these are my first bandit signs and I can't really afford for them to go to waste due to weather. What have you guys experienced with this?

Okay I'll give my attorney a call and see what he says. Our Realtor's standard contract here in Illinois leaves space for an address and "Permanent Index Number" which is a unique number that each property is assigned around here and used by the county for record keeping. I'm guessing my attorney will say to just use what's on the standard form

Great thanks. I will of course include some protections, but I will make it far more concise and easier to understand.

As for the legal description, what do you recommend using? Would address & county PIN number work? I don't want to mess this up since I know that could invalidate the deal

I'm trying to convince the homeowner to trust me to wholesale their house to a cash investor, despite not owning a home myself or ever doing a real estate transaction before

I created a 2 page PSA to be used when wholesaling deals, but my attorney was concerned there was so much missing from it that's in the standard form. But really, does it even matter if a lot of the specifics are missing?

The fact is (and this has been said on other threads) that the purchase contract really is worthless until the time of closing. As the buyer, I could blow the contract off and I would only lose my $10 EMD. As the seller, they could blow the contract off and I couldn't really do anything about it because I am not going to take expensive legal action- I would rather just move on. Also written into the contract is that the earnest money is the sole remedy for buyer's default, so I'm protected from specific performance.

So, in the event that a murky issue arises that is not directly addressed in my short contract, such as the house burning down the day before closing, or the condition of the home being different than originally agreed on, then I can just back out of the deal! Let them keep the $10 bucks if they won't give it back claiming there was nothing in the contract saying I get it back if something happens to the house.

If the homeowner remains intent on selling, and I remain intent on buying, then there should be no problem with the short contract.

What do you guys think about this? Does anyone have a 1 or 2 page contract that they CURRENTLY USE to do deals? If anyone could share, that would be invaluable to me.

Thanks for the reply.

As far as those disclosures- we have the same requirements in Illinois about the property condition and lead based paint, But if no agent is used, and I'm trying to buy the property as-is, it would be okay to just cross that part out of the contract and initial?

Also, if the homeowner asks how many houses I've bought, do I just be honest and say how I'm new? Will that hurt the chances of them doing business with me? I have not met with a homeowner yet but I plan to within the next week