Let me see if I have this right. Please correct any mistakes…
Build buyer’s list
Find properties
Contact owner, make offer
If owner agrees to offered price, get contract signed
Make offers with my buyer’s. Once my buyer accepts offer, have Contract Assignment form signed and agreed upon between myself and my buyer (Should I do this BEFORE or AFTER I submit original Contract for Purchase to Title company???)
Deliver original Purchase Contract and earnest money deposit to Title company where escrow will then be opened as “Assignment” and title search gets underway
Provide instructions to Title Company not to title it in my name as I will be flipping property to new buyer (I have been told by doing it this way, that ALL closing costs would be the responsibility of my buyer and NOT me, correct???)
Go to closing on closing date and get paid (if this is an Assignment and NOT a double closing, do I still have to wait until closing to get paid, or may I be paid once I assign contract and then just let my buyer and my seller go to closing without me??? If I must attend closing - even while this is an assignment, and NOT a double close, will there be paperwork for me to fill out? I wouldn’t think so since I assigned it to someone else. Is this right, or am I wrong?)
Other Questions:
* At what point in the process do I deliver the Assignment Contract to Title Company? At first, I thought I should do this the same time that I deliver the original Purchase Contract, but my buyer may not agree to the Assignment until after he sees the property to inspect it. So, when should I do this?
* After I find out the ARV, how do I accurately determine the cost of repairs? At what point in the process do I do this? Do I need to bring a contractor to see the house to get the repair estimates, or can my buyer make that determination once he sees the house?
* Do I need to wait until I find out if the title is clear before I find my buyer, or is it okay to find my buyer while I'm waiting on the results of the title search?
~Richard~
Great questions. I can see you have put a lot of thought into this. I will try here to help as best I can. Maye some guru’s will add in too.
After #4 get the contract to title company to get the ball rolling with the title search. Some agents will already have the title report done if it is listed with an agent. You can show property to your buyers whenever you want. I would get the contract signed first to protect yourself. It would be nice to have title work done to make sure you are not waisting your time but title problems can come up late in the game too. Buyers understand title problems and how to sure them and may even help make a deal a winner for all.
When you take the contract the first time make sure the title agent knows you are flipping the deal. It will make it smoother. You will need access to the house too so you can show to buyers. Easier if the house is vacant. Make sure you set appointments with the homeowner if it is occupied. This can get tricky. Maybe tell the homeowner you are looking for a partner or tell the truth that you are flipping or make up some other excuse to show to several strangers that are not plumbers etc.
#6 Unless you wamt to do a double closing. I have always heard that if the assignment fee is too large (over $5000) you may want to have two closings to protect your profit.
#7 There are different schools of thought on this question. I have never paid or been paid until the closing. Smaller birdog fees are often paid in advance of the closing. No paper work unless you need to make initials or corrections on the contracts. I would still attend to get paid at the table but also to help smooth over any problems or questions.
Getting the assignment forms to the title company does not have to be that quick. The buyer may need to inspect or may not. I can walk into a house and inspect in a few minutes if it is a good enough deal. I may want more time with a well and septic but that is not the norm. Once you gat a feel for your buyer you will know his moves and habits.
Repairs: If you need a contractor I would take them after it is under contract. The repairs are part of the offer process and should have at least a ballpark guess before making an offer. You could take the contractor on the first visit and get them to groan at all the repairs especially if the seller is there. This may be a bit uncool but it works to get the price lower if possible.
Get the buyer asap. Waiting will take 3 to 5 days longer. You may only have a small amount of time anyway and it slips by fast. Try not to put up much earnest money to tie up the deal and try not to ask too much from your buyer. I have seen several wholesellers ask for a grand non refundable up front. Even if I had money to burn that would be more fun than giving it up on a deal. The last deal I did where I was to pay a grand I ended up paying $100.
You may be over thinking this. Maybe afraid to do a deal. My little help above will not make you superman and you will not have all the answers. I have seen grade school graduates do this stuff blindfolded. Get out there and do some deals. Learn all you can but not all there is to know. You learn by your own experience too. So what if you lose $100. You will make 10 grand on the next. Have fun and live your dreams like me.
Mi2nice:
You can meet investors at you local REI Club. YOu can also look in your local paper under the “WeBuyHouses” ads… You could also look on the internet…