I have a contract question. I am in Illinois. One of my mentors advised me to put a clause in my contract stating that it is “Subject to my finding a buyer” so that I have a way out should I NOT be able to find a buyer or until the contract expires 30,60,90 days. Another investor tells me that doing so would make an
''Open ended contract" and doing so would get me nailed. He states that I have to buy the property myself if I can’t find an end buyer. Which investor is right? Any help is greatly appreciated.
I never ever put a clause in saying "Subject to finding a buyer" saying this indicates to the seller that they really don't have a buyer! I want the seller to know I am serious and able to close the purchase of their property!
My standard contingencies are “Subject to Home Inspection”, “Subject to Dryrot, Pest Inspection” and “Subject to Loan Approval”! I will almost always try to get 60 days for closing which gives me roughly 20 days to find a buyer and I generally will give myself 30 days for removal of the two inspections and in state’s requiring removal of loan approval I will generally give my self 45 days to make sure my end buyer has underwriting approval!
You have to write a closing date in a contract, an agreement without a closing date is called “A Real Estate Agent”!
You need to create a buyers list before you contract on a property! This list should include owner occupied and investor buyers! I find houses based on my buyers, I don’t find properties and then hope to find a buyer as this is what realtors do and if a listed home won’t sell in 30, 60, 90 days or more using a whole MLS network then how do you believe you will find a buyer in 20 days?
If your not going to actually buy it then the game is to control it, use a straight option, don’t exercise it and it is fully legal and no carry over legal issues. $10 dollars and you have control.
Or if your like the average wholesaler your not going to qualify for the loan anyway so put in subject to obtaining a loan in the amount of such for so many years at x % just like you would if you were going to buy it with a good rate loan.
Put in a contract assign-ability clause if needed in your state, and you really have an option and control. But if it’s likely you won’t find a buyer then please don’t do this and stick with the option route and don’t take the seller for a ride.
Not sure I understood. Does this mean tie it up with an option for 30-60 days then market it in the meantime and put it under contract when I find a buyer?
It means you exercise the option by assigning the option to the end buyer, or exercising the option and going into escrow with the buyer as a co-buyer and then releasing your interest in escrow.
I do not tie up a property unless I know I can sell it right away. You need to purchase at such a good price that it gives you more than one exit strategy. In your purchase agreement you need to get the right to market so you can also advertise the property any way you choose including the MLS. Many properties I have put under contract the sellers knew there would be a for sale sign up the next day even though there was no closing for up to 120 days. Buy right and you can retail or wholesale.