What type of contracts are needed to close a wholesale deal with the seller and where can I obtain them?
I have a real estate agent but I do not know what the point, when I am looking for wholesale deal. Can someone explain what the point of having a real estate agent and what their role in the wholesale process. :banghead
I am also new to wholesaling and to real estate investing in general. My real estate agent helps me by pulling comps for leads that I think will make a good deal (a must-have for determining ARV), and I help her by refering leads to her that don’t fit what I am looking for (like people with time to sell who are looking for top dollar).
You will need a minimum of two contracts; the first the purchase agreement between you and the seller, then when you have your end buyer, you will use an Assignment of Contract form. The 2nd form is what gives your end buyer your position in the original contract for a fee or other consideration.
I just did my first wholesale deal and did not, still not fully understand the process! I found a property and got it under contract to purchase for $40k. I then put a sign in the yard offering to sell it - I knew this was ok b/c the original seller was ok with it and it was a very busy street so it attracted a ton of calls! One of the interested parties was a cash buyer and we settled on $45k price, so that was $5k for my assignment fee and then he takes my place in the original contract for $40k. I took the original contract to the title company with $50 earnest money and a $10 option fee so I could back out if I could not find an end buyer quickly. Then I got the end buyer to put $1500 in non-refundable earnest money down and took the assignment contract and his earnest money to the title company. They should be able to close it 10 days or less since it is all cash - I hope!
I was told I could have just had the end buyer pay me the assignment fee directly and he even told me he was willing to pay my finder’s fee directly to me instead me having to wait until closing but I didn’t know I could do this. So now I have to wait until closing to get my fee but this seemed the ‘most legal’ way to handle it since I wanted to make sure I was doing it right.
It’s interesting how none of the ‘gurus’ give you the exact mechanics of how to do this but just general steps involved. I’m in Texas so used the standard TREC sales agreeement for the first contract and then begged my local REI group for a good Assignment of Contract form to use for the 2nd part. I also found a good one on the internet but they don’t allow link posting here so I can’t point you to it. :banghead