when wholesaling Do you use purchase contracts that are simplified, usually found in study guides offered by various gurus or do you use the standard LONG complicated form that your local RE attorneys use?
It would seem so much easier to use the simpler forms to tie the property, however, I was told by an attorney that I would risk not being able to assign the contract due to the fact that the attorney for the buyer would not recognize it. I am in NY where God forbid we try to simplify anything. Does anyone have any thoughts on this?
Assignments can be a problem with lenders more than attorneys for the buyer. I have done hundreds of assignments over the years and the underwriting for the buyer’s mortgage companies stopped accepting assignments and required ‘seasoning’ on the title from the seller in order to fund the deal.
What worked well for me was I invested $2k in a course that had a specific document that I wanted which solved the problem. I would contract to buy with the right to assign. Then, when I found a retail buyer, I would go back to the seller and remove myself in exchange for a release of contract fee and invoiced it through the closing attorney. Then the seller sold directly to buyer and with my fee, both the seller and buyer got what they bargained for in the transaction. Every attorney, every mortgage company accepted the deal and they were funded. Best $2k I ever spent!
Another viable solution would be to just take an option on the property. This will cost you an option fee, but if you have confidence in the deal and in your ability to resell, this should be a great investment in your business. Just make sure that you ‘record’ the option so you do not get ‘squeezed’ out of a deal with buyers/sellers that lack integrity.
Lastly, you might want to talk with a few closing attorneys to seek advice on the way to structure your deals that can actually close. This is what I do when I use a new strategy. Go to a few mortgage brokers and tell them what you want to accomplish and ask how to structure the deals that would fit within the underwriting guidelines. Then have the mortgage brokers refer you to a few of their closing attorneys and review the gameplan with the attorneys to get their agreement on the structure of the deal. Then go do the deals!!
Having confidence in your abilities to do deals, the confidence in the funding source, and the confidence in the closing attorney’s ability to close that type of deal will make all the difference in your production.
THANK YOU Rob for sharing your expertise! Right now I am dealing with cash buyers, so your response was good news. Thank you again!
Rob is right on. You want to make sure the deals will close.
One way to do this is to use the contracts promulgated (spelling?) by your states Real Estate commission.
That’s what our students do here in Texas and we don’t have problems at all.
The reason being is that everyone in the RE world knows what they’re looking at. It doesn’t look like an ‘outsider’ boiler plate deal,b ut something they know and are comfortable with.
We just take what works in the real world and work it into the regular state contracts.
Hope this helps!