dumb question?

Lets say I am able to find a property and get it under contract. I am thinking during this whole process…“boy I hope someone will buy this contract from me”. What is the communication back and forth between home owner and myself. I know that I do not want to keep the house but simply want to assign it to an investor. I feel like I should not disclose that I am “attempting” find a buyer. I read some where on this forum that having buyers lined up is not necessary. I am sure once it these deals are done a few/several times then there is no worry. The first one though…what if it is under contract and there are no takers?

Ok, so I’m assuming you have an assignability clause in your paperwork based on what you’ve mentioned. Assuming you do, I can share what I do. Whenever I present paperwork to the seller (in this case it is purchase agreement or option agreement), I go through every clause while I’m sitting with the seller. When I get down to the assignment clause part, I mention to the seller whenever I get a house that I buy, I usually get a ton of interest. So much so that people usually want to buy me out for a price and take over this existing agreement you and I have in place. This means realtors, other investors, buyers of all kinds. So this assignability clause allows me that extra ability to sell I tell the seller. I don’t try hiding this info at all. I look at it this way, the seller feels more comfortable with me the more honest I am and they tell their friends. But moreso I don’t want the seller asking me jack after the fact because they might think you are trying to pull a fast one of some sort. Sellers like to know they are going to get a sale with you in one way or the other, just be honest and go through everything with them and be honest. Honesty is the best policy. As far as no takers for your contract, that tells me you haven’t established a relationship yet with investor/buyers. Finding out their criteria etc. Also look at how your marketing the home. Do you have a sign in the yard? Is the home being advertised with directional signs leading buyers to the house? Is it being offered at a steep discount? For example, you should be able to advertise the house like ‘50k below market value! 4 bed, 2 bath, excellent condition, 123 anystreet, phone number’. Or ‘15% below market value, act fast, this one won’t last!’. Make sure your deals are negotiated down enough with the seller to allow you the space to offer it to a buyer at a steep discount (investor or general public), yet also give you room for your own profit.

Thanks Chunk…I am just trying to gain a better understanding of the process. I have not entered into anything as of yet. I recently concluded that I need to start at the beginning (bird dogging/wholesale) in order to acquire buy and holds.

Also, what I do is when I get to the Due Diligence clause in the contract, I explain that I have X amount of time to inspect the property i.e have my contractor run numbers, set up inspections etc …(look for a buyer) I let the seller know that either I will buy the property or not depending on what I find during the inspections (if I find a buyer to assign to).

As far as if you get no takers, once again you exercise your due diligence clause…“Mr seller, after conferring with my contractors yada yada I find that I will not be able to purchase your property at this time” (in writing, as well as verbal)

Something else I forgot to add. Analysis. Before signing any deal with this seller, what I would do is email your realtor and ask them for compariables and any other pertinent info. By other pertinent, I mean since they sell in these areas, what is their experience of the neighborhood and so on. Once they email you the comps and have verbally given their feedback, look at the comps one by one. Look at how they compare and how they don’t to the subject property (i.e bedrooms, bathrooms, taxes etc). Then look at the part of the comps where it says “DOM” or days on market. Then I determine what the average days on market is until the sale occured. So lets say the average DOM in this area was 40 days where the buyer bought at 98% list. And lets say that purchase price was 300k. You can then assume with good certainty that (provided the house is in the same condition) if you picked up the property at 240k, you can then advertise all over the place something like “40k below market value! Good condition, 123 anystreet, phone #” and you’ll probably sell it in record time. You’d then pocket the difference between the sale price, YOUR purchase price and minus out any other things like legal fees etc. Or if you assign, you’d have enough room to make decent money AND also kinda use the fact you can put it on the market to an average family with this big discount as added incentive for the investor/buyer to move quickly. The investor buyer will understand this, especially if you have a hardcopy of the comp to back up what you are saying. So get verbal feedback from agents working the area, then once you get comp, do what I described and you won’t have to worry about not selling quickly enough.

All good stuff guys, thanks. The due diligence clause definitely takes off a lot of pressure if it ends up flat. Allowing time for the inspection allows for that reasoning in the end.

Yes burgh, the due diligence clause does that. But knowing that you are new I’d tell you to be careful. Meaning, if you need or plan on relying on such a clause to ‘take off a lot of pressure’ your gonna get yourself into trouble if you ask me. Put the pressure on yourself to sign up good deals that’ll sell fast with or without the clause. Word travels fast about a new investor who signs deals and uses his weasle clause when it’s convient for him. You are trying to build a business and a reputation so be careful. Only sign deals that are worthwhile, knowing that if the worst case scenerio happened you might be able to use it as a last resort. Some ideas here. Why not sign up the purchase agreement and give yourself more time then you think you’ll need. Like sign up purchase agreement where you agree to close with seller within 60 days? Why not try 90 day closing? If you do you homework like I mentioned in previous post, that should be more than enough time. As far as inspection, for speed and learning have your handyman and/or inspection accompany you say 2 hours prior to signing so that you have a sense of what could be wrong with the house you are buying? I’d personally look at that ‘weasle’ clause like you might look at car insurance. You don’t drive you car with the intent of getting into a collision with another car, but it’s nice to know the insurance is there when and if you need it. Treat that clause the same way, drive your real estate career carefully knowing in the wrorst case scenerio the clause is there if you need it. I’ve been investing since 2004, never used the clause or even come close to using it. Hope you understand what I’m saying.

I do understand what you are saying. I appreciate the time, consideration, and thought that you put into explaining what I need to do. I am thinking what I need to do is find a mentor and I can watch him/her do this just so I can get a feel.

Are there any videos of wholesaleing? I know I saw the videos done by Ron Legrand and they were helpful. I don’t think there were any wholesales though.

I agree 100% with Chunk, if you are putting together good deals, you wont have to worry aobut your due diligence clause. I was just letting you know it was there in answer to your concern.

I also use closing to be done 45 days from date BOTH parties sign agreement, so there ya go 6 weeks to get it done…:slight_smile:

You can get a program or even try youtube…I have seen a few things on tehre

Never would have thought youtube would have that on there. Turns out there is a wealth of youtube video…thanks again!