Essential Clauses, Real Estate Agents/Real estate Contracts.

Hello, to everyone viewing this email. I have an inquiry in regards to the legality of inserting certain “wording” or “clauses” into a real estate contract. I have recently reviewed some literature and the investor has suggested that if you desire to acquire, rehab, and sell the property, to eliminate or lessen holding cost, you should insert or create an agreement with the real estate agent in writing. This agreement (in writing) is that the investor would purchase the house if the agent will arranged to have buyers ready to purchase the house immediately after rehabilitation. My questions are the following:

  1. Is this deal/arrangement with the agent can be detrimental or illegal under certain circumstances?
  2. In regards to legality and breach of contract/agreement, how would you structure this deal/arrangement in writing?
  3. If I am purchasing an REO or FSBO, would I create a separate agreement with the agent in regards to him/her ensuring that buyers would be ready to purchase after the rehabilitation of property or would I insert this contigency clause in my purchase contract?
  4. If this is deal/arrangement is legal, how does one ensure that if the agent agrees to these terms, the agent does not void the agreement?
    a) Can you arrange some type of financial penalty to be levied on the agent for each month property is not sold?

Any suggestions on this subject matter would be greatly appreciated. Thank you.

if the real estate agent is not a party to the property sales contract you can not put any stipulation in the contract creating a position of principle for the agent. agents in “normal” circumstances are penalized for a property not selling, i.e. they don’t get paid till closing, unless otherwise stipulated. sounds like you want to put all the risk of an investment on a person that is providing a service to you, interview agents, pick one you think can get the job done and let them work for you. with all you are expecting you may have a hard time finding a good agent willing to help you.

Thank you for the response Wendy. Please enjoy good fortune in your investment endeavors.