Was wondering how the paper trail progresses when performing a wholesaling transaction. First I assume you make an offer and if it is accepted you would sign a contract tying up the property between you (wholesaler) and the seller. If your buyer pans out a P+S would be signed by your buyer and the seller—fast forward to the closing and you would receive your fee . Is this close to what occurs in a typical transaction? Any tips? Have I forgotton anything?
There’s the contract to purchase between you and the seller, and then the assignment contract between you and the end buyer which assigns your rights in the original contract over to the end buyer for X amount. The seller and end buyer do not sign anything together.
You give the title company the original contract along with the assignment contract, and then show up to closing to get your assignment fee.
Make sense?
Steph
Thanks for the info Steph!
So the purchase contract between wholesaler and seller are seperate from the assignment contract…does the seller see the assignment contract? When do you disclose to the seller that you will be assigning the contract and that you will not actually be the buyer? Does this ever create hesitation or nervousness by the buyer?
My thoughts are to tell them from the get go. Honesty is the best policy.
Herbster
I typically tell the seller when going through the contract that I have the right to assign the property to another buyer, but that the contract remains the same. I usually explain that I work or partner with other investors and contractors and that if I get caught up working or buying other properties, I assign the contract to them. If they aren’t aware of this, and they’re living in it, it makes it pretty difficult to show the property to my investors. It is best to set proper expectations of what you will do with the property. Hope this helps.
Ditto what jbhollis and Herbster said.
Let them know you might be bringing a partner in, but the price/terms will remain the same, and the deal will close on time.
The seller doesn’t see the assignment agreement unless you decide to show it to them. They will, however, see your assignment fee on the HUD at closing.
Steph
Oh, absolutely! I would not try to do a deal without being completely up front and honest with all parties involved in the transaction.
We have been building a buyers list and currently have a list of about 10-15 potential buyers. Is this enough or should you just feel that you have a strong buyers list as opposed to the quantity of your list? How do you know when to proceed with your first deal based on this?
All it takes is one serious buyer to get going.
Find out what they are looking for, and then go find it for them.
10-15 is plenty if they are real buyers.
Steph :cool
i’m new to this. i’m the realtor on the buyer’s end (not the end buyer) and they want to submit contracts with an out clause. some of the properties are bank owned and my buyer is concerned about putting in the statement and/or assigns because they usually won’t accept. please help. need to do it the right way. thanks
Most banks will not accept your offer if they see “and/or assigns” on it.
Your buyer may just have the normal inspection times for finding a buyer, which is
a bit short if they don’t already have a list built up.
I’d definitely start with non-bank owned properties, at least for your client’s first
deal. With direct seller owned properties, you can negotiate anything you want!
There’s no set rule, so the tables are open…
What if your potential buyers are not responsive? I have called and left messages with probably 10 additional buyers (bandit signs, real estate agency’s who buy etc.) and usually do not get a response. Should I be more persistent and call as many potential buyers as I can or is it my approach? The message I leave is usually that I see a lot of properties that I pass on because they do not meet my strategy but if they would like me to forward them some of these properties or let me know what their buying criteria is that I can find them what they are looking for. Any suggestions?
Are you doing any marketing to get buyers? It seems that all you are
doing is cold calling potential buyers and that seems to not be working.
I’d hav to agree with the last post. Having a strong buyers list is more than half the battle. You need eager buyers. Typically you going for buyers that cant get conventional financing, if you can find buyers that can get more traditional financing then thats all the better you. Placing an ad on places like craiglist are prime ways to find buyers. As a wholesaler your in the buisness of
bridging the gap between the buyer and the seller, with the objective of collecting a nominal fee
for your time and diligense.