Hello everyone, I’m new to wholesaling and I’m getting ready to begin submission of many wholesale deals this month, my goal is 30. I live in Las Vegas and will be submitting all contracts on property in the Las Vegas market. Many of the homes here are REO. All my deals will be submitted with the following criteria in the contract.
- 15 days due diligence.
- $1,000 Earnest Deposit to be deposited into escrow on the day of closing.
- And obviously all deals would be submitted with “and or assigns” after my name.
Here are my concerns. Is 15 days due diligence enough to find a buyer to wholesale to? I’d like to ask for more time but scared the banks will think I’m tying up the property too long and reject the offer. The $1,000 dollar Earnest not being deposited until the deal closes? I think the bank will look at this and not consider me a serious buyer and reject my offer. The 3rd one which makes the deal assignable concerns me because I’ve heard that the bank hates assignable contracts and rarely accepts them.
Any experienced wholesaler out there your input would be GREATLY appreciated!!! :help
Not an experienced wholesaler, but experienced investor…
For #2, earnest money is typically deposited once the offer is accepted and you have the property “under contract.” If you didn’t do it til closing, you have nothing to lose by walking away.
Thanks Justin, that’s a tip I got from a wholesaler and it seemed a little odd. I just think it’s hard to be taken seriously if you start your deal off without even allowing the title company to deposit your check…
What about banks and assignable contracts? Is that a non-starter for most banks?
couple of things to consider
If you are going after REO’s the more contingencies you put the less chances you’ll have of getting the offer accepted. I understand why you’d want to do it, but from the perspective of the bank it will look bogus.
Most likely the bank will not let you assign the contract… You’ll have to do a double close…
In short, the less contingencies the better and don’t assign it… If you double close you’ll need to bring funds in for closing… use transactional funding… hope that helps!
Thanks fredd much appreciated
Wholesaling can be quite difficult when it comes to REO properties. This is not necessarily the best or easiest avenue to get into when wholesaling. If you are getting your properties off the MLS then you are going to have even a more difficult time since other investor will also have access to this information.
Your earnest money deposit contingency is going to be a red flag and will probably keep your offers from being accepted.
Putting “and or assigns” after your name is a clear sign of a wholesaler. You are better off putting an assignment clause in the addendum section or better off completing a double close.
My advice is to find your buyers and then go shopping. All you need are a couple of good rehabbers or other investors to get things rolling.
First off I want to say congratulations on you wanting to take action and get piece of the pie.
REO’s are not assignable as well as short sales.
Due dilligence means doing all the necessary homework on the property like comparables, how much in repairs, what is the ARV etc…I think what you mean here is inspections. I’m really not to sure about the market in Vegas, but I currently invest in the southeastern part of the U.S. and putting contingencies in the contract, such as 15 days for inspections is not a strong enough offer.
Your offer should read something like this: Buyer will close in 30 days upon sellers acceptance, no contingencies for financing, no inspections and last but not least…this is an all cash offer.
By structuring your offer #3 your chances will increase the offer gets accepted.
Also it gives you 30 days to market the property and find a buyer, that should be plenty enough time.
Hope this helps! To your success! :beer
Mrflipahouse if I make my offer with no inspection and no contingencies what happens if I go check the house out and it’s a dog. I mean that it’s been gutted, or all the copper has been stripped out of it or whatever. How could I get out of a bad deal in that case? I make a lot of offers without seeing the house first, is that a bad idea? And where REOs are concerned are double closings my only option?
Thanks for your help much appreciated
I agree with HunterHall. Having an offer with the #3 statement in mrflippahouse opens a wide door of liability. What buyer will purchase a deal from a wholesaler that does not allow him any inspections of any kind? Plus, restricting it to all cash offers is another killer for many buyers as many use bank financing.
There are several ways to write a purchase agreement so that if the deal does not close (i.e. you cannot find a buyer), you will be able to get your earnest money deposit back.
Subject to a Satisfactory Inspection. If the home inspector (or even yourself) finds legitimate problems with the property that are unacceptable to your buyer, you can be released from the agreement.
Subject to Partner’s Approval. Your “partner” is your buyer. If your buyer does not approve the transaction within the amount of days stated in the contract, then you are let out of the transaction.
if your offer is accepted, the bank will make you sign an addendum… the addendum will usually give you time for due diligence…
I’m still making offers but I’m realizing I need some stronger entries on my buyers list, not just names and numbers but I need to talk to these people and figure out exactly what their interested in. What are some techniques you have used to find solid private money buyers and are they easier or more difficult to work with than hard money lenders?
Also it appears that a double close is my only option when submitting offers for REO\bank owned. In a dual close scenario what costs am I expected to cover at closing? I don’t have much cash to work with at all so would I need transactional funding to handle the double close? Sounds sketchy to a rookie, any help is greatly appreciated.