Hi everyone I have a few questions on Wholesales I was hopping someone could assist me with.
What type of exit stratagies are most common to use to avoid.
a) getting stuck with the deal if the person that i assign the contract to pulls out. ( of course i’ll be trying to use only investors that deal with cash, or are pre-aproved and can close with in 10 days or less if the deal is good). Can i get an agreement with him agreeing to assume?
b. Estimate of repairs was too low.
c. If investor is out of state.
e. I decide to not go through with the contract, becouse investors are not interested.
On the other side do you guys think it a good idea to work with RE agents to find forclosures, and distraught houses? and if so who will pay the agent commission?
Does anyone have a contract that i can use when i create a wholesale deal.
And finaly this is the formula i was told would be good to find out the max asking price when i enter a contract, can you tell me if i’m in the ball park?
Formula
ARV X .7 - repair cost - my commission = max offer
Thanks to all in advance for your imput and assistance.
One is to put so little earnest money up that who cares what happens. I just tied up a $750K potential valued building with $500 bucks. If I could not close I was out $500. No big deal. It would have been even better with less but the seller was a bank and I knew not to try less. If you keep getting deals under contract and not closing your name will spread like wild fire and Realtors will avoid you.
Making the offer subject to loan approval, inspections, partner approval, and other weasel clauses will help you get out of a deal if there are problems.
If you find deals from agents the commission will be built into the asking price. If you hire a buyers agent that finds you listed houses then often they can share the commission built into the asking price as well. If that agent gets you deals from the seller directly you may be able to negotiate a smaller fee but you will be responsible for the fee.
The formula is good. You may be able to pay a lot more if you are reselling to homeowners instead of other investors. Some investors will pay more too for good rental property in good condition that will cash flow.
Contracts are available all over the place. Your local Real Estate Commission may have them on line. Realtors and title companies are another source.
As Tedjr points out there are clauses that you should always include in your contracts. They will allow you to pull out and not be stuck with the property if you cannot flip it for whatever reason. Be on the lookout for the 'non assignable" clause that the seller may impose. However there are legal ways around that (i.e. double close, etc).
