let me know if this is correct
1.Find a property 65 to 70%
2.Havethe seller sign Pure option contract
3. Find a buyer
4 assign the deal over using a assignment contract.
5. wait to the deal close and collect
Do i have to take my pure option and assignment contract to the title company I am going to use? When I assign the contract, does the seller and the new buyer have to make out another contract?
1- in this market try for 55-60% ltv. if you buy at 70% and are selling to investor then it may be too tight
2-option contract? not really, just a regular contract that allows assignment. You could use an option but not really necessary. but there is nothing wrong with that.
3-agree with finding a buyer
4-ok with this one
5-not only wait but also follow up to make sure that all goes smoothly
you need to provide the title co with all paperwork.
when you assign you use the original contract with the seller, the buyer signs the assignment with you and then you submit all paperwork to the title company.
How do I protect myself if I can’t find a buyer ~ is there a specific clause to enter into the agreement/contract with the seller.
ie I saw a house that is selling at a reduced price because in the subdivison the house hasnt move.
So i am thinking it would be perfect for a lease purchase deal.
however, I would like to know if I change my mind for whatever reason (inspection show a major problem and I dont want to deal with major problems) I know I would need to put down earnest’s $ how do I back out of a deal and get my earnest $ back?
If you haven’t read Rich Dad, Poor Dad I suggest doing so. The author says he always puts a clause that says “pending business associates approval” or something like that. His business associate is his cat, but no one ever asks who the asociate is, and it’s an easy way to get out
Be careful with “weasel” clauses though. I know an investor that got stuck in a lawsuit for a “subject to partner’s approval” clause. Those are usually found to be bs in a court. I always put “subject to a 15 inspection”, “subject to an appraisal of the condition of the property acceptable to buyer”, and “in case of buyer default, the earnest money shall be the sole remedy for this transaction” on my contracts. Those are legit clauses. Then if you can’t find a buyer in 3 weeks you just tell them that the inspection came back unsatisfactory or it didn’t appraise for what you needed it to to make it work. Then you can try to negotiate them down a little more if they really need to sell. Good luck. :beer
P.S. If you are wholesaling you should already have a list of buyers ready to pull the trigger on a good deal. Build that list first and you wont have to worry about escape clauses. :elephant
Those steps are great if you like stress, risk and having a general pain in the A$$
The steps would be closer to this
- Build buyers list
- Find homes that meet your buyers needs
- Put the home under contract be sure to use a inpection clause, from my experience the partner clause will get you laughed right out the door. The inspection clause on the other hand is a clause that many of the banks have in their contracts anyway.
- Get your buyers through during the inspection period
- If they like it then set up a closing or assign the deal
- If they dont, then back out of the contract due to inspections.
Dont waste your time finding homes if you dont have any buyers for them. The problem with doing it that way is you will be calling all these sellers telling them how great you are and how you buy and sell. Then you put their home under contract and the deal fizzles away because you dont have a buyer.
A great deal on a home is nothing without a good buyer
A great buyer only requires a short matter of time before you find them a home.