To do wholesale require to write lots of contract then few will get accepted. Is Realtor can write that many contracts or what are the other options to get the property under contract.
Thank You
You don’t have to write a lot of contracts if you screen your sellers correctly.
What kind of contingencies and clauses should be included in the purchase contract? and what about for the end buyer if they do not perform?
I use a financing contingency and I add at the bottom of my contract that it is subject to me assigning the contract to another investor. You can also add a study period to your contract which would allow you some time to review everything (comps, repairs estimate, etc.). During the study period, if you don’t feel you have a good deal, you can back out.
thanks demo. how do you word that? would it be something like -Buyer has the right to inspect and approve prior to closing. is the contract that you are using the one that your state uses and you just reword/add a couple things to protect you?
Since I’m supposedly buying a property as is, I don’t even have an inspection clause. I just have a clause that mentions I must get a loan for $X. I don’t write in the terms of the financing, since this is irrelavent. As I said earlier, I write in at the bottom of the contract that the contract is subject to me assigning the contract to another investor. I am very upfront about mentioning to the seller the assignment of the contract. This prevents any objections later on.
I modified an Offer to Purchase agreement which I downloaded from www.kaktus.com (this site has free and low cost forms). I also have a form from another website (I don’t remember which one). If you belong to a REI group, you might be able to get some contracts from the group or its members.
thanks demo. i just went to my first rei meet on monday here in arizona. i’ll make sure to ask around for a copy of a purchase agreement.
You have several options for doing contracts depending on what your ideal outcome is.
You can lease option the home from the seller and then sell your option
You can can buy in an llc then sell the LLC
You use regular contracts, then ad your name and/or assignees
As far as clauses go, I would stick with an inspection clause because it is based on opinion rather than fact. Plus, many banks and REO’s allow inspections anyway.
There have been people who have gotten sued for “Failure to follow through” on contracts involving financing clauses. If you get a hard hitting seller that can prove your financible, then he/she could have a case against you. Unless of course you want to demolish your credit to prove you cannot obtain financing.\
One last tip, if you write a contract of your own later down the road, be sure to include “This agreement supersedes any agreements made prior to DATE on ADDRESS”
Here is a good source of some free contracts and forms. http://www.yamon.net/resources/contracts_forms.htm
cool thanks rdo
Eric, I’ve read several of your posts and am impressed with the knowledge you have of this segment of the investment game. I run a wholesale company in Philadelphia and we do several wholesale deals per month. While I have several rental properties to wealth, the majority of my cash flow comes from wholesaling. With such an upheaval in the real estate and mortgage industries, what are your thoughts as to the future of the wholesaling outlet. I know Maryland has already made this an illegal transaction and Pennsylvania has seen fit to double tax it. What is your sense as to where these trends are leading us?
I live in Maryland and I wasn’t aware that it is illegal to wholesale. Well I’m glad I have been reading the postings because I have been really focusing on gaining information on wholesaling in my state. I guess I need to focus on gaining knowledge in a different direction. :banghead
I am a member of NARHRI (National Association of Responsible Home Rebuilders and Investors) and I just looked up new legislation for Maryland. There’s no mention of wholesaling being a prohibited practice. Basically, practices which help the homeowner to retain a legal or equitable interest are strictly prohibited. This means lease-purchase agreements and options to purchase properties are illegal. Also, don’t even try to sound like you’re a foreclosure consultant. There are regulations about foreclosure consultants popping up everywhere.
You should still be able to make discounted cash offers on houses and wholesale them to other investors. Also, Sub2 transactions should still be OK.
thanks for the site info… seems to be a good, easy base to build off of…