Ive just recently started reading the forums on here, and have a quick question about how the process works. Assuming that you have negotiated a good deal on a piece of property, and you have it "under contract" and wish to wholesale it, what do you do if you can't find a buyer (you have to give them some earnest money to get it under contract right)? Is the contract binding or is it contingent upon you finding someone to buy it? Also, do you get an inspector and contractor estimates in there after you've agreed upon a price and terms but before signing a contract? And lastly, are wholesalers up front from the start about their intentions to flip the sale to an investor and essentially just get a commission out of the deal, or is that something they bring up after negotiations?
Any answers on this would be greatly appreciated, just trying to get this all clear in me melon.
Well first thing you should do is build your buyers list before you look for properties. Also you need escape clauses in your contract that will let you get out of it in case you can’t wholesale it and you can’t close yourself. (I suggest having 2 exit plans on properties you get under contract, ALSO I strongly suggest you DO NOT get any house under contract unless you can close on it yourself, cause weasling out on contracts all the time will ruin your reputation and word travels fast that you aren’t a serious buyer.
The other thing you could do is use a OPTION TO BUY contract, with this contract you and the seller agree to a certain number of days that you the buyer have the OPTION to buy if you desire, if not you just waive your right. This is the least risk way to start out in my opinion, but I suggest giving a good earnest deposit on it so the buyer takes you serious, cause he is tying up his house and cannot sell until the set number of days has expired or you waive your right to buy.
Ex. You and Seller agree that you have the OPTION to buy for 15 days, you give him a earnest deposit, you try to find a investor to buy it, if you can’t find one within the 15 days, waive your rights.
You need to get a licensed contractor in there before you make your offer so you will have an idea of the repairs the house is gonna need, most contractors will give free estimates.
Don’t pay for an apprasal until after you control the property (have it under contract), actually once you open escrow the appraser will be paid at closing, so if you assign your contract your investor will pay all of that.
Ok, thank you for your reply. So if understand your answer correctly, you can theoretically get out of deals if you have escape clauses but the majority of wholesalers will just buy the house themselves if it comes to that. As for the “option to buy”, dont you have to pay the seller for the option in the 1st place, and therefore wouldnt an earnest deposit on top of the option price be redundant? Im just trying to understand how a typical wholesale deal works, b/c even if a wholesaler finds a legitimately good deal there’s always a possibility that he wont be able to find a buyer in time, right?
hi! i`m new to the real estate game and have no deals under my belt . would anyone have any advice on how to get started. i have abroker willing to finance my first deal. but my main concern is can the purchase price be increased on my first deal to pay closing because this will be a resell.
To answer your question, yes, in general you can increase your purchase price with the seller agreeing to credit that amount back at closing for pre-paids and closing costs. It’s actually a great strategy to use so you bring even less to the table.