I live in TX and have found quite a few good deals on the local MLS, but most of these deals are foreclosures. I want to wholesale some of these foreclosures, but don’t know if that’s smart or not. A few questions…
1.) Can you assign contracts with the larger banks (Wells Fargo, B of A) Do they allow you to?
2.) I’ve heard you can put as little as $10 earnest deposit, but I think that’s through motivated sellers. The banks are requiring $1,000. What happens to that $1,000? I don’t want to risk that money if I can’t wholesale the property.
If you are buying right, then you should be able to wholesale it… this is one area that using a trust would be useful. Buy it under a trust with you as the benefitiary and sell the benefitiary interest to your investor for the wholesale fee.
As far as the money, yes banks and realtors in general will not even bother if it is not $500 or more. You will also need a preapproval letter which you can get from a hard money lender. The ernest money is subject to the contract terms.
Another idea is to add your buyer onto your contract, close on it together, and then execute a quit claim deed to your buyer right after closing. I have one closing this Friday where I am doing this. The bank didn’t mind me adding another person onto the contract, as long I was still going to be on title as well. They just want it sold.
Some buyers might not go for this, but in this situation, I have a great relationship with this guy and he was fine with it.
Just an idea- it sure beats doing a double or simul close and having to pay those extra closing costs.
Steph,
I like the idea of having the buyer on the contract also. However, if you dont have that relationship, the buyer would know how much you were making on the deal, correct?
Yes, the buyer will know what you are making if you do it this way.
I’ve never had a buyer care what I was making on the deal. I don’t think I would want to work with someone who did. If they are getting a good deal that they are happy with, it shouldn’t matter to them what I am making.
I would agree with Steph. If it’s a good deal, then they should be happy regardless, but that’s not always the case. I know guys who have walked from a deal b/c the wholesaler was making too much. Don’t try to get rich off one wholesale deal is my advice.
I too heard from other investors that buyers will walk away from a deal or are disgruntled about how much you make. Personally, I could care less, so long as I make what I expect to make.
Thanks Steph for that advice. I didn’t think of that, to add the buyer on the contract with the bank. So the only time you would really be able to “assign” a contract is if you are working directly with motivated sellers. Do banks not accept assingment contracts?
It happened to me once. However, I was persuasive and worked out that deal with less commissions (not much less, really, but to loose a deal because of that could’ve been stupid)