An Introduction To Wholesaling Real Estate

it is very good info. thank u a lot

This is great information. Thanks for posting this. I know there is alot of information posted regarding this subject but, I still can't get my mind wrapped around it.

Thanks for the great information. I was wondering are wholesaling and assigning the same thing or is there a difference between the two approaches?

Tony

You are a wholesaler doing assignments. A wholesaler is a person who goes around searching for great deals to assign over to his investors.
The houses are assigned by a little contract between you and your end buyer.
First you have the main contract between yourself and your seller.

I have noticed most agreements have a 60 day time frame. When going it, do most of you disclose that you will be lining up another buyer? What if someone wants to close much faster than 60 days and you don't have a solid buyer lined up?

Also, how do you sell the seller on a small deposit? After writing the deal do you send the agreement with the earnest to the title company that the seller chooses?

I guess what I'm looking for is speaking points or a script of things you say to get a property under contract...

joshril,
I personally DO NOT Disclose that I am lining up another buyer, all you need to do is have contingencies in the contract that #1 Allows the Assinging of the contract and #2 Allows you to Market and walk other "Investors/Buyers" through the property, Before Closing takes place.

There is No "Selling the Seller on a Small Deposit", Beleive me, just about EVERY Wholesaler I know puts NO More than $10 Bucks down, You just tell the seller that your giving this small deposit just to make the Contract "LEGAL" Money Binds the Contract.

After writing the Deal Up, you do indeed send the contract with the deposit to the Title Company, BUT it's NOT who the Seller chooses, It's who YOU Choose, You never want to use someone elses Title Co. or RE Attorney(Unless your comfortable with them) while you are new, you should ONLY be using YOUR Tile Co.(Theirs a Reason for this), by using someone elses Tile Co., They will be looking out for their "Client", NOT you, The "New Guy". So, Do yourself a favor and use the same Title co. or RE Attorney for your Closings, It'll go a LOT SMOOTHER, SULLY

Thanks for your comments! Great stuff...

How do I choose a title company? What costs am I looking at other the $10 in earnest money? Does the title company charge me anything?

Where will I find a contract that already has all the escape clauses and contingencies built in to protect myself without having to hire an attorney to draw it up?

Try to get a referral for a title OFFICER. Title companies are notoriously. You really want to find one title officer at a title company and work with that person exclusively.

Yeah.. the title company does charge to close and for title insurance.

When do they charge and who pays? The end buyer or me? If I submit the contract, how much will they need from me?

Their charges come at closing. SO it would be the end buyer.

I am not sure what you mean by the last question...

That pretty much answered it. Just curious if I had to pay anything to the title company when I send them the contract.

Another quick question...

How much due diligence do most of you wholesalers do? Do you get a contractor to give you an estimate on repairs? Do you pay to have a title search done?

Or, does the end buyer normally do this?

Well.. it would help to give your buyers an idea of what needs to be done. You may not need to get an actual estimate but at least an itemized list of "problems". Any good wholesaler will have an idea what paint, carpet, appliances etc cost. Eventually you can have that same rough idea if you choose.

Title is a good question... I probably wouldnt do a title search. But this really IS something that could blow up your deal. Let's say you are wholesaling a deal to me. I run all my numbers and agree to pay X based on what I can repair it for then retail it to an owner occupant.

Then we get to title and there is a 7000.00 lien from the city there. That would come right out of the retailer's profit.

So it depends on how you structure the deal. If you do a double close then it's definitely a problem. If you just assign the contract then it's really on the other person to know what liens are against the property.

Does it cost to run a title search?
Thanks Kingjuss,

Thanks much Sistreat! I now see how assigning is a part of of wholesaling. One other thing I'm confused about is when you finally go to closing is the type of close that you do what is referred to as a back to back closing? Even with the Dean's book (read it once on my second go through now) and all the great posts on this web site I still find so many of these concepts confusing. So we bit the bullet and signed up for the coaching program. Had my first session last week and ploughing through the first class activities which is why I haven't been online for a while. The more I get involved though the more exited I get about the possibilities. So looking forward to structuring my first deal even if it doesn't go through the experince will be great!

Tony

how much does a title search cost?? I def want to make sure my buyers don't have any unexpected surprises when it comes down to closing. everything needs to be smooth

What I do is contact my title company that I am using for the deal and tell them I need to let the end buyer know exactly how much his closing costs will be. If the end buyer is paying 100% of closing be sure to tell the title comapny that. Let the also know the total price you are selling the house for. Closing costs are based on the total the end buyer is paying for the house and if they are paying cash or conventional loan.

Title companies used to do searches as a courtesy. That has mostly stopped though they may still do it for their best customers.

I think I paid 250 a property but that was a while back.

As newbie to all this I've got to say I am having a lot of fun doing the coaching assignments! I was nervous at first about making the contacts with agents, brokers, sellers, and potential buyers but after talking and meeting with a few folks they were all so incredibly friendly and helpful that the nerves quickly settled down and now I look forward to making the contacts. I've been extremely fortunate in my area to find a couple of real estate brokerage firms that were started by investors who were tired of not finding agencies that were REI friendly. When I found these two agencies and made the initial contacts I found two great investor/agents who not only have been forwarding potential deal my way but one has taken me under his wing and is mentoring me too. Now I have two mentors!! I'm working on two short sales right now that look very promising.

Anyway to my questions. In my post above I asked about closing with an assignment and I now understand that if I've assigned the contract then I won't be the buyer going to closing it would be the end buyer. I was wondering though other than not having to pay closing costs, deal with the closing, and provide proof of funding, if you do an assignment as opposed to a back-to-back closing, are there other advantages one way or the other to an assignment of the purchase agreement versus doing a back-to-back closing? Does a back-to-back allow you to ask for a higher price? With an assignment don't you still have to wait for the deal to finally close before getting paid?
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"Whatever the mind of man can conceive and believe it can achieve."
Napoleon Hill

well with an assignment, you can put in a clause to get paid upfront. But remember, the amount you make will be known to all parties, so if you do that, you might not want to take a big cut. If you wait till closing to get paid, then you can take a bigger cut, but you'd have to wait till closing to get your money AND you take on bigger risks, because there is a possibility the deal won't go through.

In a back-to-back closing, you do not have to disclose any information, so you can take a bigger cut.

as far as closing costs go, you would be adding the closing costs into you fash cash formula when you are doing your due diligence before you lock up any property. When you make your offer, the closing costs will be subtracted out of your max offer price anyway. So, ya technically you won't pay any closing costs, but you already factored that in to your offer price, that way you assign it to someone else for lets say 10k higher, you can let your end buyer know that you already accounted for closing costs.

hope that helps!

Assignments are typically cleaner and less complicated. I write you a check. You assign the contract to me. I close on the home.

Assignment really means just selling the contract. With the contract, you have the right to buy the house for X dollars. You are selling me that right for Y dollars.

We hope that the house is worth more than X+Y dollars. (A LOT more. )

Thanks very much "Copy Ninja" and "wmark1963" you both helped to clear up some lingering misunderstandings I had about assigning a contract. Now I got to get out there this week and work real hard on my buyers list.