In episode 32 of An Investors Journey, we go over the How To Wholesale A Contract!
Since our start in real estate, we have wholesaled over a hundred properties. In doing so we have learned a lot about what to do as well as what NOT to do.
I'll cover in this episode how to properly wholesale a real estate contract.
The reason I say "contract" and not "property" is because you're NOT wholesaling a property. The only time you're wholesaling a property is when you actually own the house and you're selling it a wholesale price. This means you're selling it for less than market value. If you got a property under contract with a seller and then turned around and "wholesaled" it to a buyer what you're actually doing is selling your equitable interest to buy that property to someone else.
NOTE: First thing's first, make sure on your original contract to the seller you write "and or assigns". I'll discuss this further in the episode.
You can go online and download one from the hundreds of samples you will find on google. You can also get one from maybe some guru training you have purchased. Or, you can do what we did and have your attorney draft one up for you.
We cannot share the one our attorney-drafted up for us because I just don't know if it can you or us into any problems being that he did it for us. Sorry.
That being said they're all pretty standard and easy to understand.
You have to always make sure you and the buyer of your contract are aware of everything that's involved in the purchase of the house.
When we buy a contract from a wholesaler we first agree to a price we're willing to pay for the house then we'll ask to see the original contract between the wholesaler and the seller. The reason we do this is that we want to make sure there will be no surprises at closing.
There are 2 ways to set your price:
Many wholesalers have a tendency to forget about the deal once it's under contract with the buyer. Don't do this. Stay with the deal, make sure title has everything they need, make sure the sellers are ready to move out and close. Don't make the buyer have to scramble around trying to get everything done. After all, this is your deal. You're the one that has the rapport built with the seller.
There are times when you pick up a property at such a great price that you know someone will have problems with how much you're making. in this case, you can always do a Double Close/Simultaneous Close/Back-to-Back Close. They're all the same.
All this means is that you will close with the seller and then turn around and close with the buyer. So you are both the buyer and then the seller on the same day usually.
You can do this by doing a Dry or Wet Close.
A Dry Close means you don't have to bring any money to the table. The seller gets paid with your buyer's funds and you get the difference. Not many title companies or attorneys know how to or feel comfortable doing this. So I strongly recommend you ask around to see who would be willing to do it and then close with them.
A Wet Close means YOU need to bring the money to close with the seller and then you can sell it to your buyer. This is done by either you having your own money or borrowing it. If you borrow the money it is mostly referred to as transactional funding. All this means is that it'll be for a very short time.
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