Wholesale deal with Broker who is not investor friendly
A Realtor family member in Sacramento, CA brought me a property as a private deal to flip. I live out of state and want to wholesale the home. Unfortunately, the Broker will not allow "and/or assigns" on the purchase agreement. My family member wants to keep in compliance with his Broker's request. Is it possible/legal to have a completely separate contract from the purchase agreement stating (in fancier language than this) "Investor is to sign the purchase agreement with Realtor present and pay the wholesale fee within 48 hours"?
If it's a good deal, the other option is to just close on it and then turn around and resell it the next day...
@Natalie C. can you speak to any of the details of the deal? I am sure if it is good you will have lots of intrest from the Sacramento folks that are on the site.
You can also check with the Closing Attorney and Title company to see if they will allow a simultaneous closing. We just did that when a local bank refused to pay an assignment fee. We used one contract with the Owner/Seller to us as the Buyer and then a 2nd contract with us as the Seller to the End Buyer. Everything passed through though we did have to pay some extra fees that cost us about $3k so be sure you add that into your fees and see if you can get your Buyer to pay all closing costs.
Can't tell you how many times agents/brokers and even Title companies have almost screwed up good deals b/c they don't understand how Assignments work. Good luck!
Well because your " and/ or assigns" could mean anyone.
How much earnest money non-refundable are you putting down?? My guess is it is not hardly any.
That's the rub in that you probably want to lock the property to an unknown buyer for nothing.
If I was the broker I wouldn't look favorably on that either.
The wholesalers want no risk in the deal yet lock up a property from other purchasers the seller might find that are better.
There are usually 3 options:
Unlimited Assignment Permitted - assigns can be done to anyone without seller consent.
Limited Assignment Permitted - Usually when transferring to an LLC, trust etc. the direct buyer controls.
Assignment Prohibited - Unless permitted in writing by the seller.
No legal advice.
Remember, unless the Broker has limited power of attorney, he is NOT a principal party to the contract. It's not his call whether you can specify "and/or assigns" in your deal with his client/boss. If the impasse continues and he won't submit your offer to his client, then file a complaint with the licensing board.
All contracts, except Personal Services Contracts, are assignable UNLESS the contract specifically states otherwise. Do not rely on the implicit assignability of a contract, because that won't release you from liability (there are now two responsible buyers -- eek!). Always provide for explicit assignability with full release of liability.
Legal information is not legal advice.
Two cents worth. Your mileage may vary.
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See the California realtor contract to see if it addresses assignability. No knowledgable seller will agree to the initial buyer being relieved of liability/responsibility through an assignment. But the the idea of a "side agreement" with the investor paying you a "wholesale fee" is violating licensing law, if you're referring to not being in contract. Also, did you say you are in a different state from the property, and the most likely buyers? Your relative is crazy for trying to "help you" with your wholesaling if this is the case, let alone screwing his client/owner. Please clear the situation...locations of you/the property, what you mean by "private deal" and yet a Broker being involved. I'm guessing you need to stay out of this one, from the assumed locations, and your questions/suggestions here, if I read them correctly.
Oh, and just to be clear on this "investor friendly" topic.
I, as most others, am Investor friendly, an investor who can actually Buy the property.
I, as most others, am Not wholesaler friendly, who want to tie up a property in hopes of flipping it, and will have to walk away if they can't.
Wholesalers are Not "investors".
what about a double close with transactional funding?
purchase in an LLC with a decent earnest money deposit and sell the LLC to your end buyer?