BiggerPockets

1.) you find a house that needs some work

2.) you contact the owner, find out he is motivated, throw him a lowball which leaves plenty of room for you to make your assignment fee and make an investor a good bit of cash after they rehab and flip it or rent it out

3.) the seller and you sign a purchase agreement essentially saying you have the exclusive right to buy the house for the next 30 days

4.) you fail to get an investor to buy the property because, well, you're new to all this

is step 5 you have to buy the house? or do you just tell the seller sorry my investors weren't interested? can he go after you legally for wasting a month of his time??

thanks!

If you are going to wholesale you will have plenty of times where you are unable to find an investor to buy the house. You should be sure that your contract has plenty of escape clauses that allow you to back out of the deal. Of course you can buy the house if you want to but you wouldn't be forced to do so.

:cool:

I am not trying to do a half-assed job by any means. But surely you must understand that all the "you can do it" / "it's all up to you" / "sky's the limit" real estate slogans in the world can't change the fact that in reality a lot of people screw up their first time, and if you fail to locate an investor and/or get them to close on your first deal, I don't think it should bury you.

I mean, how are you ever supposed to do your first deal if you have such a zero tolerance for error policy?

Corey,

I would suggest finding a mentor, someone who will help you with your learning process. Many investors do things different. Myself and my company have our own way of doing things. You need to do whats best for you. I come off aggressive b/c in this business all you have is your reputation and if you burn it too many times you will find that you will have a hard time making things happen. Keep your relationships in check and you should be just fine.

Corey, I'm no Pro by any stretch, but I do believe it all boils down to due diligence in having all your ducks in a rolw and full disclosure to the parties that you are dealing with. After all real estate investing is as much a relationship business as the $$$$.

Corey,

You will not be forced to buy the house but chances are you can say goodbye to your earnest money deposit...if you are dealing with a realtor you should be prepared to buy the house anyway so that you don't burn bridges in your area. (line up a hard money lender or private money before hand) You can also request an extension, just offer them (the sellers) a consession for doing so.

The best way to avoid this problem altogether is to have a good database of qualified cash investors lined up. This way you will know what kind of properties and neighborhoods are in demand...you can't do much wrong when you buy in a hot neighborhood but just to be on the safe side avoid very old homes, 2br's, houses on alleys, close to commercial properties, very small houses (below 850 sf) Know what is a must have in your geographical area.
i.e. basements for Michigan homes and Block frames for Florida homes.