BiggerPockets

How do you wholesale? Im curious to see strategies of all of the experienced wholesalers. Do you find a property that seems to be a great deal then put it under contract and find a buyer while its under contract? How do you get the property under contract without a preapproval letter or the chance of losing your earnest money?

For example say you find a house for 50K that you know you can think you can get it under contract for 37K do you put it under contract for 37k? How do you go about doing this?

Im new to this area and am a little lost on how you actually go from getting the deal to the new buyer. If anyone could explain this process to me it would be much appreciated. Thanks

We collect a non refundable deposit when we sign the assignment addendum. Then we collect the remainder at closing.

So does this mean that you put the property under contract before you have a seller or start advertising before you even have it under contract at all?

you can do it both ways, you can find a good deal and then get a buyer or you can find an investor ask them what type of property there are looking for and then and find a deal to match its criteria. before you do a deal learn the market value of the property ,this way you can then determine if its a good deal or not

So under this arrangement, how often do you end up with a property that you didn't want or can't pay for? Does the contract have a clause that allows you to get out if you don't find a buyer or?

Gabriel you can get out of almost any contract with the right clause in place

Can you give a few good examples of out clauses?

Subject to inspection should be sufficient. The standard TREC contract has a built in termination option, making each contract an option contract. I also limit the sellers recourse to retention of EMD which takes most of the fear out of buying.

Do NOT use the "subject to partner's approval", that wont hold up in Texas. You are basically saying that you do not have the authority to fully execute the contract.

Do your due diligence and buy right, and there should never be a need for a "weasel" clause. Wholesalers have a bad enough reputation as it is. Why add more fuel to the fire?

You've had a seller take you to task, and the judge declared your contract enforceable?

If you do not have the power to fully execute, most would hold that contract to be unenforceable. Of course, there are many other types of clauses also, and so long as your seller is uninformed or has no one assisting them, you could tie up a property indefinitely and not perform. There are a lot of wholesalers out there now who do this which is precisely why wholesaling has gotten such a black eye.

There is a big difference between something working once or twice or actually holding up....in court.

Gabriel,

Get a contract from your local Realtor. Its probably a standard contract that people are used to seeing. It wouldn't make sense for me to send you a Florida contract for your area.

Once you have the contract let me know, and I will help you write in an inspection clause.