Hello - I am trying to do my first wholesale deal.  The property is in Indianapolis which is where I live and the owner lives in California.  We agreed on a price, so I filled out and sent him the contract and he is pushing back on almost everything.  For example:

1.  He wants me to deposit the whole purchase price at the title company and he wants the terms to say that he gets to keep 50% of it if the deal falls through.

2.  He totally wants me to remove the portion about the property being "free from hazardous substances, and from violation of zoning, environmental, building, health or other govt codes or ordinances and that there is no material or other known defects or facts regarding the property that would adversely affect the value of the property."

3.  He wants me to totally remove the portions that say the "Buyer upon giving notice enter the property and inspect, repair, market and show to third parties prior to closing date."

4..  He wants me to remove the portion about Contingency which says the contract is "contingent upon the buyer having the right to inspect all of the property, engage professional inspectors to determine the structure and condition and that the report must be satisfactory to buyer or all deposit money will be immediately refunded and all contract obligations considered void and the inspection shall be conducted within 30 working days from acceptance of the contract."

5.  He wants the words in the Closing section to actually name a title company (which i have no idea what that is at this point) and to remove "Subject to a 90 day period in which the buyer/seller shall be permitted to clear any title problems"

6.  He wants me to remove "Contract subject to an acceptable appraisal", "Buyer may assign or otherwise transfer any of the buyers' rights, title and interest in and to this agreement to a third party without the seller's consent" (Even though he didn't say for me to remove the line that lists my name as the buyer and then says "and/or assigns as buyer")and "Buyer may place signs and show property immediately upon acceptance of this contract by both parties". 

7.  He wants me to remove the item "Time is of the essence with this agreement" stating that both parties will diligently pursue the completion of the transaction.

 Is this normal for a seller to be this picky about a contract ?  Based on this information, should I just forget about this deal, especially since I have no experience at all yet?  It seems like he wants me to remove some pretty important things plus the fact that I can't put the whole purchase price down as a deposit now.  

I would appreciate anyone's thoughts on this.  Thanks!

It appears he's doing his best to get you to buy it without contingencies. Those contingencies are extremely important to unwind the situation for any buyer because RE is buyer beware (caveat emptor), (unless you're extreeeeemely experienced and/or really want the deal and have the cash, already know the property well, and are the end buyer). The problem is, if you agree to those items you will be required to close and thus if you do not (which it sounds like you do not want to be the end buyer), he can sue YOU personally for non-performance. Also, Fishers, Indiana tends to have a lot of California owners/investors (I know a few myself).  He's probably an experienced investor trying to prevent you from wholesaling. Not sure, but just my gut feeling. OR, they just want to know they have a real buyer. Honestly not trying to scare you but just hoping you see the inherent risk involved. Would hate for your first deal to turn you upside down. If he agrees to keep your items in the contract, perhaps it's still a viable situation, but you may want to reach out to a local investor and/or RE attorney and ask for their help. 

@Jordan Callaway Thank you for the response.  Yeah, I definitely need the contingencies since I'm brand new and I don't want to be sued and I don't want to be the end buyer.  

as to his first request........ tell him to &^**&&&^^%%$#$$%%%^^^^^.

if he is still there after that then work on the others.

as for the rest it sounds like you have a lousy wholesale contract.
I would object to half of it myself lol.

@Crystal Oneill sounds like your seller knows what you are doing and plans to stop it. Hard to blame him, he can probably tell you are a new wholesaler and will most likely tie his house up, then 30 days later not find a buyer and walk away. Not saying this will happen, but it is exactly what you want your contract to allow. I think it's best to walk away from this deal. Your seller is too savvy and seems to know some of the game.

Lol yeah this seller knows you’re a wholesaler and is basically telling you he’s not going to go along with it. The part where he wants you to remove the “and or assigns” part almost makes it painfully obvious.

I doubt this works for you unless you double close which means you actually have the cash, which usually isn’t the case

I'm in her corner now. The seller has met every bit of his match. If the deal is worth a crap we will set him straight tomorrow.

as for the last 2 posters you can kiss my *&$

OK listen very carefully.

Monkey has the mic.

The Absolute common mistake of wholesalers, especially new ones, they are too desperate/eager (use whatever term you want here) to make a deal. This desperation is very understandable:

Wholesalers feel like they are doing something wrong (they say they will buy their house without ANY intention of buying said house) and that guilt shows clearly (often in the form of taking a defensive stance).

I know you won't want to hear this and I am also admitting I am assuming some things here. But I assume you did not tell the seller you are a wholesaler.

Look seriously, you will NEVER make it as a wholesaler telling sellers "I will buy your house" when you are just not going to buy it. It is wrong, dishonest and poor choice to build a business on.

If you just wanted a new laptop and you just need a quick 3K to buy it and never touch wholesaling again, I would still give you lip about it, but sure I can see logic in that. You will literally make a deal or 2 every year and you will forever struggle, and you will have a life of a LOT of drama, and legal issues. 

This is what you do, seriously. First, don't even think about what anyone said above me, not that they are wrong,  and most have solid advice, but the tips given start of from a completely erroneous perspective. The advice given is how to deal with your current situation (founded on dishonest false promises of buying that house, when you simply are not).  The issue with this is that you do not need to "solve" your current situation. You need to walk away from it period. Undo and start over.

These are the steps I would advise you to take:

1) Tell the seller, to take a hike. Drop this deal, take 3 steps back and reevaluate your business model, strategy and systems.

2) Before you dive into wholesaling, make sure you have a strategy. Have an angle. And for Pete's sake: Be honest

3) NEVER be defensive. Don't bend over for anyone. Keep this in mind, HE/SHE is the one that NEEDS to sell. You do not need to buy anything (from him/her). There are plenty of deals out there. 

4) Do not focus on one specific deal. Focus on constantly having a filled pipeline of deals. If one is too difficult or unreasonable, give him your card and say: "Yo dude, when you come back to earth and are ready to sell that damn house give me a call pumpkin, Good luck Pebbles" and move to the next deal in the pipeline. (For this you need a website).

Honestly I am kind of shocked and disappointed no one above me gave any advice along the lines of "You need to be honest and upfront with sellers". That is the NUMBER ONE rule of successful wholesaling. Seriously NO WONDER everyone SUCKS at wholesaling and then everyone convinces themselves and each other "ohh wholesaling is hard, only 3% make it". What ever!!

Seriously. Stop! Just stop. 

Walk away from this deal. This is already such an elaborate mess it simply is not worth it.

You are a beginner and I applaud you for taking action. But this is not the right way to do it. Confidence is key (in ANY business). YOU are the authority.  YOU are the one that provides the solution to HIS/HER problem.

I know this message was harsh, but you need to take my reply very seriously and take it from someone that knows a thing or 2 about actual wholesaling.

Read this:

https://www.biggerpockets.com/blogs/7786/73445-how-i-got-my-first-paycheck-wholesaling-in-3-months

Jerryll

  Good post.  I have done over 500 deals and I let sellers know what
I am doing up front. A good wholesaler is more valuable to a seller
than a single cash buyer because the wholesaler knows which buyers
follow through and that saves sellers a lot of hassle. I am going to look at her
deal and if it is worth it will work through the issues with the seller as she
is in my market. I will do this for free to help her out. As long as a contract has
one escape clause it does not need 3 more. Her contract is pushing sellers
away because it is obnoxious. I have an attorney approved one pager
for the State of Indiana that should help her in the future.

Originally posted by @Andy Rumple :

Jerryll

  Good post.  I have done over 500 deals and I let sellers know what
I am doing up front. A good wholesaler is more valuable to a seller
than a single cash buyer because the wholesaler knows which buyers
follow through and that saves sellers a lot of hassle. I am going to look at her
deal and if it is worth it will work through the issues with the seller as she
is in my market. I will do this for free to help her out. As long as a contract has
one escape clause it does not need 3 more. Her contract is pushing sellers
away because it is obnoxious. I have an attorney approved one pager
for the State of Indiana that should help her in the future.

 Very interesting indeed. I got my contract from the clever investor package. That contract is HORRIBLY awesome. It sucked.

What do I mean? It is 6 full pages that completely protected me in all shapes and forms. If a 3 meter ant showed up in pink high heels wearing victoria secrets latest undies, and pooped on me forehead, rest assured that contract had me covered for just such an event. Needless to say I didn't get any contracts signed.

You have a SOLID point there my friend! The contract needs to be carefully written to protect you but not scare off sellers!

Yes I agree with you!

@Jerryll Noorden   well I hope you did not pay the clever investor 20k for that contract.. and add to his car collection.

much of this is regional of course and in Indy were these guys are at there are literally thousands of vacant homes and of course the Morris debacle is going to throw a bunch more wholesale inventory out there.. 

if your in these areas with low value assets and huge population of renters it sure makes wholesaling more viable.

West coast that model is pretty much dead.. few can do a few deals.. but its pretty tough.. 

But Jerryll your a 1% no matter what you put your mind to you will succeed.. your smart your driven and articulate the traits you need to do transactional real estate.. when it might be a little tougher crowd.

pretty easy to wholesale boarded up homes or out of state land lords who are burnt out.. that takes no particular skills.

Jay

  Indianapolis involves much more than burnt out houses and out of state landlords.

@Andy Rumple some of your comments aren’t helping some people’s opinions of wholesalers.

I don't care. I owned 23 units before I even knew what a wholesaler was.

Wholesaling is not the bottom of the barrel. It is one of the smartest
real estate strategies period.  I control deals. Sellers need me. Buyers need me.
If you are a seller or buyer who I do not like you are GONE.

If you want to judge all wholesalers by the actions of those who do not know
what they are doing yet then it is at your own peril. You are going to miss
out on a lot of good deals.

Many Rehabbers, landlords, etc want to put wholesaling down and relegate
it as entry level. If they want to be that stupid I don't care. If they do it on here
I will expose their stupidity.

I love Jay and most of his posts but he seems to have had a bad day. Hey Jay.......

do you have anything other than Sasquatches up there in Oregon?????????

Originally posted by @Jay Hinrichs :

@Jerryll Noorden  well I hope you did not pay the clever investor 20k for that contract.. and add to his car collection.

much of this is regional of course and in Indy were these guys are at there are literally thousands of vacant homes and of course the Morris debacle is going to throw a bunch more wholesale inventory out there.. 

if your in these areas with low value assets and huge population of renters it sure makes wholesaling more viable.

West coast that model is pretty much dead.. few can do a few deals.. but its pretty tough.. 

But Jerryll your a 1% no matter what you put your mind to you will succeed.. your smart your driven and articulate the traits you need to do transactional real estate.. when it might be a little tougher crowd.

pretty easy to wholesale boarded up homes or out of state land lords who are burnt out.. that takes no particular skills.

 Well Mister Jay. I succeed because you are one of the few that always steered me in the right direction waaaaay back when I was a weee little mortal just starting out.

Thanks for the words of encouragement man. Seriously thanks for everything!

Originally posted by @Jerryll Noorden :

Originally posted by @Jay Hinrichs:

@Jerryll Noorden  well I hope you did not pay the clever investor 20k for that contract.. and add to his car collection.

much of this is regional of course and in Indy were these guys are at there are literally thousands of vacant homes and of course the Morris debacle is going to throw a bunch more wholesale inventory out there.. 

if your in these areas with low value assets and huge population of renters it sure makes wholesaling more viable.

West coast that model is pretty much dead.. few can do a few deals.. but its pretty tough.. 

But Jerryll your a 1% no matter what you put your mind to you will succeed.. your smart your driven and articulate the traits you need to do transactional real estate.. when it might be a little tougher crowd.

pretty easy to wholesale boarded up homes or out of state land lords who are burnt out.. that takes no particular skills.

 Well Mister Jay. I succeed because you are one of the few that always steered me in the right direction waaaaay back when I was a weee little mortal just starting out.

Thanks for the words of encouragement man. Seriously thanks for everything!

Well if I helped .. then that's what we are here for.. although this end of the business as you know is a little more controversial than many other parts of it.. for a variety of reasons..

Keep It up... your on your way.. !!!! 

Originally posted by @Crystal Oneill :

Hello - I am trying to do my first wholesale deal.  The property is in Indianapolis which is where I live and the owner lives in California.  We agreed on a price, so I filled out and sent him the contract and he is pushing back on almost everything.  For example:

1.  He wants me to deposit the whole purchase price at the title company and he wants the terms to say that he gets to keep 50% of it if the deal falls through.

2.  He totally wants me to remove the portion about the property being "free from hazardous substances, and from violation of zoning, environmental, building, health or other govt codes or ordinances and that there is no material or other known defects or facts regarding the property that would adversely affect the value of the property."

3.  He wants me to totally remove the portions that say the "Buyer upon giving notice enter the property and inspect, repair, market and show to third parties prior to closing date."

4..  He wants me to remove the portion about Contingency which says the contract is "contingent upon the buyer having the right to inspect all of the property, engage professional inspectors to determine the structure and condition and that the report must be satisfactory to buyer or all deposit money will be immediately refunded and all contract obligations considered void and the inspection shall be conducted within 30 working days from acceptance of the contract."

5.  He wants the words in the Closing section to actually name a title company (which i have no idea what that is at this point) and to remove "Subject to a 90 day period in which the buyer/seller shall be permitted to clear any title problems"

6.  He wants me to remove "Contract subject to an acceptable appraisal", "Buyer may assign or otherwise transfer any of the buyers' rights, title and interest in and to this agreement to a third party without the seller's consent" (Even though he didn't say for me to remove the line that lists my name as the buyer and then says "and/or assigns as buyer")and "Buyer may place signs and show property immediately upon acceptance of this contract by both parties". 

7.  He wants me to remove the item "Time is of the essence with this agreement" stating that both parties will diligently pursue the completion of the transaction.

 Is this normal for a seller to be this picky about a contract ?  Based on this information, should I just forget about this deal, especially since I have no experience at all yet?  It seems like he wants me to remove some pretty important things plus the fact that I can't put the whole purchase price down as a deposit now.  

I would appreciate anyone's thoughts on this.  Thanks!

You ran into a sophisticated seller who knows far more than you about how to transact real estate.. this is about how I handle all those folks that send me direct mail.. :)   NEXT  just move on..  He is playing you..

Originally posted by @Andy Rumple :

I don't care. I owned 23 units before I even knew what a wholesaler was.

Wholesaling is not the bottom of the barrel. It is one of the smartest
real estate strategies period.  I control deals. Sellers need me. Buyers need me.
If you are a seller or buyer who I do not like you are GONE.

If you want to judge all wholesalers by the actions of those who do not know
what they are doing yet then it is at your own peril. You are going to miss
out on a lot of good deals.

Many Rehabbers, landlords, etc want to put wholesaling down and relegate
it as entry level. If they want to be that stupid I don't care. If they do it on here
I will expose their stupidity.

I love Jay and most of his posts but he seems to have had a bad day. Hey Jay.......

do you have anything other than Sasquatches up there in Oregon?????????

I think you may have missed my point or maybe I did not make it..  to me Wholesaling the way most of those that try to do it is a very advanced strategy that takes a huge amount of skill,,, some money,, and ability to CLOSE...  its not a hey I know nothing about real estate and the guru told me this is the easiest way to make money when I have no knowledge of the business, no money , etc etc.

Its highly regional.. and there is no question that the rust belt and other older mature MSA's that have large SFR populations of rentals are prime wholesaling grounds.. that's a fact.

in other areas were the inventory is different wholesaling is a completely different ball game and in many markets its done.. ya you can do some but its not a machine you cant do the volume you guys do.. and granted not all of them are Morris invest bait.. IE 8 to 10k houses in the worst areas sold as turn key... I bought about 40 houses personally in the last 20 months in BAtes Hendrix and Fountain square.. so I know its not all that and I did a few on Broadway just north of downtown those are 400 to 500k deals.

I love Indy so I am not bashing it by any means.

the guys in our state that wholesale any big volume have pretty much all been turned into the department of real estate and forced to get licenses and then most of the wholesaling is done at the courthouse steps.. its the only way to get inventory.. they pay cash then wholesale them off.  you simply don't have the contract flipping that you do in other markets.

I paid last Sept 125k wholesale fee for a contract assignment here in Oregon but it was a 92 lot housing project that I will pay over 7 million for and at build out its a 50 million dollar plus deal.. so it all equates  ya it was something for me to pay that fee.. but there was value.  He got the seller into contract and they did the hard land use on it.. 3 years to get it to where I was so I equated his fee to value I would have probably spent close to that on land planning and MY time ..

Jay you knocked it out of the park once again. Bates Hendricks and Fountain Square ARE all that
unless you bought outside the boundaries! Good luck with the deals if you need to get rid of those
20 I may have buyers. Did 5 deals in those areas in last 1.5 months.

@Crystal Oneill

A big part of the problem here is that you don't understand wholesale. It's great that you are able to ask questions here to learn more quickly. By the way, to qualify myself, my husband and I buy about 60 single family houses per year, 80 percent of which we wholesale or assign.

1. A seller can ask for whatever they want. This is part of the negotiation process. Simply reply with what you want to put down. Remember, we negotiate to buy the property - if we can't reach agreement, we don't buy the property.

2. He can remove whatever he wants. A lot of wholesale deals are sold "as is" without inspections and cash which leads to fast closings. 

3. We always ask for permission to show the property before we've closed on it. We have an addendum the seller must sign for us to have permission to both show and put a sign in the yard. If they object (which they sometimes do) we wait until after closing to show it. And, under normal circumstances, you don't want to repair anything you don't own. It increases liability and you may not be able to close on it so the money spent would be wasted. Because you're new, you may want to have it inspected but that is also not always necessary. Once you have experience, you can do most of the inspection yourself with your initial walk through. You should be buying at a deep enough discount that you can sell it to a rehabber and allow them to make profit with just that initial walk through (once you have more experience). But, again, this is a point of negotiation. What do you need from item #3 and what is he objecting to? There's a lot to discuss with the seller here.

4. Again, not unusual for properties to be bought and sold "as-is", especially wholesale deals. If it's a true junker, he knows inspections are going to find tons of issues, but you do too if you've walked through it. It is not uncommon for us to buy and sell without inspections on our wholesale deals. The reason these properties sell so cheap is they have tons of issues! But negotiate. If you need to inspect and he doesn't allow it, you walk away.

5. If you're engaging in real estate investing, you obviously need a real estate attorney or title company. Who do you plan to use? We can easily give a name to our seller - in fact - we prefer to use someone of our own choosing rather than someone they choose who may not be experienced. And most of our deals are closed within 2 weeks so he may want the property sold and closed sooner than 90 days. What is his objection?

6. Not every state allows assignments, I assume yours does. And, again, he doesn't have to agree to any of this. It sounds to me like you are hoping to assign and not wanting to close on the deal. That is not a wholesale - with wholesale, you do close on the deal; with assignment, you do not. Again, this is a place for negotiation and if you don't agree, you walk away. You are apparently trying to use a retail contract for a wholesale deal. Our contract is only one page, and much less detail than this is necessary for wholesale purchases.

7. There has been much conversation here about whether or not the seller is "experienced". What we know for sure is that the buyer (you) is not experienced. You need a better contract; the seller can object to anything they want to object to; you do not sound ready to close on this deal which you should be if you're promising to purchase; you are both in the period of negotiating and must reach agreements on all points before the transaction takes place. 

The problem here really is that you don't know what you want or how to negotiate it. It sounds to me like the seller is not experienced and is fearful of all of these things on a property that they know is in bad shape. I understand all of the seller's exceptions and would take the time to talk through each of the concerns with him/her.

This is a great start for your wholesale future. Congratulations. Please let us know how this deal progresses, or doesn't. And don't give up on your learning.

Thank you to everyone so far with all of the great responses.  I appreciate the feedback and the advice!  

I have watched so many different YouTube videos and Bigger Pocket podcasts (so many hours worth), read so many articles, and gone to some local meetups to get the knowledge I have so far.  And most all of the videos say to just "take action" and don't think too much about it and just do it, so I'm taking what I know so far and going with it like they say they did.  Most of them say they made so many mistakes and didn't know what they were doing at first and then just figured it out, so that's what I'm doing.

I sent about 30 yellow letters to owners of properties that seem distressed a couple weeks ago, and I got this one response so far.  I went to look at the property and got him to agree to the price that I think is a fair deal and I could make a little money after doing some research ( @Andy Rumple confirmed I did a good job with the negotiated price in his opinion).  I'm putting all the pieces together still.  So now I'm trying to get through this roadblock with the contract now.

So, I got this contract template from a local property management company that has regular meetups to network with wholesalers.  I have been to a few of their meetups and they sent me this contract and an assignment contract they said was legit, so I'm not sure why it's so bad!  But apparently it's not very good. :/

Luckily I have @Andy Rumple helping me now and we are going to try to straighten this one out.  If we can't straighten this out, then I will just take it as a learning lesson and will be moving on to the next transaction with a little more knowledge and experience.  Shout to Andy for taking his time to help me out with this!

I'm going to keep going and not give up and I am looking forward to the journey and I am so grateful to everyone that is willing to take the time to answer and give advice and guidance!

To me, it sounds like a bored homeowner that got your letter, and decided to waste your time just for fun. It's like when a telemarketer calls and you keep them on the phone for 20 mins just because you can.... You could play along for a little while to get a little experience for the next one, but I would expect you'll end up walking away to find another deal. But good luck, maybe I'm wrong!

I've always known @Andy Rumple to bring very good stuff to the table.  I've also always known him to be 100% honest and upfront.  Andy is a great teacher and mentor to many out there.  This is why I really like the BP community.  It brings some very bright minds together with great perspectives.

I get to see alot of these severely distressed properties.  Many times we have to turn down projects on some of these, because the numbers just don't work.  Andy makes a great point that Indianapolis is not all about the burnt out, low end, or all board up situations.  The Morris/OP debacle can give a false impression of what Indianapolis has to offer. I'm involved in alot of buying and selling and there are many times when the property needs no rehab and has solid and reliable tenants in place.  There are also many townships and other areas in Central Indiana (all property classes).  I think its one of the things that makes inidnapolis unique.  

With some of the negative publicity Indy has had, I'm really glad to have people like @Jay Hinrichs and @Andy Rumple seeing the positives.  

For wholesalers starting out - I just pass along our philosophy on almost everything we do.  If it doesn't fit in your cookie jar - don't take it.  We don't get involved with every project that comes along.  I don't invest in everything that crosses my desk.  We don't buy every property that we come across. In the end, you have to put your name on it. Your risk and your reputation.  You can't build a buyers list that works FOR your business without having a good reputation.