Santa Barbara, CA · Member since 2018 · 8 posts · 0 votes
Hi BP,
I've been looking doing the BRRRR strategy on my first property in Kansas City, MO with a wholesaler and I am fairly interested in moving forward with it.
Just a quick question, when you're not dealing with a buyer's agent, do you typically hire a lawyer to review the contract documents to make sure that you are covered properly?
The way that I understand the process is:
wholesaler drafts contract with contingencies such as inspection, title search
I review and sign - with a lawyer?
property goes to title search and if all works out, I wire the money and the deed becomes mine.
Flipper/Rehabber · Kansas City, MO · Member since 2011 · 2k+ posts · 712 votes
7y
So guys and gals I am here to tell you that a wholesaler is a real estate investor that 100% represents their own interests and they are not a buyers agent in any way shape or form.
I want to make sure everyone following gets this as I get investor buyers who sign up on my list and then wonder why I have not found them a deal right away. My response is always I wholesale houses. I market for good deals, get them under contract (in my case buy them) and then market them out to my buyer's list. Whoever has the best offer price that closes the fastest gets the deal. That may be you that may be one of 100 or 1000 other people.
So if you are buying from a local wholesaler, by all means, have someone who represents YOU - go look at the house, review the contract to make sure the numbers work and the contract works for you. That could be you if you know how to read a contract and review a house or you may need to hire an attorney.
If the wholesaler is not buying and then reselling to you but rather assigning their contract, you would be purchasing their position in the contract they already have. I would advise to review their contract before you sign the assignment as you have to close and follow the terms they negotiated.
And despite what some brokers will allow in their specific office, in Kansas and Missouri real estate agents and brokers can wholesale if they want to as long as they follow the law and their broker will allow it.
That all depends on your experience level and how comfortable you are with understanding the contract and knowing what a contract should include to protect you. If you haven't dealt with many real estate contracts, it wouldn't be a bad idea to have someone review it.
Real Estate Broker · Phoenix, AZ · Member since 2013 · 749 posts · 399 votes
7y
@Warren Kong - full time flipper and a RE broker. Doubtful the wholesaler is using a standard KCRAR contract. Typically it is just an assignment contract, is that what they are using? Or are they doing a double close? Licensed agents are not technically allowed to wholesale.
For me I never need an agent cause everything is on standard contract, even contracts I work out with wholesalers. If it isn't a KCRAR contract you might want to pay a lawyer to review it.
To answer your question though, yes. It should go contract to you. Sign. EMD drop off. Then it is sent to the lender, if there is one, and the title company.
If you need help or have questions PM me. I have bought a half a dozen properties from wholesalers. Some are great and some have very flimsy contracts. Review it careful and make sure you aren't agree to something outlandish like possession days after closing or $1,000 non refundable EMD, etc...
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Warren Kong I would review with an attorney and ideally use your own documents. Reason being is wholesalers are unlicensed and they can essentially do whatever they want.
A real estate agent is licensed and used contract that’s they’re broker approves of (who’s also
Flipper/Rehabber · Kansas City, MO · Member since 2011 · 2k+ posts · 712 votes
7y
So guys and gals I am here to tell you that a wholesaler is a real estate investor that 100% represents their own interests and they are not a buyers agent in any way shape or form.
I want to make sure everyone following gets this as I get investor buyers who sign up on my list and then wonder why I have not found them a deal right away. My response is always I wholesale houses. I market for good deals, get them under contract (in my case buy them) and then market them out to my buyer's list. Whoever has the best offer price that closes the fastest gets the deal. That may be you that may be one of 100 or 1000 other people.
So if you are buying from a local wholesaler, by all means, have someone who represents YOU - go look at the house, review the contract to make sure the numbers work and the contract works for you. That could be you if you know how to read a contract and review a house or you may need to hire an attorney.
If the wholesaler is not buying and then reselling to you but rather assigning their contract, you would be purchasing their position in the contract they already have. I would advise to review their contract before you sign the assignment as you have to close and follow the terms they negotiated.
And despite what some brokers will allow in their specific office, in Kansas and Missouri real estate agents and brokers can wholesale if they want to as long as they follow the law and their broker will allow it.