I'm selling a property. I've posted it on Craigslist(it's low end property) for a while but it's not moving. I've dropped the price and also called back on some yellow letters I was sent.
i've got a yellow letter guy offering me a "contract" but this is my first time trying to sell a house myself. When I read the contract it sounds more like he's locking me into a wholesale deal and not committing to purchase the house. I didn't demand earnest money and perhaps that was a mistake. But I haven't signed anything.
When I talked to him on the phone he sounded fairly realistic about closing in a few weeks and understood the process. He has a closing company that he prefers and they seem to specialize in fast closings. I looked him up on LinkedIn and he has a degree in marketing and is new to investing to. He started in january 2015 acquiring properties for a local investment company.
I'm not anti-wholesale. I just want to sell the property and not lock myself into exclusivity with someone for a month.
Thanks for the help,
@Dan Doughty That's definitely a wholesaler. And while I am sure he wouldn't sue you if you sold it out from under him, you are promising in the contract not to do so.
While some wholesalers may waste your time, locking up property they won't actually be able to close on, 30 business days (6 weeks?) is not an unreasonable amount of time. Consider if from the wholesaler's point of view. A real wholesaler has real buyers who want a real deal. He doesn't want to drag buyers out there because maybe you will sell it at the agreed price. He wants to be able to say these are the exact terms of the deal. He also doesn't want to waste his time bringing marketing it to his buyers and bringing them out when you might possibly sell it to someone else.
That said, an experienced wholesaler should have a good feel for whether or not he has a buyer for the property right from the outset. A bad wholesaler will lock up the property, and simply hopes someone might be interested.
Ask him to be honest. Why does he need 6 weeks? Does he really have a likely buyer? If he is just seeing if anybody is interested that is okay, but he should let you know that is what he is doing.
From what I can read of it yes it sounds like a Wholesaler. If you have no issue with him moving the contract around I would ask for EMD and less than 15 days Due diligence. If you have EMD and he can't find a buyer at least you get to keep it for your hassle. I wouldn't go too high, but you risking the time is worth at least a couple hundred bucks if he can't deliver.
"1. Seller understands that Buyer is acting as a principle [sic] in the transaction and is not working as a real estate broker representing anyone other than himself in this transaction.
4. Seller grants Buyer access to the above property for showing to prospective buyers, contractors, or appraisers, along with the right to market the property for sale."
First, he doesn't even know how to spell principal (so probably doesn't understand the concept). Second, #1 and #4 in his "Terms and Conditions" are contradictory. It makes no logical sense for the "Buyer" to show the property to "prospective buyers" or to "market the property for sale." Yes, I understand how "wholesaling" works and I think phrases like "grants the right to market the property for sale" are what get non-licensed wholesalers in trouble with licensing agencies and the law.
My understanding of how this should be done is with a standard (or better written) purchase agreement with the "Buyer" listed by name "and/or assigns." He shouldn't need much more than that and wouldn't ask for permission to "market the property for sale" - if he's not representing you as a fiduciary agent (which requires a license to protect YOU), what interest in the property, as a principal, does he have in the property to market?
He seems to be trying to ask for permission to market his interest in the contract for sale, which, again, isn't necessary. But I'm not a lawyer and I'm in California, so take this comment with a grain of salt.