Wholesaler 路 Newburgh, NY 路 Member since 2017 路 32 posts 路 4 votes
Quick question. My buyer wants to see my purchase and sale agreement I have with the seller. Is this normal? My concern is that he'll see how much Im making on the deal and lower his offer. Thx馃彙
If you're closing on the property, then reselling, none of his business. If you are assigning your contract, then of course he has to see it, as That is what you are assigning, and what he is obligating himself to.
If you're closing on the property, then reselling, none of his business. If you are assigning your contract, then of course he has to see it, as That is what you are assigning, and what he is obligating himself to.
@Kevin Jeter I completely disagree with @Account Closed on this. It is 100% a concern of the buyer. The buyer could be ensuring that you truly have an equitable right to the deal which I have dealt with at length, especially commercial deals that I have moved. There is no harm in that.
However, the only time the number on that contract makes sense for the end buyer to see is if you are assigning the property. If you are double-closing, obviously you don't want to show your cards. If you are double-closing and he wants to see your right to the deal, simply scan a copy of the contract and black out the purchase price. I do it all the time.
Here in lies the problem. If you are not allowed to sell a property and are simply selling a contract (because there is not a license). Then you are expecting someone to buy something from you without the details.
Date to purchase by- Which could be used to go around you
Price- Which lets them know how much they can get it from the seller themselves for after your date ends
Seller- Person to contact to make another offer.
Solution: Take an online class and spend about $200 to get a license, hang your license with a no cost broker. Get sellers to let you broker the deal (signs in the yard, ads the whole nine yards). Don't tie anything up and they can't go around you without having to pay anyway. Also they are not planning on you buying the place. Assigning contracts has a place, I just don't think that place is in the beginning.
My buyer mentioned that he needs to know what he's getting into before taking further steps since I'm assigning the contract over to him. He asked me how long have I owned the property. That's when I told him that I have the property under contract. Blacking out the purchase price along with the sellers name sounds like a good idea. @Evan Manship for you advice and ALL others who offered help.
If you're assigning the contract it is perfectly normal for someone to want to know what they're buying. You wouldn't buy a car without seeing it. Essentially they're buying the contract. You are right to be suspicious however, they could definitely try to go behind your back to get a deal done with your seller. Also they should know your assignment fee since they're paying it, so they should already know what price the contract is for. Definitely black out the seller's name.
For all your buyer knows the contract could say "Kevin can live here forever and his rent will only be $1."
If you don't want him to see how much you are making then you should double close on the property.
You should feel no shame about what you are selling the contract to the flipper for. If it's a good deal for him then he shouldn't care if you are making $500 or $50,000.
@Evan Manship Agreed. @Kevin Jeter didn't state if he was assigning the agreement. If the agreement is being assigned, I'd blank out the price and give him a copy.
If Kevin is doing a quick flip (as I frequently do, as in I've owned it for 30 to 60 days but now I am selling it to an owner occupied) then the buyer has no right to know what I paid for the property. I have actually had people tell me that I am making too much, since I only paid "X" amount. If they want to pay my asking price we do the deal, if not they simply go away.
Hey guys, if he is assigning the contract, then his Assignment Contract has to have the assignment fee in it, right? I've have seen assignment contracts where; under contract for $50k, wholesaler trying to make $10k, and their "assignment contract" says the Fee is $60k......WTF. When assigning, the buyer pays You your fee, and pays the Owner the contract price.
This is wholeselling 101. Since this is an assignment deal, then of course the buyer needs to see the contract he or she is taking over via assignment. If your fee is reasonable why would you fret? If your buyer is going to renegotiate no matter what fee you charge, then get another buyer.
The suggestions of definitely blacking out the seller's name is ridiculous, any competent buyer can check title based on the property address and find the buyer name. Why are you people so worried about circumvention? That can only take place if you have not covered your bases of having a good and real deal, having multiple back up buyers, and having enough time in your contract to do what needs to be done.
Lastly, are you doing this legally and ethically? If not, get better educated before going under contract and get licensed.
I'm assigning the contract to my buyer. I'm not concerned about my seller knowing how much I'm making on the deal. My seller just wants what we agreed on. My buyer is the issue. I met with him yesterday after sending him my blacked out purchase and sales agreement via email. We spoke on the phone later that night. He talked about how he doesn't care if I made 5k or 15k on the deal but then mentioned that I blacked out the price leading me to believe he doesn't care but really does. I was thinking of recording A memorandum of contract to protect myself in the event the buyer tries to be sneaky.
If you are assigning a contract the buyer you are assigning it to needs to be able to read every number and word on it. Your buyer is buying your contract from you for a set price. Which means he is responsible for every word and number written on it. The purchase price will be written in and that's what your buyer will pay to purchase the property. Your assignment fee will be separate. I have a separate assignment form my buyers will sign stating the fee for purchasing my contract and I turn that in to my escrow officer. Then my buyer has to wire in my cut for the deal to close. Make sure your purchase agreement you had your seller sign states that the agreement is assignable.
I always ask my wholesalers their spread. And I tell them if they lie I will never work with them again. Wholesaling is not technically legal, keep all parties happy and you will not have problems
If I am buying an assignment contract from you I better be able to read every single number on that contract. This is reason #456 why wholesalers have a bad reputation. If I assign a contract I am NEVER worried about letting anyone see what I am making.
Yes for double the closing costs (Thousands each transaction) you can double close, or pay a couple hundred, get licensed, be on the HUD-1 form, legally grab a commission and not have to lock the property up plus are able to advertise to the general public.
@Christopher Blanco If your assigning a contract where you could make 20k, would you be worried about buyers seeing how much you make? I just can't see how a buyer or even a seller would be ok with a wholesaler making more then 7k-10k from a deal let alone 20k or more. In a nut shell, assigning contracts where the buyer needs to see my profit is death to the Home Run deal. It's the buyer saying "dude your making way to much on his deal which means I'm paying way to much". So..what I learned from this is assign when my spread is 5k-7k, double close when making more. Period.
If he is an experienced investor and he buys the contract from you he is going to make a lot of money. Either flip or holding on to it. If he cares and doesn't do the deal then he got nothing at all and he is not a good business man. If you have a real deal under contract you will have no problems assigning it to a good cash buyer and he will have no problem with how much you make. If you get 20K on your assignment the cash buyer will probably be looking to get close to 25-30K so he is, in most cases, going to make more than you are. If your gonna make 20K on a wholesale deal you have under contract and are scared of your cash buyer seeing what you got it under contract for, then your solution is to close the deal yourself rehab it and make 50K yourself.
@Mike Flora hits it out of the park @Kevin Jeter. If you find a killer of a deal that is going to make me money I will buy them all day, I don't care what you make. However if you are making $20K on assignment and I am trying to eek out $10K, you're right, I would not be happy. If its a win-win deal then you have nothing to hide.
Will Barnard Thanks for the advice, but why ask if I'm doing this legally or ethnically? What did I say that made you ask such a question??
You did not saying anything specifically rather, it was a general question since so many domit wrong. In addition, the questions about hiding the price to the buyer and if your buyer should see your contract led me to ask that question. If a wholesaler is worried about those things then it is quite probable that there are some legal and or ethical issues in th deal.
@Will Barnard That's simply the way you choose to think. Having the ability to see my numbers gives you an edge in negotiating. Also, can you state exactly what legal issues your speaking of? Can you be specific?
I am getting the impression you are taking a defensive stance here and I don't wish to squabble with you. There is no need to be defensive, like I stated, my response was general in nature and not specifically directed at you as I have no idea what process you used, what you negotiated or what your contract states.
I can't state any specific legal issues as. Am not aware of any that cost as I am not privy to all the details of your transaction, I simply stated that many do it wrong and run into legal troubles. In many states, wholesaling done in the manner that many perform it is not legal by each individual state laws and statutes. I am not saying you have done anything illegal.
I do not think people are trying to abuse you, but trying to point out other perspectives. If someone offered you 3 contracts (not properties because unlicensed individuals can only sell contracts and never a property or else you are asking for the state board to come calling).
- All 3 have an ARV of 1 Million dollars
- All require about $1500 in repairs
- All available for $800 cash
- All have 3 Lines of text on the contract blacked out that could say anything but you are bound by it.
Would you sign and send in the $2400 in cash to take those contracts? We are talking 3 Million upside for $2400 cash. Would you sign it over? Of course you would not. Because those 3 lines could say "Buyer pays 7 Million Dollars in scholarship funds to Sellers kids for 6 years" (in .2 point font)
Best of luck and I hope it works out in your best interest