Assign a contract to a real estate agent's property on CL?

Question

I have a situation and need to go the best way to proceed on this? An 60 year old investor, Anthony, who lives in Tennessee had a family member/friend post a bandit sign near University of Denver campus "need to obtain a house pronto" for his sister in law, who resides in Colorado. Fortunately, I got a hold of him and he is open to me helping him find houses, and eventually get his sister-in-law to select the house of her choice.

My goal is negotiate with a seller who agrees to sell a house and ultimately, assign a contract so I can obtain my first wholesale deal. I understand I'm better off search houses marketed on Craigslist (of course those without real estate agent involved), or properties off the MLS, which I may find under county websites - i.e. properties on foreclosure, auction, etc.

Will I be able to still assign a contract for a house on say, for instance, foreclosure (or under probate, other off market scenarios, etc) and still be able to arrange seller financing?

How do I make sure I still get my $5000 profit for wholesaling it. Would I need a real estate attorney to expedite this assign of the contract, closing costs, etc.?

thanks for any input

Drew Fein · Answer

This scenario sounds like unlicensed real estate brokering to me, too. As @Matt M. alluded to, if you violate Colorado's Foreclosure Protection Act laws, you don't get a civil penalty - you go to jail. So purchase foreclosure properties with caution.

This post does not constitute legal advice and does not establish an attorney-client relationship.

This post does not constitute legal advice and does not establish an attorney-client relationship.

Bill S. · Answer

@Robert Uceda not sure where to begin. Typically wholesaling begins with finding the property not a retail buyer. The typical buyer of a wholesale property has the whole purchase price in cash or a hard money loan to cover the gap between their cash and the purchase price.

There is little to no chance of seller financing a foreclosure. The seller is behind on payments and so can't pay off the loan to offer seller financing. You might be able to do a "subject to" deal where your buyer brings the delinquent mortgage current and then "takes over" the payments for the seller. You should do some serious learning on this because it's complicated and there are strict laws in Colorado governing the purchase of homes in foreclosure.

Something to think about is that there are far more buyers in our market than sellers. It's easy to find someone that wants to buy a home. It's far harder to find someone who wants to sell a home, much less so someone that is willing to sell at a discount.

The scenario you painted is very very close to brokering which requires a real estate license in Colorado. If you were to initiate a deal under the basic premise described and it goes badly, you could easily find yourself in trouble with the real estate commission.

Something to think about, if you had a license you would likely collect quite a bit more than $5k for putting together the deal you described above.

Matt M. · Answer

Just what @Bill S. said. You are brokering a deal and would need a real estate license.

About the bandit sign: What you probably ran into is another wholesaler looking for deals and will use you to bird dog. Not a bad thing, but he should be up front about it.

Find your own deals first, then wholesale. Be careful with foreclosures as you can get in serious trouble if you don't know what you're doing.

Luke Miller · Answer

Hey @Robert Uceda not trying to tell you how to run your business, but as a wholesaler you shouldn't always expect a $5k commission. Usually wholesaler commissions are based on the deal. I would have a really hard time paying a $5k commission if the deal is crap, but if you were to negotiate with me and offered to take a $2k commission on the crap deal to make it more appealing in exchange for a $7k commission on a home-run I would jump on it. That's usually how you build relationships with buyers.

James Green · Answer

@Robert Uceda, why do you think you're .."..better off search houses marketed on Craigslist (of course those without real estate agent involved), or properties off the MLS, which I may find under county websites - i.e. properties on foreclosure, auction, etc." ?

You need to do a lot of reading up on what is wholesaling. You can't assign bank own properties,..period. Not in any city in any state in the US. There is a way to wholesale bank owned properties, but if you've never done a wholesale deal trying to mess with banks is a lost cause.

Have you checked out all of the resources on BP, about wholesaling?

Assign a contract to a real estate agent's property on CL?

Assign a contract to a real estate agent's property on CL?

Most Popular Reply

5 Replies