What happens if you cannot sell a wholesale deal?

Question

From what I understand, Whole Salers get deals under contract for less than market value and sell the rights to purchase the property to the highest bidder.  This is  accurate, correct?  As a whole saler you are under contract to purchase a property.  What happens if you cannot move a deal?  Do you purchase the property or cancel the contract?

Account Closed · Answer

Put an option to buy one page contract on the property. 30 day period.

Jacob Sampson · Answer

There are many ways to wholesale.  The ideal is to never actually own the property, but there are times when you do end up purchasing.

I would make sure to discuss these options with the seller before you get it under contract.  Come up with a plan that both of you agree with.  Barring that, you can pass on the deal and hope they don't try to enforce the deal legally.

Matthew Krickeberg · Answer

@Bill Plymouth

Great question, I'm right there with you. New to REI and stumbled on to an opportunity to wholesale a local vacant property. I've been making progress with the out of state owner and am beginning to realize this deal could happen soon. I've been poring over Brandon Turner's No/Low Money Down chapter on wholesaling to get up to speed.

(I'm not interested in wholesale in the long run, but it was an opportunity I couldn't pass up to create some funds for my first buy and hold rental!)

It seems to me you can add a contingency for financing and/or finding a buyer (or just about anything else you both can agree to), but I'd like to hear from some experienced wholesalers to verify.

Jim Viens · Answer

Ideally you should be prepared to close on it yourself and continue trying to find an investor-buyer.

Kevin Whisler · Answer

Have a due diligence contingency built into your contract; so earnest money deposit would be submitted after a 5 or 10 business day period contingent on your partner, contractor, funding, etc. I mean it could be your family dog for crying out loud. But the point is, the due diligence period is a window where you can wholesale the property and have the buyer submit deposit so you dont have to come out of pocket. And if you can't sell it during that 5-10 day period, you're off the hook.

Bill Plymouth · Answer

Thank you all for your input!

What happens if you cannot sell a wholesale deal?

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