For purposes of simplifying, I will use round numbers.
I have a seller (family member) looking for $100,000 for his property. I have an investor that is willing to pay $120,000 for the property. I was looking to see if there was any legal agreement in which the seller agreed to pay me anything in excess of the $100,000 paid for by the buyer (anything besides me setting up a wholesaling agreement). Any advice? How can I set up this transaction?
I hope you don’t plan on being on good terms with this family member afterward.
@EDWARD M. If you're a licensed real estate agent, what you're describing is called a "net listing" and is most likely illegal in NJ. It certainly is here in MA.
If you're NOT a licensed real estate agent, you are marketing a property that you don't own, which is illegal in most states. Again, it certainly is here in MA, but you should contact an attorney or read the NJ Real Estate Commission's rules for yourself.
But even worse, you're intentionally screwing a family member out of $20,000 so you can stick it in your own pocket.
People wonder why wholesalers have such a bad reputation. This is Exhibit #1.
Tell the family member and put it on the HUD as a lien.
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