Contract from a wholesaler

16 Replies

Dear BP,  

I am trying to buy a property from a wholesaler. He/she sent me a standard Florida FABAR contract which is between the seller and the wholesaler and then an assignment contract which then assigns the  contract over to me. On the assignment contract it states what the purchase price will be and the deposit.

My question is that the original contract between the seller and wholesaler has no purchase price, it only shows the requested deposit amount. Doesn't that make it an illegitimate contract? Is this standard? Should I be concerned with this? 

Wholesalers how do you normally assign your deals?

Any input is appreciated.

if they are not licensed and they did not own the property they are operating illegally whether there is a purchase price or not

Thanks John. I know it's legal to assign a valid contract to someone else. Or an option to buy property. But my main concern is that the contract they are assigning is not legal and I'm going to be at risk of losing my deposit. 

I'm not sure how them being licensed plays into it? I guess because they are selling property and collecting a comission or assignment fee. I'm honestly not sure if they're licensed but my bigger concern is whether I'm at risk of losing my deposit.

Keep in mind they have no accountability if they are not licensed unlike a licensed agent which can be reported to the state, has E&O insurance, etc. People using contracts to circumvent licensing law are indeed acting illegally. Did you do an inspection of the property?

FYI-assignment clauses were never meant to be used to circumvent licensing law. I always make my contracts assignable, and then decide which entity I will hold title in. Other LEGAL uses would be to take on a partner, tie up a property for a relative and then assign to them (without a fee), etc. Strictly tying up properties and then assigning IS illegal under 475.42. See also 475.43. I saw two people recently get a cease and desist and another operator get issued a citation by the state (got that in the mail today). I turn all of these scammers in. When you are bringing an end buyer, that IS a brokerage activity regardless of what the propaganda artists propose. If this "wholesaler" got you access to the property (as they usually do), then they were showing you a property for sale they do not own which is a brokerage activity. I know this does not answer your original question, but wanted to at least offer some education about dealing with "wholesalers" whether licensed or not. If licensed, I would still question the validity of the contract without a price and would NEVER pay a non-refundable fee. If you insist, at least take it through a title company and get it in writing concerning a EMD and the terms on which you would be willing to forfeit it.

@Jim Hiler There must be a sales prices in the contract to make it a solid contract  between the whosaler and seller . Ask the whosaler this question.  Why is there no sale price in the contract .    Drop your deposit to the title company in person. Instead of giving it to the wholesaler.  So you won’t lose your deposit. 

@Jim Hiler   the wholesaler you are working with doesn't seem to know what he is doing.

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@Jim Hiler You should be seeing the original purchase agreement and it should have the purchase price.

Thank you everyone 

This wholesaler is attempting to assign you a contract without a purchase price. That's the most important element of the contract. Are they planning on writing it in later and hoping you don't notice? 

If you accept the assignment that contract is yours. I'd want to know what price I'm purchasing the house for. 

@Nick C. The purchase price is on the assignment contract but it's not on the contract between the seller and wholesaler which is being assigned to me.  I assume it's because he doesn't want me to see what number he agreed to with the owner but I also believe that without a purchase price the contract he sent me is not valid which makes the assignment void and therefore doesn't give me any right to buy the property.

In my understanding a contract has to clearly state what's being exchanged or traded for what. If it doesn't I believe it's not valid...But I'm not sure how wholesalers normally issue their contracts that's why I posted this.


It would be great to hear from a wholesaler in South Florida.

Originally posted by @Jim Hiler :

@Nick C. The purchase price is on the assignment contract but it's not on the contract between the seller and wholesaler which is being assigned to me.  I assume it's because he doesn't want me to see what number he agreed to with the owner but I also believe that without a purchase price the contract he sent me is not valid which makes the assignment void and therefore doesn't give me any right to buy the property.

In my understanding a contract has to clearly state what's being exchanged or traded for what. If it doesn't I believe it's not valid...But I'm not sure how wholesalers normally issue their contracts that's why I posted this.


It would be great to hear from a wholesaler in South Florida.

yup a wholesaler who Is probably trying to rip a big fat fee out of the deal and does not want yo freaking out.. I would put in a back up offer with the seller.. chances are wholesaler has no money to close and you just buy it direct.. IF the wholesaler cant close or sell it to someone else.. but to just have a blank contract no one does that.. Remember in these deals your not bound by any code of ethics.. You have the right to make a back up offer in second position to this guys offer that is in first position.. happens all the time on MLS so there is no reason you cant do it out in the open market..

Yep, a wholesaler trying to hide his and also has no clue what he’s doing if the purchase contract has no price......not unusual for the new crop of wholesalers.

BTW, look up the owner/property and check gif liens/mtgs/taxes.....these guys seldom check this out.

@Jay Hinricks Thanks. I did try to contact the owner directly by writing him a few letters but did not get a response. 

How can I make a back up offer if I can't get a hold of him?

Thanks @Wayne Brooks. I just called the sellers closing agent. He seems legit and claims he has a fully executed contract with purchase price on it between seller and wholesaler. 

So I may sit on it and issue a contract direct to the closing agent in a day or so.

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