Purchase Contract (Assigned from Wholesaler)

[Travis H.]

Howdy!

I am getting set up with wholesaling, and wanted to get your opinions, as investors who are purchasing assigned contracts from other wholesalers.

I have read that it is beneficial to closing the contract with the seller to have a very brief contract written in plain english as opposed to the longer official state contract (TREC contract in Texas).

I have drafted a version of this wholesaling contract, it has two or three clauses that will protect me in case I need to get out. My question to you is - are you folks comfortable with purchasing a contract like this, or would you prefer a TREC contract? If you are ok with a custom wholesaling contract, what clauses do you need in it to protect you after I assign it to you?

Thanks!

[Scott Hubbard]

When offering on a FSBO property, it will be much different than if your offering on one that is in the MLS. Typically your outs a ten day inspection period if your offering cash or a ten day inspection period and financing contingency with non-cash offers.

With most MLS properties, you will need to use a TREC contract especially if it is an REO. However, with an FSBO, you will have flexibility with your terms to really make it pro-buyer.

1. Your earnest money should be low enough that if you have to walk-away it will not hurt.

2. Make sure if the buyer fails to perform that the earnest money shall be considered in lieu of the execution of this contract and shall be released as liquidated damages and for full settlement of any and all claims or damages.

3. Under inspections, I have a clause that the seller is responsible for repairs that exceed a certain price that I determine before offering. This allows me to ask the seller to bring cash to the table or allows me an out.

For instance, the seller says the HVAC is working fine an I bring in an inspector who says it is on its last legs, well this can greatly change the value and I want to be able to go back and ask for a price adjustment.

This is what i would suggest you have in your agreement. I am sure other will share other strategies.