Rental Property Investor · Emmaus, PA · Member since 2021 · 154 posts · 85 votes
Good morning - I am looking for any advice that may be given on wholesaling. Specifically any special nuances that I may need to be aware of.
For example - If I have a property under contract for $100,000 and I assign it to an interested buyer for a price of $150,000, what else needs to be done? Is the process as simple as that, or (as I am expecting) is there more steps in the process that I am missing.
As a side note - I am not necessarily looking to wholesale, but I do have a property under contract for a good price, and if my personal plans to purchase it fall through, I wanted to get familiar with the requirements to complete a wholesale to use as a plan B.
Great question, Kyle. The overall process is pretty straightforward, but there are a few key things to know to make your wholesale deal go smooth.
Make sure your original purchase contract is assignable. Check your agreement, there should be language that lets you assign the contract to another buyer.
You need a separate assignment agreement with the end buyer. This states you are transferring your rights under the original contract for a fee (in your example, $50,000).
Send both the purchase contract and assignment agreement to your title company or closing attorney so they know exactly what is happening.
The end buyer brings the full $150k to closing. The title company or attorney splits the money $100k goes to the seller, $50k goes to you as the assignment fee (sometimes called a wholesale fee).
Make sure everyone is clear about who is paying closing costs, and double-check that your assignment fee is disclosed as needed in your state.
A couple tips:
Always be upfront with your seller that you may assign or bring in a partner, just to keep everything transparent.
Use a title company or attorney who has closed wholesale deals before, they will catch any issues and keep you out of trouble.
If you want sample contract language or assignment paperwork, just let me know. Happy to help!
Investors may not like how much you are making. So, you may have to double close. If I were you, I would first try to build a buyers list before I lock up property, get a sense of what type of numbers the investors would typically pay and then try to stay under those nunbers. You dont have to try to match exact dollar amount but some napkin numbers and then you can negotiate with buyers. Lot of wholesales advertise on facebook groups. Try to talk to couple of them to see if they can help you dispo your deal.
At a high level it can be as simple as contracting at $100,000 and assigning at $150,000, but the key nuances are making sure your contract allows assignment, working with a title company familiar with assignments, and most importantly having real buyers lined up ahead of time. From my experience, the biggest risk comes when you secure a deal and then try to figure out who the buyer is after the fact. Having a few solid buyer relationships first gives you clarity and makes that backup plan much more reliable.
Great question, Kyle. The overall process is pretty straightforward, but there are a few key things to know to make your wholesale deal go smooth.
Make sure your original purchase contract is assignable. Check your agreement, there should be language that lets you assign the contract to another buyer.
You need a separate assignment agreement with the end buyer. This states you are transferring your rights under the original contract for a fee (in your example, $50,000).
Send both the purchase contract and assignment agreement to your title company or closing attorney so they know exactly what is happening.
The end buyer brings the full $150k to closing. The title company or attorney splits the money $100k goes to the seller, $50k goes to you as the assignment fee (sometimes called a wholesale fee).
Make sure everyone is clear about who is paying closing costs, and double-check that your assignment fee is disclosed as needed in your state.
A couple tips:
Always be upfront with your seller that you may assign or bring in a partner, just to keep everything transparent.
Use a title company or attorney who has closed wholesale deals before, they will catch any issues and keep you out of trouble.
If you want sample contract language or assignment paperwork, just let me know. Happy to help!
Great question, Kyle. The overall process is pretty straightforward, but there are a few key things to know to make your wholesale deal go smooth.
Make sure your original purchase contract is assignable. Check your agreement, there should be language that lets you assign the contract to another buyer.
You need a separate assignment agreement with the end buyer. This states you are transferring your rights under the original contract for a fee (in your example, $50,000).
Send both the purchase contract and assignment agreement to your title company or closing attorney so they know exactly what is happening.
The end buyer brings the full $150k to closing. The title company or attorney splits the money $100k goes to the seller, $50k goes to you as the assignment fee (sometimes called a wholesale fee).
Make sure everyone is clear about who is paying closing costs, and double-check that your assignment fee is disclosed as needed in your state.
A couple tips:
Always be upfront with your seller that you may assign or bring in a partner, just to keep everything transparent.
Use a title company or attorney who has closed wholesale deals before, they will catch any issues and keep you out of trouble.
If you want sample contract language or assignment paperwork, just let me know. Happy to help!