Questions on the Wholesaling process

5 Replies

OK. So I have been doing a lot of research and reading on wholesaling. I have not yet done any sales or assigned any contracts. I have been trying to get as much information as I can before I actually get into it. 

So my question is this:

What happens after you get a property under contract. I understand that you need to then find an investor buyer to assign the contract to but I have noticed some mention of having to send the contract to a Title agent or having it in escrow.

What is that process and what is the meaning of escrow?

Also what happens if you get a property under contract but you cannot find an investor buyer for the property? are you then liable for having to purchase the property or is there a clause in the contract to avoid such an issue?

Originally posted by @Blake Reynolds :

OK. So I have been doing a lot of research and reading on wholesaling. I have not yet done any sales or assigned any contracts. I have been trying to get as much information as I can before I actually get into it. 

So my question is this:

What happens after you get a property under contract. I understand that you need to then find an investor buyer to assign the contract to but I have noticed some mention of having to send the contract to a Title agent or having it in escrow.

What is that process and what is the meaning of escrow?

Also what happens if you get a property under contract but you cannot find an investor buyer for the property? are you then liable for having to purchase the property or is there a clause in the contract to avoid such an issue?

So I am no pro on this. Escrow is the closing company that handles all the paper work and $. Once you have a signed contract you will need to send it to your escrow officer. Once you find a buyer then you will send the assignment contract to your escrow officer.

You will probably need to put earnest money down once you have the signed contract this should be $500-$1000 dollars. now if you don't find a buyer you could lose your earnest money.

I am very new to this process so take this with a grain of salt.

@Elliot Smith

Thank you, that makes a little more sense now. 

So does the earnest money go to the current homeowner once the contract is signed or does it go to the closing company?

Blake -

I went to a local REIA meeting and the investors told me exactly what they wanted. How much profit they needed per deal, how much they pay ( 70% of ARV in some areas and 75% in others). They even gave me a copy of the property analysis sheet they use to determine if it is a good deal for them.

  To make a long story short ... I know exactly what they will buy. Find buyers who will tell you what they want.

@Darrie Bennett

Thank you for the advice! 

I am planning to attend one of my local RI meetings soon. I hope that will be a big step towards making some connections with investors in the area.