Wholesale a seller finance deal

3 Replies

For my deals I do cash or hard money only. I currently have a deal that I'm wholesaling and the seller is another investor and asked me to find an end buyer and he'd be willing to do a seller finance option. I've found a buyer and he's given me an offer that includes seller financing and I think the seller will accept.

my question is if he accepts this deal then how do I get paid my wholesale fee?

@Christian Marin As with any wholesaling deal you've got to have a spread between the what the seller is selling at and what the buyer is buying at.  With this you would probably want to get some money down from the buyer of which you'll take a cut or all.  Alternately you could simply assign the deal to the buyer for your fee.

@Christian Marin I would get an option to buy on seller financing and record it 

 In the option it would state all the terms of the deal 

 Then I would sell or release my option for a fee 

 Florida is a little sticky about assignment contracts without a license 

I'd say you're really stepping into the muck,  representing the seller clearly if the buyer is contracting with the seller and you seeking a fee without a license.

And, you can't assign a financing agreement held by a proposed lender, nor make a commitment to do so in blank, the seller must consent directly with the borrower.

What I'd do is to buy the property seller financed with a short balloon and then sell it to my buyer with the note holder accepting a new note from that buyer as payoff.

Or, buy it with the note being assumable with qualification and consent of the note holder.

Either way, Dodd-Frank may apply since you are not living in the property or since you're flipping the property. Any option made with a seller financed arrangement made is also subject to lending requirements, and, you option may appear as more of a disguised sale than a true option. Florida doesn't like options that are sale agreements and you'll likely be giving money back thinking it's yours from an option fee, if it's not an option there can't be an option fee. Funds become a down payment on a property you can't sell and you'll be giving it all back.

If I did an option and just sold the option, I'd let the seller and buyer agree to their own financing. At that time, you have an opportunity to co-sign the note with the ability to buy the property in the event the buyer defaults through an assumption of that note, since you co-signed it.

My fee would be from assigning the option, up front as mentioned.

Your buyer can also pay you to co-sign the note, staying away from wholesaling anything and letting the buyer and seller deal together.

I suggest you get with your attorney before jumping into this.  Good luck :) 

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