Originally posted by @Account Closed:
My subject is not direct, but a legitimate question.
I recently got a prime follow up call for a prospect that could absolutely be wholesaled. Upon making an offer and coming to negotiating terms with the seller, I needed to find an attorney who is familiar with how wholesaling works. .....
After several phone calls with attorneys, I have not gotten one single attorney who wants to deal with wholesaling because it is a "dishonest" thing to have the seller under the impression that YOU are going to close on the property and/or it is a waste of their time because "most of the time these assignments of contracts never work out".....
After giving it some serious thought, it does seem pretty dishonest to mislead the seller into believing YOU are going to close on the property and then worst case scenario ending up voiding it all together through a "weasel clause" and wasting everyones time....
My question is.... can anyone convince me this is not a dishonest business and also is it possible to find an attorney willing to work with you without actually being dishonest with him too.
Wholesaling Houses Ethically...
Thank you for taking the time to write this very important question.
The answer is actually much simpler than you might imagine. As a Broker, Realtor® and Investing Wholesaler myself, I can only imagine what the Attorney may have been thinking when you described your deal.
A MAJORITY of the problems that newer Wholesaling Investors have when dealing with agents and Attorneys is the language that you use.
When you say things like "flipping the house prior to close" or "using the end use buyers funds to close" or other "industry vernacular" then it is akin to an attorney expecting you to know what "Anticipatory Breach" is.
Truth is, we as investors and agents are judged by the language you use.
Instead, change the dialogue from whatever you are currently saying to "assignment of contract" which is the legal term for a majority of what you are doing.
By simply using the correct language, you will eliminate 90% of the problem.
Dishonest Business?
In your question about "can anyone convince me this is not a dishonest business..."
Well, I won't try to convince you. I will demonstrate however the fallacy of this line of thinking.
Chances are, you've not given a single thought to the Nike Shoes you are wearing that were most likely created in a Vietnamese sweatshop by children who cannot afford to wear the shoes you throw away.
Chances are, If you are like me, you haven't given any pause to the fact that Apple, who made this Macbook Pro I am writing on, routinely creates jobs overseas so they can legally avoid paying taxes in the United States.
Dishonest? That is simply a question of perspective.
If you lie to the Seller about your intentions, then perhaps that might be dishonest.
However, I tell my Sellers that not only am a licensee, and that I am not working in their interests... but that anything they say... "Can and will be used against you in negotiations." I tell every Seller (in writing) that my intent....
Buyer shall not reside in the premises.
Buyer shall lease, rent, repair, assign, or sell for profit.
Wholesalers provide a useful function in the marketplace. They are, to my estimation, the sum total of what an Investor should aspire to be.
A rehabber can fix and sell. Thats a tough job. A Landlord can figure out CAP Rates and handle tenants... thats another tough job and skillset.
However, to the man or woman who is ALWAYS in the know about the BEST deals...
Their future is assured.
Finding Attorneys...
If your concern is finding an attorney to close the deal.. then it is because you are telling them in advance of your intent to do a wholesale deal. Big mistake in my mind.
Not saying that you should lie to anyone... of course not.
However, you need to keep your options open.
Approach every deal as though you personally could do it yourself. Trust me... if the deal is a really good one, you will have people who will help you repair and sell it.
Keep your options open. Maybe you will decide to sell it via assignment of contract. Maybe you will close with transactional funding and sell it 20 seconds later. Who cares. Either way, you are keeping your options open.
In conclusion, Assignment of Contract (aka wholesaling) is legal. Dishonesty is if you lie. Disclose your intent to resell for a profit as I do if you are concerned about it, and keep your options open.
That way, you will win!
Have a Powerful Sales Day!