I've been wholesaling for a bit now, and my current process is:
1. Get purchase contract signed by seller
2. Find new buyer, assign contract & get their EMD in escrow
3. Escrow instructions then go out to the seller with the new buyer's name
I've noticed that the lag time caused by item 2 (usually a week or more) causes some sellers to get antsy (I suspect I lost a decent sized deal recently because of this).
Basically, I'm looking for a quicker way to get escrow instructions signed by the seller (i.e. right after I get the purchase contract back signed); I feel like this will make everything "official" in the seller's mind & put them at ease. Is this possible, considering I'm not actually going to be the end buyer? I'd be sending out instructions before I actually have a buyer- so who would show as the buyer on the instructions?
transactional funding is what you want... do you tell them up front your just flipping the property with no intention of purchasing... if you are then they should not be spooked right?
if you don't want to reveal you will not be the end buyer, then transactional funding is your best bet. Get your transactional funding in place and execute a double closing.
Check with your title company some will allow you to double close using solely the end buyers funds.
I tell my sellers upfront that I very well might now be the name on their check. I explain that I work with other investors/private funds so often my name might not be on their closing paperwork. I have never had an issue. This is both double closing and assignments.
Personally if there is less than 10k on the table for me I assign. More than 10k I double close.
I can describe what I have done to keep the seller at ease as well as keep myself in the clear if I am unable to find the buyer. I am not 100% sure that this will answer the question that you asked. I would say speed is not what you need, manage the sellers expectations!
In the contract that I use I added an additional line to the purchase price and deposits. I have a stipulation that earnest money is only due at the end of the inspection period. The details help the home owner so you can referrer to exact line in the contract. "EMD to title by 5 pm on the last day of the inspection period" (hopefully 10-30 days after beginning of contract). If the seller is worried at all about the emd not being in, I just let them know that I am still working on my due diligence I will have it by the final day of inspection. I should have a buyer by this time, if not than I will cancel of take down the property myself.
Thanks for the responses guys.
Yes, I let every seller know that I'll be assigning. But I still feel like if I could get escrow instructions in their hands sooner (rather than having a one-two week delay while I find a buyer), they'd be less likely to talk to other buyers/decide not to sell/etc. Based on the responses here, it looks like a double close is the best way to do this.
Next question - does anyone have a good, cheap escrow that does double closes in CA? The few I've come by out here are super expensive & way slow to respond (again, speed is of the essence here).
They can't "choose" to sell to someone else while they are under contract with you. Your P&S is a legally binding agreement. It all depends how hard you want to play it. But legally they have to sell to you at the agreed upon price or you could sue. If it's an owner occupant I give them some grace. If it's an investor/rental property it is a business transaction and both parties are required to uphold their end of the deal.