Investor · Cary, NC · Member since 2008 · 218 posts · 29 votes
I plan to find an end buyer and have the seller buy me out of an option contract that I have with him. Before we break contract, however, we will both sign a promissory note stating that he will pay me the difference in the option price I had with him and the option price agreed with the end buyer that I found; I will get paid from the title company as a lien holder at closing, simply having them wire my fee to my bank account and me never having to be at closing.
Can someone please explain the process of doing this? Does anyone know/have a promissory note template? Which contracts should be used?
Sorry I know this isn't your typical wholesale....any help is appreciated.
John Alexander has a course on this, not bad info, google it and get a copy of the information and beware the pitch to get into coaching. You just need the info and the time to set it up.
You can find a good promissory note online, then just have the seller sign the note and take it in to put a lien on the property that way you will ensure that the title company sends you a check.
I would suggest checking with the title companies in your area to see what they are going to require at the closing of the exercised option
To set up the deal just put the home under lease option with the seller, then bring your buyer into the deal. At the time that the buyer signs a p/a with the seller, then do your promissary note.
Would I not just have the seller "buy me out" of my option by signing a promissory note and then sending him directly to my buyer to sign the p/a contract with?
Had the end buyer write up a contract to buy directly from seller subject to my PA (or option) being released.
I then had the seller pay me off with a note and TD on the property which was paid off as a lien in escrow. Remember to submit a payoff demand to escrow.
If your profit is large, share some of it with the seller or use another method.
But this avoids double closing costs, transfer taxes.
Are you doing this to prevent your buyer from knowing what you are making? If NOT...
I would keep it simple. Since you have an Option to Buy the property of the seller, why not just sell your Option to your buyer. He/she takes over your place and in exchange you get the CASH from your buyer. If this is truly a good deal, your buyer should have no issue with you making a big wholesale fee.
If you are hiding from your buyer what you are making...tough luck. You should have full disclosure because...
title companies require full disclosure on what every party in the transaction is getting (more and more of them are doing that right now and as a wholesaler myself, I have no issues with this as my buyers love the deals I am passing to them so they don't care how much money I make).