Whats happens if you can't assign your contract to a buyer

18 Replies

Hi, I have a question about wholesaling. What happens if a wholesaler is not able to sell the house before the deadline of the contract is the wholesaler stuck with the house or does the wholesaler just cancel the contract? 

Originally posted by @John Thedford :

another [email protected] Gulleyand @Brian Gibbons !

 Your'e taking the easy way out John!!  LOL

I will too. 

Search for wholesale threads, one is "Why Wholesale" read those posts another Brian can point you to, about the Ohio Real Estate Commission. 

If you're going down that track, with this runaway freight train of wholesaling, find buyers first then contract on what they want, if you don't have a buyer leave the owner alone and don't tie up a property that could be sold. Learn real estate before trying to deal in real estate!  :)

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com

if you do that, I'll introduce you to my friends - Adrian Peterson and Ray Rice. You'll have buyers first before doing that again. Don't be focused on making money with a quick flip- focus on helping people get what they want. 

Medium investnwiAdrien S., Invest NWI | [email protected] | 219‑237‑9088 | http://www.investnwi.com

Well, if you don't have money to buy it, you will probably look to weasel out of it somehow. That's why wholesalers always seem to have at least one weasel clause in their contract with the seller. 

Whether that seems ethical or not, I won't comment. 

IMO, if the wholesaler can't find a buyer than he should close on the house himself.  Afterall, he entered into a contract with the seller to purchase the house.  It's not the seller's fault that the wholesaler couldn't find a buyer. 

In reality though, what happens in most cases is the wholesaler will cancel the contract and walk away from the purchase leaving the seller high and dry.  In fact, here's a real life example (don't be the wholesaler described here): https://www.biggerpockets.com/forums/48/topics/228448-wholesaler-misrepresented-himself

@William Brown no I don't. I don't like dishonesty, illegal dealings, and deceit. If you can "wholesale" without those qualities more power to you. I have not run into one "wholesaler" that could pass that test.

No company avatar mediumJohn Thedford, John Thedford | 239‑200‑5600 | http://www.capehomebuyers.com | FL Agent # BK3098153

I'm a wholesaler but understand the resentment towards us. The problem is gurus and even here on BP, wholesaling is pitched as the no money way to get into real estate. Most newbies get too deep before they know enough. It's a profession so educate yourself like a professional would and you'll avoid the problems that give wholesalers a bad name. 

Medium investnwiAdrien S., Invest NWI | [email protected] | 219‑237‑9088 | http://www.investnwi.com

well maybe ill start a thread

Why senior people on BiggerPockets really don't like wholesalers or at least are losing patience with wholesalers

If you think you can assign an option agreement or a sale and purchase agreement , and then sell the house by marketing-advertising the house, then you should really look at "acting as a real estate agent regulations", and examine closely your state regulations on getting a license to sell and market real estate

Once you are licensed, you can act as a principal in a transaction and usually have the state regulators leave you alone

What regulators hate, wholesalers that say that they have cash buyers and they don't, and they never close

Regulators also hate you Marketing property as an owner, and you're clearly not on title 

@William Brown

@Bill Gulley

Maybe you can talk to William about this

Medium banner reiskills 997   copyBrian Gibbons, REISkills | [email protected] | 818‑400‑3046 | http://MyREISkills.com

It seems to me that a better method for all involved is to get an option on the house that allows the seller to sell to someone else/by other means during the option period.  The upside is the "wholesaler" doesn't feel panicked trying to find a buyer and if they fail to locate one they didn't cost the homeowner any time or money.  The downside is someone could scoop the deal while your trying to find someone to assign the contract to.

Wholesaling is low on my list of what I would want to do with a property but I'm also an agent now so shouldn't have the legal issues.  However, my reputation is the most important thing so I would never want to mislead a seller Into thinking their house is "sold" when it isn't.

@John Thedford Those are some of the reasons why I wanted to make wholesaling my entry point into real estate. Its seems like there is a lot of wholesalers making a bad name for others.  I figure if I can find a way to become a legit wholesaler and do it the right way I would do better than others.

is calling the 6-8 cash buyers I have that constantly buy and telling them I have a property considered marketing? No craigslist ads, no bandit signs, no BP ads, but just a couple of phone calls and an email with details. Does it matter that I can close if needed? Sometimes it makes sense to assign and not pay closing twice. And keep in mind, these are properties that the owner either can't or doesn't want to list with a realtor. A good wholesaler doesn't go to a decent house, twist the owners arm into a 50% offer, and then weasel out of the contract.

Medium investnwiAdrien S., Invest NWI | [email protected] | 219‑237‑9088 | http://www.investnwi.com

@Brian Gibbons You should start that thread to see what people think about wholesalers. The thread would have some good advice for wholesalers.

Originally posted by @William Brown :

Thank you all for your information it is very helpful.  But it seems like you guys hate wholesalers.

@Bill Gulley

@Brian Gibbons

@John Thedford

@Adrien Chabot

@Kyle J.

@Steve Babiak

I actually don't hate wholesalers.  Not even sure where you got that from.  You asked a question and I responded to it and even directed you to a similar thread directly on point. 

I don't see where the other people you tagged wrote anything to show they hated wholesalers either.

Originally posted by @William Brown :

@John Thedford Those are some of the reasons why I wanted to make wholesaling my entry point into real estate. Its seems like there is a lot of wholesalers making a bad name for others.  I figure if I can find a way to become a legit wholesaler and do it the right way I would do better than others.

 If you get your NV real estate sales license, and get a coach like me, you might be able to be a "solutions provider" for the seller, and make $100K per year or more.

@Dev Horn

Medium banner reiskills 997   copyBrian Gibbons, REISkills | [email protected] | 818‑400‑3046 | http://MyREISkills.com

@Brian Gibbons That's what I Im going to do get my license and do it the right way.

@Kyle J. I know you don't hate them but from the answers it just seem like some people think that wholesalers aren't doing there job right and it's annoying.

@Adrien Chabot Yea that's what I'm doing now trying to educate myself so I understand how everything works so I can do it the right way. Thank you for advice.

@Lee S. That's a good idea I didn't think of that thanks for the advice.

@William Brown

Do not start by trying to figure out strategies to get into real estate. Start by LEARNING real estate, that means get a book written for agents to study for their test. If you want to do things the right way, that is where you begin. 

If anyone got through the 10th grade, they should be able to learn real estate by reading a text book and taking the quiz at the end of each chapter. You can get a used text on Amazon, the basics of real estate haven't changed so an older text is fine. When you read one, you can ignore the HUD-1 because that is changing, you can read about that on the CPFB website.

You will not be learning real estate from any guru, they sell a product and it's not a real a estate education.  

Glad to hear you're going to get a license and do things right, my bet is, that after you learn real estate and get a license, you'll see that you don't need to wholesale!  :)

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com