Talking about contract terms when planning to assign the contract
Rental Property Investor · Central, CO · Member since 2015 · 69 posts · 11 votes
Talking about contract terms when planning to assign the contract
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Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes
10yOr you could just tell them exactly what you are doing and that you need to find a buyer (assuming you can't close alone). To find a buyer, you need to show the house.
If you can't close yourself- be upfront with how you can help them and exactly when you need them to do. They have a problem- you have a solution (that is outside the box for most people) so be super transparent on the front end to avoid stuff like this on the back end.
25 Replies
- Investor · Owasso, OK · Member since 2013 · 166 posts · 90 votes10y
Originally posted by @Andrea Tapp:
How do you share information with your sellers when you are planning to assign a contract to another buyer? Do you disclose to your sellers that you are going to be selling the home immediately to another investor and ask them if you can show their home? We have 2 homes currently under contract and some of our buyers are asking to look at the homes and our sellers are questioning if we are reevaluating the deal? I informed the sellers while signing the contract that we would like access to the home before closing to bring in some contractors and also to bring in some other investing partners to look at the house. They agreed at that time that would be okay. But now they are questioning what we are doing?
So main question... How do you talk with your sellers in the very beginning about showing their home to other investors before closing?
Thank you!It sounds as if they were not explained the situation. They assume you are the buyer.
- Real Estate Investor · Shelton, WA · Member since 2013 · 369 posts · 639 votes10y
Hey @Andrea Tapp
I have the following in my purchase and sale agreements and overly emphasize it when walking the seller line by line through the contract before they sign it."INSPECTIONS: This contract is contingent upon the Buyer’s and Buyers’ Partner inspection and approval of the property prior to transfer of title. Seller agrees to provide access to the Buyer’s representatives prior to transfer of title for inspection of the property. Inspection must pass Buyer and Buyers’ Partners Inspection Process. "
I tell sellers that i plan on bringing on a partner/other investor in the project (which is the truth; if options for buying it fall through, i wholesale) and let them know that prospective partners on the project will also want to do a walk through.Lloyd Stanton.
American.
- Rental Property Investor · Central, CO · Member since 2015 · 69 posts · 11 votes10y
thankyou @Scott Carder and @Account Closed.
I did share with them at signing that i would like to bring inspectors and investing partners through to view. I appreciate your thoughts.
Lloyd, thankyou for explaining what you do.
Do you just set up individual appointments with your buyers and sellers when doing that walk through? Or do you ask the seller to put a lock box on the house? I know some wholesalers will put a lockbox on the house and i wasnt sure how to discuss that with the seller so that they would be comfortable with people walking through their home?
- Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes10y
Or you could just tell them exactly what you are doing and that you need to find a buyer (assuming you can't close alone). To find a buyer, you need to show the house.
If you can't close yourself- be upfront with how you can help them and exactly when you need them to do. They have a problem- you have a solution (that is outside the box for most people) so be super transparent on the front end to avoid stuff like this on the back end.
- Real Estate Investor · Shelton, WA · Member since 2013 · 369 posts · 639 votes10y
I've heard of folks requesting/requiring a lock box on a wholesale property; however, I personally would never ask that of a seller as i would never want the keys to my house hanging on the doorknob outside!
I usually give the seller's a day or so notice, and definitely at their convenience. If you've got more than one buyer wanting to look, get a few together at once that way you're not inconveniencing the seller.
- Rental Property Investor · Central, CO · Member since 2015 · 69 posts · 11 votes10y
Great advice! Thankyou so very much! Right now we are either wholesaling by assignment or interested in doing subject to's, while we are beginning to look for private lenders to help us purchase deals. So I love your advice. We are learning how to navigate through all of this. Thank you again!
- Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes10y
Originally posted by @Account Closed:
I've heard of folks requesting/requiring a lock box on a wholesale property; however, I personally would never ask that of a seller as i would never want the keys to my house hanging on the doorknob outside!
I usually give the seller's a day or so notice, and definitely at their convenience. If you've got more than one buyer wanting to look, get a few together at once that way you're not inconveniencing the seller.
It's a lockbox so one would need to know the code to open it to get the key. It also makes a big difference if the house is vacant or occupied. Wholesaling an occupied house is one heck of a challenge if you don't have a buyer that trusts you enough to purchase based on your past dealings. Most sellers of vacant houses have a big enough need to sell that they are ok with a lockbox on the house.
- Real Estate Investor · Shelton, WA · Member since 2013 · 369 posts · 639 votes10y
One neighborhood junkie would need less than a minute to pop that little lockbox open.
http://fox40.com/2014/09/16/real-estate-agent-finds-squatters-in-for-sale-home/
Having a lockbox on a wholesale deal definitely gives you ease of access at your convenience, but in my personal opinion, that convenience isn't worth the liability of something happening to the property while i was responsible for access. Just my opinion. If it works for others, keep on keepin on!
Lloyd Stanton.
American. - Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
Originally posted by @Andrea Tapp:
How do you share information with your sellers when you are planning to assign a contract to another buyer? Do you disclose to your sellers that you are going to be selling the home immediately to another investor and ask them if you can show their home? We have 2 homes currently under contract and some of our buyers are asking to look at the homes and our sellers are questioning if we are reevaluating the deal? I informed the sellers while signing the contract that we would like access to the home before closing to bring in some contractors and also to bring in some other investing partners to look at the house. They agreed at that time that would be okay. But now they are questioning what we are doing?
So main question... How do you talk with your sellers in the very beginning about showing their home to other investors before closing?
Thank you!They are questioning what you are doing? You are acting as a real estate agent without a license.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
This is from the OK Real Estate Commission Website:
Complaint Process - Investigations
What Happens After a Complaint is Filed?
The Oklahoma Real Estate Commission will initiate a formal investigation upon the filing of a formal complaint by the public or the "Commission," when the complaint alleges a violation of the licensing law.
You should not file a complaint with the Commission in hopes of changing an agreement, voiding a contract, or attempting to solve a civil dispute. In those cases, you should consult with an attorney.
The complaint should consist of a brief explanation of the facts, presented in the order in which they occurred (i.e. chronologically). Copies of documents, such as contracts, closing statements, cancelled earnest money checks (front and reverse), or any other article that will assist in validating your grievance should be attached to the complaint. You should PRINT or TYPE the complaint, and you should avoid expressing your conclusions or opinions.
After filing the complaint with our office, the Investigation Department conducts an initial investigation. (If there is insufficient information obtained through this phase of the investigation, the Commission will schedule a preliminary session in front of a case examiner (attorney) and your presence will be required.) Upon completion of the investigative process, the investigator or attorney will prepare and submit a report to the Commission for presentation at a regularly scheduled meeting. The Commission will either dismiss the case or order a formal hearing. You will receive notification as soon as possible after the Commission
- Lender · Denver, CO · Member since 2009 · 1k+ posts · 597 votes10y
@Andrea Tapp when wholesaling an occupied house, or really any property, you might consider vetting the buyers before allowing a handful of tire kickers walk through your sellers home. This will help keep the number of showings to a minimum - best for the seller/tenants and your time.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
@Andrea Tapp if you want to avoid problems and do it legally it is simple: close on the property. Then it is yours to do with as you please.
- Rental Property Investor · Central, CO · Member since 2015 · 69 posts · 11 votes10y
Thankyou @John Thedford for your research. We have an attorney working with us through this process, and he is guiding us on keeping it legal.
- Professional · Columbus, OH · Member since 2015 · 119 posts · 37 votes10y
Originally posted by @Andrea Tapp:
Thankyou @John Thedford for your research. We have an attorney working with us through this process, and he is guiding us on keeping it legal.
If you have an attorney "guiding" you through the process why are you on BP asking questions about the transaction?
I am surprised more haven't commented on what a train wreck this transaction appears to be, but then maybe not as there are plenty out there that don't know how to conduct a real estate transaction properly.
- Rental Property Investor · Central, CO · Member since 2015 · 69 posts · 11 votes10y
Thank you @Account Closed for your reply and thoughts. I simply asked a question about how wholesalers speak with the sellers in the beginning about showing the sellers home as I know it is done often. Our deal is not a train wreck and we have done nothing wrong and our sellers are being very gracious with us they are just asking questions. I am seeking advice from other experienced wholesalers on their initial process as we are learning and I wanted to hear how other investors handle showing the sellers home. That is one reason why I love BP as it is great a sounding board and an incredible way to learn. I do appreciate your feedback. Thankyou for your time.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
@Andrea Tapp if you need help contact the OK Real Estate Commission. I am sure they can offer guidance.
Here is their website:
@Account Closed
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
If you're simply asking how wholesalers speak to sellers, that's easy, they lie, just as the poster did above with his imaginary partner (who is not a partner), but then it's just a long list of deceptive practices, lying beginning with signing a sale contract as a buyer.
Nothing personal Andrea, but really, what you're really asking is how do I get out of the mess I'm getting into? How do I deceive the seller to into thinking I'm buying when I have no intention to buy?
The last thread from a lady wanting to wholesale getting proof of funds was taken down it got so bad.
As to having an attorney, if you have one he is either an idiot or he's a weasel, I'll be happy to tell him that right to his computer screen if you can get him on here. You don't have the intent and/or the ability to buy, you don't have a contract! Your attorney wouldn't be Ronald (first name) would it?
The ONLY way to wholesale these houses is to take title to them and then sell them. That holds true in every state in the country.
If you wouldn't mind, look up a blog The Wizards of Real Estate, read that.
Now, I'm exhausted posting to wholesalers, nothing personal, but most have attitude, personality and/or sociopathic trait disorders, unwilling to learn, self centered, self absorbed, lazy, looking for a fast buck having the audacity of calling themselves real estate investors or even business people when they follow the guru track of using a sale contract, either that or, probably like yourself Andrea, you or they just got caught up in something you or they aren't really aware of. Actually, that makes you and them a victim as well.
After so many threads on this site, regulators posting, attorneys speaking and preaching the law concerning wholesaling, anyone at this point must have a screw lose to continue down this road. I'm going back up to higher ground before the flood hits again.
Happy New Year everyone, yes, even the wholesalers. :)
- Rental Property Investor · Central, CO · Member since 2015 · 69 posts · 11 votes10y
Thankyou @Bill Gulley, @John Thedford. I know what I am doing is not illegal. If you are tired of talking to wholesalers then stop interfering with and taking over the posts. We are off topic from the original post so I am not going to discuss this further. I appreciate all of your thoughts as it makes me sharper in what I am doing.
And no, my attorney is not Ronald. Thankyou.
- Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes10y
OK take a deep breath here, you are in the territory of brokering or selling agreements
I would look at the definition in your Oklahoma real estate agent agency laws and see what defines as activities of a real estate agent
If you take title to a property, your LLC owns it, and then you resell it, you were not acting as an Agent, you are acting as a principal buyer
If you were signing for sale purchase agreement and then selling that or assigning that, in some states that is definitely brokering agreements, which prevents you from properly marketing the house
Most agents won't let you look at the house unless you have proof of funds that you can close
So how do you get on title so that you can resell?
I know in Oklahoma you have some kind of land contract or contract for deed that allows you to buy the property with low down and get on some kind of title
Now your exit strategy can be to rent it out or to resell it for cash
Another strategy is to buy it subject to or subject to existing financing, or you leave the financing in place and get the Deed
Dodd Frank and Safe Act do not apply because it is an investor to investor transaction
You can also look at lease-option assignments where you enter into a lease option and then sell your contract for a fee which is brokering the contract
Oklahoma City I really enjoy; a great marketplace because of the rent that you can get compared to the fair market value of the house
If you want to win at real estate I would get a real estate license and find a broker that will allow you to do creative transactions, which include Wholesaling, and Creative financing as a principal buyer
I have written extensively about "how to talk to Sellers" at BiggerPockets for the last eight years or so
Google "Brian Gibbons negotiating with sellers"
Happy new year and good luck!
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Well, that was the a very good post Brian, you might take the post of the day!
What we get as a response from newbie wholesalers is typical, denial, I'm not breaking any law, I'm ethical, I'm honest, etc.
Seems too, they always feel like they own a thread if they start one, as if this isn't a public forum, demonstrates that sense of entitlement that youngsters suffer from.
Another one bites the dust...... :)
- Rental Property Investor · Central, CO · Member since 2015 · 69 posts · 11 votes10y
@Brian Gibbons I really appreciate your post Brian. I truly do. Thank you for giving me a very constructive path to work with and not policing my wholesaling ideas. I will be reading more of your material and would love to learn more from you. Sincerely. Andrea Tapp
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
@Andrea Tapp you missed the point of my post. You are acting as an agent whether legally or illegally. Laws vary state to state. Leading sellers to believe their house is sold, when it is not, is unethical at best and may, in some cases. be fraud. Since you want to operate as an agent, why not pursue your license, learn the rules, learn contracts, etc and work it from that perspective. Do you have E&O insurance? Agents typically do. Should you find yourself in a situation where you face lawsuits from owners, are you prepared to defend them? There are two ways to operating in RE whether acting as an agent and investor: honestly and ethically, or otherwise. I have NO idea why a homeowner would entrust their property to someone without proper training and skills, not to mention accountability, to amateurs. And this leaves one question: why would someone wanting to enter RE NOT want to get educated in the business they want to operate in?
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Originally posted by @Andrea Tapp:
@Brian Gibbons I really appreciate your post Brian. I truly do. Thank you for giving me a very constructive path to work with and not policing my wholesaling ideas. I will be reading more of your material and would love to learn more from you. Sincerely. Andrea Tapp
Not sure that was meant foe me as well or you just wanted me to see you thanking Brian, either way, I'll be happy to teach you as well.
It's kinda like someone yelling at someone who is about to step in front of a bus. I just don't yell.
As I always suggest to new folks, learn real estate before trying to learn how to deal in real estate.
Good luck and Happy New Year! :)
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Andrea Tapp I understand your question and its straight out of wholesaling 101 and your answers are from other wholesalers who come straight out of wholesaling 101.
And that is the long escrow periods.. miniscule EM deposits , long due diligence. And the one that says your partner must approve... etc etc.
Attorneys can guide you but sometimes they are not up to speed on all the rules and laws. you really want to go have a chat with the department of RE in your state.. that's the definitive voice of if the way you are structuring your transaction currently is indeed selling without a license..
And that usually includes putting the house on craigs list.. with pictures ... walking potential buyers through it etc.. exactly what an agent does.. If we did not need license to bring buyer and seller together there would be no RE industry at all.. Like china they have no RE industry anyone can do anything they want..
But that all said lets put the shoe on the other foot.. what if this was your mother or father or relative and this was an important transaction to them.. IE RE usually one of the biggest financial transactions you will do in your life time. And the person engaging was not telling them 100% of the truth and or leading them to believe certain things by not necessary flat out lying to them but by acts of omission and slight of hand.. so it really goes to the golden rule of due unto others as you would like them to do to you. and what happens if you can't get a buyer to buy the home ? what then... what do you tell the sellers who may be making plans currently based on you closing..
This unfortunately is what is giving wholesaling a black eye in the industry. you have these methods that are promulgated on BP we see it in this post.. were others are giving you advice of how to create an illusion to the Seller that your a TRUE principal and you have partners.. which from your post is not the case.
In my personal opinion a TRUE RE investor or even a good wholesaler ( and I know many) they have the ability to close the homes they contract for.. and they do that as a normal course of business...
I had one of my clients in MS put in jail because of this... He got turned in for selling homes he did not own.. IE he just had them tied up and was making a middle man fee on the hud but never taking title. he got a cease and desist as a CA. buyer turned him in.. He did it again and got arrested and thrown in jail... was not pretty .
I don't know anything about your state.. and I do see in Texas were its pretty common to tie up a property on an 100 option.. but the buyers and sellers are all fully aware of what is going on.. the way you made your post and the subsequent advice you were seeking and given clearly indicated that your sellers are not fully up to speed on your motivations and your end game.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Andrea Tapp based on that Mississippi fellow I became the largest transaction funder in the state and I believe I still am.. LOL.
my guys all take title then resell. really as simple as that .. so maybe that's one thing you should investigate as well. especially if your dealing with low value assets that don't take to much to buy them.. nothing like controlling your inventory.. makes you a true player and a proud investor
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