What is the process to buy from a wholesaler?

Question

I'm a newbie at real estate investing - want to do fix & flips.  I've just found out about a property for sale by a wholesaler here in NJ and want to know if the proposed offer process is typical.  I've seen posts & blogs on BP about how to wholesale and what makes a good wholesaler but little about the process from the buyer's point of view. Here's what the wholesaler is laying out:

• No seller or wholesaler disclosure on the property … it's an as-is sale
• One open house will be held at which the property can be viewed
• Buyers have 24 hours after the end of the open house to make an offer comprising simply the offer amount along with proof of funds
• Wholesaler selects the winning bid that night and send the buyer an assignment contract.
• Buyer wires a deposit (over $10k, and not called earnest money but called a deposit) to wholesaler's attorney the next morning
• Wholesaler sends the contract between seller & wholesaler to the buyer and/or buyer's attorney
• 1 calendar day for attorney's review (in NJ real estate contracts are not binding until both party's attorneys agree on the contract)
• Deposit is only refundable if title is not clear
• Approx 3 weeks to close
• There's no underground oil tank contingency (in NJ it's common to have the seller remove an underground storage tank).

Are these steps & conditions & timing typical for a wholesale deal in NJ?

Thanks

Don Konipol · Answer

These are very restrictive terms, highly in favor of the seller.  Seller may be able to demand compliance with these terms if (1) property is in high demand/low supply market or (2) price is way below market.

You can submit a contract for purchase with any clauses you want (i.e. option period, earnest money at title company, subject to inspection, etc.).  The worst that can happen is seller rejects your offer or does not respond.  And who knows, yours may be the best offer and the seller accepts or counters.

Daniel Cohen · Answer

Thanks.  Is it customary for the wholesaler to provide the purchase contract only after the assignment contract is signed and the deposit paid?

Chris Boyd · Answer

@Daniel Cohen sounds pretty typical. Deposit seems a bit high, but I do not know the price of the property. We all work a little differently.  I always encourage buyers to share their preferences with wholesalers. We can find you what you want without you spending that time yourself. We do the research, make sure it works for everyone. Find some wholesalers that you feel comfortable doing business with. All the best!