Wholesale contingencies

[Dave McEvoy]

Hi BPers. I am new to the wholesaling game and am still trying to learn all I can. I live in NY so I have to deal directly with attorneys for closings vs title companies so I can't write a contract. My question is if I make an offer and it's accepted, what sorts of contingencies can I put in my purchase offer that can allow me to back out if needed an not lose any deposit/earnest money? My fear is that I may not be able to find a buyer but don't want to let the seller know that so I can back out gracefully.

[Joshua Martin]

Dave McEvoy

Hey Dave, welcome. I'm working the same strategy in Milwaukee, and getting closer and closer to that first deal (I kind of bird dogged one), but here's what I would say.

First of all, this contingency should be obvious and not hidden in the contract. I believe the seller should know your intentions with the property, I.e. You're going to sell it to an investor, and not buy it yourself. That said, I would be careful not to mislead motivated sellers. If it's a deal with meat on the bone you should be able to sell that contract, but I wouldn't put a 'deal' under contract when it isn't one. You'll frustrate yourself and most unfortunately get a sellers hopes up that their problem is going to go away. Know your numbers and be confident that it is a deal. That first and foremost.

But still, your concern is legitimate. What if you can't find a seller for your great deal? Maybe you want to buy it. Try private money. But if all else fails, your contingency will be something like "this contract is contingent upon finding an end buyer," or "this contract is contingent upon the inspection and approval of an end buyer." Again, back to point one, it should be no mystery to the seller that there is or will be an end buyer. And if that is clear then assuming you ever end up in court there will be no confusion that you were actually going to buy the property. A local wholesaler has a separate acknowledgments page to her contract that I like.

Given your in an attorney and not title state, I would find an attorney and double check everything you're going to do. If you don't have state approved forms then maybe you want or need to spring for an attorney to draft some for you. Or ask other wholesalers. People are helpful.

Best of luck, and I hope that helped a bit.

JTM