Timeline

E. Jacobs · 2010-03-27T06:10:26-07:00

Can someone briefly explain the timeline of a wholesaling deal? Let's say day one I receive a call and find out there's equity in a property. I make an appointment to go see it the next day, and analyze the comps that night so I have an estimated value in my head when I go see it. I look at the house, and tell the sellers I'll have my offer in... 2 days? 1 day? What more research do I need to do after I see the house to make my offer? Say 2 days later I make an offer, and they accept. I have 45 days to close. When do we open escrow? How easy is it to assign the contract before opening escrow (so you can avoid the closing)? When is a title search done and who pays for it? Once I find a buyer, how do I ensure that they close in time? What if there's 10 days left in the contract period and a hard money investor comes along with my only offer. Is it risky to see if he will get financing in time? Thanks!

Peter Giardini

Rental Property Investor · Baltimore, MD · Member since 2009 · 624 posts · 559 votes

16y

You have pretty much asked for a response that could take pages and pages...

I would recommend that you read through the post in the wholesaling forum and the various blogs here on BP.

Most of your questions will be answered.

Best of luck!

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E. Jacobs

OP

Real Estate Investor · Chicago, IL · Member since 2009 · 91 posts · 22 votes

16y

I'm sorry- I tried searching the wholesaling forum for "escrow" and nothing at all came up. I'm not sure if I did something wrong here. Anyways, I'll do further investigating

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Randall Rose

Real Estate Investor · Tampa, FL · Member since 2010 · 28 posts · 8 votes

16y

I can relate to your questions! There is no way to control the time line to a deal,maybe in the closing part of it.
It is very important to have full disclosure with your seller,unless you are doing a back to back closing.I myself would make the wholesaler go to closing for their fee,You never know what could go wrong.If your buyer feels like I do, they must give you a EMD big enough to cover all/or any expenses if they back out...Plus it will show, they are all in! Use that check to open escrow.
As a wholesaler, it is very important to control where closing takes place.Your closing company should be in place before you submit your offer.There is one thing I do not hear alot of people talk about, and that is, pre title check(FSBO).If a title has liens or lots of other issues, you would want to know before making your offer(save time). I have heard some title companies offer, courtesy title checks.
I believe it is all about exit plan(s)

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E. Jacobs

OP

Real Estate Investor · Chicago, IL · Member since 2009 · 91 posts · 22 votes

16y

Randall, I'm not sure I fully understood your post, but here's what I think. First, I will definitely disclose everything. I will pretty much make it sound like I am there inspecting the house and making an offer on behalf of my "company" of cash investors. This way, they will know that I do plan on showing the property to others and will think that this is just so I can seek approval from my partners and get the sellers the cash they wanted. I don't want them ever thinking I personally will buy the property, because they will obviously find out that's not true, and I want to build a good reputation. I will play myself off as more of a "rep" for the other investors who will be seeing the property, and I will explain to the sellers (if they ask) that the reason they couldn't just sell it themselves to these people is because I have spent a lot of time and money networking with cash investors and building relationships with them. If not for me, you would have a very difficult time reaching these people and that is why I am entitled to a wholesaling fee.

Your next point was about EMD. As the wholesaler, I plan to put down nothing in EMD with the seller, but I will ask for a $500 deposit up front to be applied to the total assignment fee at closing. This is standard right? I definitely won't put earnest money in with the sellers. If they ask about it, which people have said only a few do, I will say that is against my company policies and that it is not necessary because we are professionals, we do this all the time, and we want to buy the house or else we won't make money. We wouldn't be making you an offer in 2 days if we weren't serious about doing business.

As far as the pre-title check, do I just call and ask the title companies if they offer courtesy title checks? Does the location of the closing have to be near the seller?

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Brian Haskins

Real Estate Investor · St. Louis, MO · Member since 2008 · 443 posts · 91 votes

16y

I will usually give them an offer there on the spot. If you donâ€™t want to then you would most likely want to give them one that day if not they may be calling others and your competition will swoop in and get it . As far as your closing time frame, you may have to make that much shorter. It's really all in what you negotiate with the seller but most won't do more than 30 days. In my area we don't open escrow you basically put the house under contract and then set a closing of 30 days or whatever you choose. Then you market the property during your inspection period. If you cant find a buyer in your inspection period whether its 5 days or 15 days then you use that as your excuse to get out of the deal if you have to. The title search is done once you find a buyer and they are setting up closing. The title search can be paid by anyone whether it's the sellers or the buyer it depends on what you negotiated during their contract. If you have on the contract the buyer will pay then your new buyer will get stuck with this price and it will cut into the profit. I'm really concerned you don't have any outs in your contract to protect yourself if your waiting until 10 days before closing. You will lose your earnest money and really make the seller mad and word travels fast if you bail on them. The inspection time frame is the best because it's right away and it's a legitimate excuse to get out of a deal in most cases.

Brian Haskins

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E. Jacobs

OP

Real Estate Investor · Chicago, IL · Member since 2009 · 91 posts · 22 votes

16y

I didn't know that the inspection period is what you use as your escape. I just thought a lot of people put the contingency about finding a money partner, not inspection. So if you don't find an investor when the contract expires, you use that contingency to protect yourself. And do you usually use 10 or 15 days for the contingency period?

Also, how much earnest money do you use? I don't think I want to use any. And do you usually negotiate for the seller to pay the title search? If not, does this need to be subtracted from your sale price?

I think I'm really getting a grasp for what I need to do to do these deals successfully. It's just trying to work out every little detail so I can visualize everything happening before it actually does. This will help me learn a lot faster and project myself more professionally to sellers and investors by knowing how everything works and being able to answer questions.

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Timeline

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