Wholesaling with an agent

[Alison Anderson]

I am a real estate agent.  I have a client we will call Bob who is fixing his father in law(we'll call Mike)'s home and selling the home for an inflated price after the remodel is complete.  They have a notarized purchase and sale contract where Bob agrees to purchase the home for $300,000.  I think the best way to sell would be to rewrite the contract to have Mike sell to Bob and or assigns to put Bob in the position of the wholesaler, so that if the home sells for $550,000, Bob keeps the additional money.  We had originally thought that Bob could lien the property for the construction costs, but, the profit will be directly related to what they end up selling the property for, which is usually an unknown until the final hour.  The reason Bob did not buy the property outright from Mike is because the end goal is to fix and sell, so it seemed silly to pay excise tax twice, also there was a lien on the home and Bob did not want to fool with financing to acquire the property to just turn around and sell.  This is my first deal that has anything to do with wholesaling so I thought I would throw the situation out to you all to make sure it is a reasonable way to move forward.  

[Josh C.]

A simple jv agreement would be cleaner. It would basically say all net proceeds over 300k would go to the son in law. But at this prices I'd pay an attorney to draw up a jv agreement. Or $10 on rocket lawyer. :) That's what I personally do anyway.

Good luck