TEXAS wholesaling contracts

Wholesaling
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TEXAS wholesaling contracts

Jaime Farias
Real Estate Professional · Edinburg, TX · Member since 2017 · 16 posts · 19 votes

Even though I can purchase,  I am starting with wholesaling doing assignments. I was told to get a home under contract via the Option to Purchase contract (include a consideration fee given to the seller) and getting all signatures done with a copy given to the seller. Then finding an end buyer and filling out a Purchase Agreement and the Assignment Contract.

Well, I consulted an attorney and he says this is NOT how it is done. :-/  :-/  He says even if you are planning to assign, that the wholesaler needs to have: 1. Option to Purchase Contract signed with seller and wholesaler  2. Exhibit A -a page with the legal description of the property  3. A purchase agreement between wholesaler and the seller.  He says now I can find an end buyer and have him fill out the Assignment Contract and at this point he will now own my Option to Purchase Contract and my Purchase Agreement.

I have properties(sellers) coming to me and about 5 cash buyers waiting for wks! But I'm spinning my wheels bc of these contract issues.

Thought?? Texas folks please as I need to follow TX laws.

Thank you.

JF

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Stephanie Ruiz
Member since 2018 · 1 post · 12 votes
8y

where does one find these contracts? Asked title company and she basically said they do not provide them. Then referred us to TREC. Bottom line, I cannot find all contracts. What do I do?

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  • Lydia R.
    Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    @Jaime Farias I think part of the problem is the learning curve of all the other involved parties. Now you have to explain it to the seller, to a title company. The seller will most likely ask their friends and/or family about it. All it takes is one person to cast doubt in order to kill a deal. I totally get where you’re coming from, but it seems like more hassle with essentially the same outcome. Can you expand on some pros/cons for using an option contract?

    2Reply
  • Jaime Farias
    OP
    Real Estate Professional · Edinburg, TX · Member since 2017 · 16 posts · 19 votes
    7y
    Originally posted by @Lydia R.:

    @Jaime Farias I think part of the problem is the learning curve of all the other involved parties. Now you have to explain it to the seller, to a title company. The seller will most likely ask their friends and/or family about it. All it takes is one person to cast doubt in order to kill a deal. I totally get where you’re coming from, but it seems like more hassle with essentially the same outcome. Can you expand on some pros/cons for using an option contract?

    It can be a simple 1-2 page Option contract. I have always been into Notes which is personal property. I first learned Notes when I was 15 yrs old and have over 30yrs experience. For real estate, I used the P and S agreements for the longest time, but I wanted an easier way for those I bought from. I had to basically start from the beginning again bc the attorney I used for the longest time retired and my original post was basically like starting over--creative financing is foreign to most now. It was common back in the day. The new attorneys and title companies don't seem to have any creativity.

    I found that a long contract initially can scare a prospect. You can write anything into an Option agreement and assign it and have the end buyer execute on those terms. I have seen the argument for over 3 decades and you can just pick it up from the Tx Occupations code bc some think I made it up. It reads as follows in case some attorney says you're wrong...

    Sec. 1101.0045. EQUITABLE INTERESTS IN REAL PROPERTY. (a) A person may acquire an option or an interest in a contract to purchase real property and then sell or offer to sell the option or assign or offer to assign the contract without holding a license

    0Reply
  • Brian Vaughan
    Real Estate Consultant · Texas Hill Country · Member since 2017 · 56 posts · 58 votes
    6y

    From the TREC website:

    Form Name:One to Four Family Residential Contract (Resale) (Form ID: 20-14)Effective 

    Date:02/12/2018

    Description:  This is the most frequently used contract form.  It is used for the resale of residential properties that are either a single family home, a duplex, a tri-plex or a four-plex. It is not for use for condominium transactions, new homes being sold by a builder, or farm and ranch properties.

    0Reply
  • Carlos E Rodriguez
    Member since 2024 · 1 post · 0 votes
    2y

    These posts are quite informative. I'm getting started myself and was unsure of how to go about when wholesaling. I was advised to use the TREC for purchasing + an Assignment of Purchase and Sale Agreement. I then read that this assignment doesn't absolve me of obligations if they don't close. Question: does anyone have any suggestions on how to protect myself if this happens? Much appreciated!

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  • Luis Herna
    Member since 2024 · 84 posts · 10 votes
    1y
    Quote from @Ronald Rohde:

    There is some debate as to how to new laws will be enforced. There were clarifications/changes effective Sep 1, 2017. I would just point out that you must make clear you are selling the interest to purchase, cannot advertise the underlying real estate (as that would require a license).


    What I read on the Trec rules was that as long as both party knows that it is an assignable deal (wholesale) there is not a problem.
    0Reply
  • Luis Herna
    Member since 2024 · 84 posts · 10 votes
    1y

    Does someone here knows about wholesale contract for commercial?

    0Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    1y
    Quote from @Luis Herna:

    Does someone here knows about wholesale contract for commercial?


     Yes, if anything its easier since no residential restrictions. savvy participants.

    Harder because you have to know how to present a property, typically have to spend on chase costs prior to assigning. Also if you burn a seller/broker, its a much smaller world in CRE, you will be hard pressed to get another deal.

    I did a longer video on the topic!

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