Lots of Random Wholesaling Questions From a Newbie

7 Replies

Hello BiggerPocketeers!

I am preparing to start marketing for wholesale deals as a side hustle and have run into a few questions that I need to be answered before really getting going. 

Context: 

  • I have my real estate license, which is listed under my mother's broker's license 
  • I live in Northern California (Sacramento area) 
  • My plan was to build or buy a list of absentee/pre-foreclosure/tax delinquent homeowners, skip trace them, then cold call to get deals through the pipeline.

Questions :

  1. Since I have my license, should I consider double closing? Or would that just be a waste of time and money?
  2. Is the person I am assigning the contract to the one who pays for the title fees, and all fees for that matter?
  3. Does anyone have a simple phone script for cold calling outbound to people on my list? I have a good idea: "Hello, my name is Nolan, I was calling because I am a local investor and lisenced real estate agent, and I noticed your home was (absentee/pre-for/taxes). So I wanted to see if you would be interested in (this is where I get stuck on my wording) scheduling a time for me to come by the property to make an offer to buy it?"
  4. How do California wholesalers usually structure the contract (EMD? timeframe? option)?
  5. What else am I missing that any newbie MUST know? (this is more to avoid any risks rather than how to find deals)

-Nolan

@Nolan Podbielski  

  1. I will skip this one as I don't know CA law. In General I believe wholesaling with a license increases your risk. 
  2. Generally the end buyer is the one paying for closing but it depends on what your contracts say.
  3. "Have you considered selling?"
  4. It's all negotiable.

1. Elaborate on what you mean by double closing. Are you saying to double end the deal and represent both sides? If so that would mean you have a fiduciary duty to both parties and you would have violated that with wholesaling the home.

2. Depends on what's in the contract. If it's a really good deal then most likely the buyer would pay those fees.

3. 

4. They usually have an attorney create their own to benefit them or use an assignable contract as the CAR rpa isn't assignable.

5. Since you are licensed just tread lightly while wholesaling and be sure you explain no representation if wholesaling. You might also want to present both options; listing and wholesaling.

@Nolan Podbielski

Your license may get you into trouble since you understand so little about wholesaling. Don't do anything at this point. As a licensee, you are under scrutiny by the real estate commission so you need to understand and have an attorney who understands wholesaling before you start.

1. Having a license has absolutely nothing to do with and no impact on double closing. Plenty of investors, licensed and not, double close to save both time and money.

2. If you're assigning a contract, you're not selling real estate - you're assigning a contract. You don't pay anything for closing because you're not closing, you're selling a contract. By the way, assigning a contract and selling a property wholesale are two entirely different types of transactions.

3. Just talk to them. Ask them what they need and tell them how you can meet that need.

4. You need to attend local investor meetings to learn what local wholesalers are doing, what they're buying and selling, what closing attorneys, etc. they are using. All real estate is local.

5. Being a licensed real estate agent and being a real estate investor are two entirely different things. You can invest if you have your license, but you don't need a license to invest.

Attend local investor meetings to learn. At this point, you really just know enough to get into trouble so take your time and learn.

Hi Karen,

I thought a double closing for wholesale was a way to get around the fact that in an assignment the seller can see the wholesalers profit? Is the net result the same- except for additional expense of closing?