Hey there everyone! My partner and I were recently approached by a virtual wholesaler who came to us with a deal. we have never done a JV deal before. These people are out of state and completely virtual. I would feel comfortable if there was some sort of contract between us and them BEFORE, we blast it out to our cash buyers. Of course having never done one of these before we do not know the proper parlance with these things. is it common to just blast out the deal to our buyers and say something like "We do not yet have this under contract, it is a joint venture deal, call/email us for more details" and then put it under contract with this other wholesaler? or should we have a contractual agreement with them before we blast it out. I would feel far more comfortable having some sort of contractual agreement first, but if this is not how things are done then I understand. What do you guys do?
Thanks so much for taking the time to read my post!
You definitely need to get an agreement in writing with them first. You also need to make sure you see a copy of the contract they have with the seller to make sure they are direct to seller. You do not want to daisy chain the deal.
Thanks Greg, That's what I was thinking as well. I actually met with the seller today.
@Mahmoud Y. Elhalawany The best way to protect yourselves is to do a couple things. 1. Get a copy of their contract to make sure that they are actually under contract with the seller. 2. Agree in advance and in writing what the wholesale fee split will be. 3. Also agree and understand (in writing) exactly what your role in the transaction is. Do they expect you to go and take pictures of the property? Meet contractors to get repair estimates? Etc. 4. Sign an assignment with them for the amount they want to make, ex: say property under contract for 100k and they were charging a 20k wholesale fee. If split is 50/50 then sign an assignment agreement with them for 110k and then send deal to your buyers at 120k. Also agree in writing in advance how to split any overage (ex: if you accept an offer of 125k) and have that in a second doc that you submit to the title company so everyone gets a check with the correct amount.
Thank you so Much Lydia, I will do all of those things when I talk to him next.
Hey everyone, So I told the other people in the deal that we would require paperwork to go through with the deal and they flatly declined so we had to move on. Thanks though!! I am glad for the guidance on here so as to not do anything which would create liabilities or legal issues for our business.
@Mahmoud Y. Elhalawany Whenever you have people who flat out decline your reasonable request, they were probably trying to scam you. Glad that you found out before there was money on the table to be lost.