Wholesaling Contract Contingencies?

Question

Hi, I'm starting to get calls from my first direct mail campaign! Curious, as a wholesaler, should I be putting contingencies into my purchase and sale contracts? If so, which ones? Inspection? I'm wondering for two reasons: (1) is there a way to hedge against losing my earnest money in case a cash buyer falls through, and (2) are my cash buyers going to want that?

Thank you in advance for your time.

Lynnette E. · Answer

If you are wholesaling then the contingencies should be for YOUR contract for YOU and should not be to pass back a loophole for you in case of failure in another contract with your buyer.  That is just scammy and deceitful to the seller.

Do you think about how the seller, who likely is in crisis, is going to feel when you back out because you can not find a buyer?

If that is you goal of a contingency, then be HONEST.  Tell them you are a scammy wholeseller and will try your best to find a buyer after you mark up his price to you.  But if you can not find a buyer then the sale will not happen as you have no money that you are putting in this deal.  HONESTY, then the seller can make a decision.

And if you wanted to have a great wholesaling business model the seller should be able to back out of your deal if he/she finds a real buyer on his/her own.

John Thedford · Answer

I always have inspection contingencies. I CLOSE if no issues and don't leave sellers disappointed. I don't wholesale and use purchase contracts as defacto listing agreements.

Nicholas Hooyman · Answer

@John Thedford thanks for your time. Does that mean you would put an inspection contingency into a purchase and sale agreement as a wholesaler?

John Thedford · Answer

There are two reasons to back out: legitimate inspection issues and dishonesty.

Nicholas Hooyman · Answer

I have, but it's been a while.

Mark Russell · Answer

Have you posted on here before?

Wholesaling Contract Contingencies?

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