Closing on a Wholesale Deal

Wholesaling
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Closing on a Wholesale Deal

Ember Meadows
Real Estate Investor · Columbus, OH · Member since 2011 · 74 posts · 25 votes

Hey guys, I have a question. I have done several deals already, but have never completed a wholesale deal. Well I have a deal under contract and I have a cash buyer. The deal is I am supposed to contact a title agency to do closing. My cash buyer does know I am making some money on the deal,but doesn't know exact numbers. I contacted a title agency today and they told me they could not close a transaction for me unless I had the money to close first, then after I closed, they could do closing with me and my cash buyer. I have done some research and I have heard there is2 options, a assignment of a option contract or transactional funding. I want to find out what other wholesalers are doing to close? I would prefer not to have to use transaction funding. I am not sure exactly the paperwork for a assignment of a option contract or how that works? For instance I'm not sure if my cash buyer will pay me the option fee before theres even a title search done. Any timely advice would be appreciated.

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Timothy Rogers
Investor · Garland, TX · Member since 2010 · 99 posts · 92 votes
13y

You are probably not dealing with an investor friendly title company. Not all title company know how to work with investors.

I do a assignment of contract. My buyer always know what my fee will be when we fill out the assign contract.

Here is my process of wholesalin:g

1. put property under contract.

2. take contract to title company so they can open title.

3. assign contract to buyer for a fee and give copy of original contract with seller to buyer. Also, get some type of nonrefundable deposit($1000) from buyer so you won't get burn by buyer. This deposit will let you know if buyer is serious about buying. You would get the rest of your assignment fee at closing.

4. take assign contract and deposit to title company so new buyer and your fee will be on HUD1.

5. wait for closing to get your money.

That is how I do it.

Hope this has given you some clarity.

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  • Alyssa Mallot
    Real Estate Investor · Houston, TX · Member since 2015 · 7 posts · 0 votes
    11y

    Hello @Timothy Rogers

    I noticed that you were tremendously helpful and generous by sharing your contract forms used in wholesaling( purchase contract, assignment contract i.e.). I am from Houston, and am a beginner wholesaler who is working on her own wholesaling company. I was trying to find the appropriate forms needed. If you could offer me the same generosity, it would be wonderful! Please, and Thank you!

    0Reply
  • Keith Washington
    Culver City, CA · Member since 2014 · 4 posts · 0 votes
    11y

    I am new to wholesaling, and I have my first property under contract. The inspection is this Saturday and I have a few questions. 

    Question 1: I signed the purchase contract a week ago, but the seller is just now signing the contract and returning a copy to me today. Did my 30 days to close start last week, or does it start today?

    Question 2: I have cash buyers who wants to see the property, but the seller has a limit of 2 visits to view the property. It is currently vacant so I am having a hard time understanding why there is a limit. Is this legal?

    Question 3: Does anyone have a copy of a purchase contract for my end buyer? The structure of the deal is a double close, and I intend on using transitional funding. 

    Question 4: I plan on selling the property without a selling agent. What do I need to successfully close on this deal?

    Question 5: At what point do I need to collect the proof of funds, earnest money deposit and purchase contract from the end buyer?

    Question 6: Does anyone have contact information for "investor friendly" title companies who can do double closings within the San Diego area? And at what point do you engage the title company?

    Question 7: For experienced investors who have done this hundreds of times, can you please let me know if I've missed anything?

    0Reply
  • Tim Davis
    Warren, AR · Member since 2015 · 1 post · 0 votes
    11y

    Hello @Timothy Rogers 

    I am a nube trying to gather all the helpful info that i can before i dive in 

    would you please send me a copies of contracts and any other helpful

    info that will help me out as I start my wholesale quest.

    Thanks   [email protected]

    0Reply
  • David Henriquez
    Miami, FL · Member since 2015 · 15 posts · 4 votes
    11y
    Originally posted by @Timothy Rogers:

    You are probably not dealing with an investor friendly title company. Not all title company know how to work with investors.

    I do a assignment of contract. My buyer always know what my fee will be when we fill out the assign contract.

    Here is my process of wholesalin:g

    1. put property under contract.

    2. take contract to title company so they can open title.

    3. assign contract to buyer for a fee and give copy of original contract with seller to buyer. Also, get some type of nonrefundable deposit($1000) from buyer so you won't get burn by buyer. This deposit will let you know if buyer is serious about buying. You would get the rest of your assignment fee at closing.

    4. take assign contract and deposit to title company so new buyer and your fee will be on HUD1.

    5. wait for closing to get your money.

    That is how I do it.

    Hope this has given you some clarity.

     i recently read something about if the title of the property has a bunch of problems on it than the title company cant close the deal.is that true?like liens judgements taxes owed etc.

    0Reply
  • Allison OBrien
    Levittown, PA · Member since 2015 · 36 posts · 5 votes
    11y

    Quick question -- when virtual wholesaling (I am in PA, deal is in VA) do I need to use a title company in VA? can settlement be done local to me and all signatures be given to the title company here or do I need to initiate the settlement local to the deal in VA and have the buyer attend separate settlement live? Thanks in advance!

    3Reply
  • Trevon Peracca
    Wholesaler · Chicago, IL · Member since 2015 · 245 posts · 102 votes
    10y
    Originally posted by @Allison OBrien:

    Quick question -- when virtual wholesaling (I am in PA, deal is in VA) do I need to use a title company in VA? can settlement be done local to me and all signatures be given to the title company here or do I need to initiate the settlement local to the deal in VA and have the buyer attend separate settlement live? Thanks in advance!

     I would like to know the answer to this as well. 

    0Reply
  • Anthony Longobardo
    San Clemente, CA · Member since 2015 · 2 posts · 0 votes
    10y

    Was anyone able to get this 'assignment of contract' that Timothy mentioned?  Can you email me a copy of that please?  In the middle of deal right now and really needing one!

    0Reply
  • Anthony Longobardo
    San Clemente, CA · Member since 2015 · 2 posts · 0 votes
    10y
    Originally posted by @Caleb Thurston:

    Thank you so much for that explanation and sending me the Purchase contract and the Assignment of Contract Timothy Rogers ! That was a huge help! Should the paperwork you sent me work in most states? My goal was to get all of my paperwork together and bring it to an attorney who is also a real estate investor or an investor friendly title company and make sure that it will be sufficient for the state of NC so that I can get my hands dirty immediately.

    Were you able to get that 'Assignment of Contract' from Timothy?  I really would like to get a copy of that myself.  Could you possibly send me ?  Thanks!!

    0Reply
  • Muhammad Saleem
    Real Estate Agent · Stering, VA · Member since 2016 · 60 posts · 10 votes
    10y

    Hi,

    Can anyone please help me referring to an investor friendly title company who works in wholesale deals in or near Taylor MI (zip 48180)

    Many thanks. 

    0Reply
  • Deadrick James
    San Antonio, TX · Member since 2016 · 1 post · 0 votes
    10y

    Hey guys I have a few quick questions for you...I just got my first deal under contract, but its for a property out of town (in the same state) First...do you suggest I get an investor cash buyer from the same area or town? Secondly, do you think I should use a title company from the same area or town as the property or use one in my local area? Third, do you think its wise for the investor to know the address of the property before we close on the deal? Thanks for your insight.

    0Reply
  • Edward Caicedo
    London , city of london · Member since 2016 · 1 post · 1 vote
    10y

    Someone could give a point of view for a real exercise of wholesale ..

    There is a property that is not for sale but this deteriorated in an area where rehaber would find an opportunity.

    The property is in an area, which is also a thriving market for such business ..

    The property was spoken and agreed on a price before the inspection ...

    The investor and final buyer is at hand ...

    The day of the inspection costs will be determined

    repair and be given a final offer, putting the

    property under contract.

    the roll here would be ..

    controlling the property and then assign this to an end buyer. It could be done directly with the owner or right through a real estate agent? ..

    As would ensure my commission at closing? ..

    It is recommended, any attorney to play for this?..

    Thank you very much for sharing all information is very useful. this case for my lack of experience does not help and I want to ride in this car ...

    Grateful to have good day ..

    1Reply
  • Adam Gleason
    Surveyor · Fort Walton Beach, FL · Member since 2016 · 4 posts · 0 votes
    10y

    Hi guys. I know Im pretty late to the party but if anybody has the purchase agreement and assignment contract from Timothy could you please send it to me? It would be greatly appreciated!!

    0Reply
  • Dave DeVito
    Investor · New Canaan, CT · Member since 2016 · 1 post · 0 votes
    9y

    So I'm looking to buy a property from a wholesaler who is trying to get me to pay his fee before closing.  I said no way and he's claiming "that's how he always does it."  Has anyone ever heard of this?  If closing falls apart he's long gone with his fee.  No go, right?

    0Reply
  • Amanda Dolan
    Lindenhurst, NY · Member since 2016 · 15 posts · 3 votes
    9y

    @ibrahim - how do you get the buyer to pay for the title search and binder? Is this a claw in you contract ? So you just bring that up?  Also how do you suggest us new comers who are in this to create financial security and may not have 650$ to have a lawyer do the assignment paper work done go about getting this done? Great advice btw. It will be good after I close my first deal and have the extra cash to do so with! Also what are people doing with these lump sums of money after wholesaling for profit? How is this claimed tax wise? Do you have to create a business? Is it a 1099? How much would one typically loose in taxes off the profit you just made. Curious as to how this all works. It's great to understand the process of investing but what happens when you end up with all this cash lol ?? Any answers greatly appreciated thx. :-) 

    0Reply
  • Michael K.
    El Paso, TX · Member since 2017 · 4 posts · 0 votes
    9y

    I can answer a couple select questions that I know for sure about.

    You do not have to create a business. This can go on your personal tax return if you are not doing it through a business.

    As far as income taxes go, the amount you will owe will depend on your total yearly income and what bracket this additional income falls in. 

    Generally speaking, the more money you make, the higher a percentage of that additional income that you will owe to the IRS. This is why rich people, despite cries about not paying fair shares, in reality pay disproportionately more per dollar than others, that is, more than their fair share relative to others.

    0Reply
  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Bill Gulley I like the way you think......The only snag is getting a seller to agree to this original contract term.  If this is your only means of completing this transaction then you'll be short lived as many of the sellers that I speak to want that good ole word "cash" written into the contract.  Great strategy though!

    0Reply
  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Ember Meadows definitely look into another title Co.  Many title Co's do cut and dry transactions and are not comfortable closing deals in this manner.  Just out of curiosity,  Is the title Co implying that they will be doing 2 closings and collecting there fee twice?? 

    0Reply
  • Kevin SchaeferPro Member
    Real Estate Agent · Emerson, NJ · Member since 2013 · 182 posts · 34 votes
    9y

    @Timothy Rogers if you would be so kind as to forward me the assignable contract that would be great. Thank You. 

    0Reply
  • Jay Collins
    Flipper/Rehabber · Chicago, IL · Member since 2016 · 9 posts · 0 votes
    9y

    @Timothy Rogers great info. Thanks!

    0Reply
  • Darvin Ezell
    Jacksonville, FL · Member since 2014 · 75 posts · 9 votes
    9y
    Originally posted by @Timothy Rogers:

    You are probably not dealing with an investor friendly title company. Not all title company know how to work with investors.

    I do a assignment of contract. My buyer always know what my fee will be when we fill out the assign contract.

    Here is my process of wholesalin:g

    1. put property under contract.

    2. take contract to title company so they can open title.

    3. assign contract to buyer for a fee and give copy of original contract with seller to buyer. Also, get some type of nonrefundable deposit($1000) from buyer so you won't get burn by buyer. This deposit will let you know if buyer is serious about buying. You would get the rest of your assignment fee at closing.

    4. take assign contract and deposit to title company so new buyer and your fee will be on HUD1.

    5. wait for closing to get your money.

    That is how I do it.

    Hope this has given you some clarity.

    I know this post is years old...but when you get the $1000 deposit from the buyer, do you have them give you a check or something personally or do you meet at the title company and have that $1000 deposit held with the title company?

    0Reply
  • Timothy Rogers
    Investor · Garland, TX · Member since 2010 · 99 posts · 92 votes
    9y

    You get a check from the potential buyer and take it to the title company. Title company will hold deposit and if buyer flakes out then you will receive deposit.

    0Reply
  • Account Closed
    Insurance Analyst · New York, NY · Member since 2017 · 31 posts · 7 votes
    9y

    Timothy Rogers Hello Timothy, working on my first wholesale transactions. If you still have the Purchase contract and assignment of contract for guidance, that would be greatly appreciated. Your example was clear cut and easy to comprehend. Thank you!

    0Reply
  • Kelvin Honora
    Houston, TX · Member since 2017 · 5 posts · 0 votes
    9y
    Hello, Timothy Rogers great info, I would like a copy of the contracts. Thanks
    0Reply
  • Augustine Wadian
    Massillon, OH · Member since 2017 · 1 post · 0 votes
    9y

    Any way I could get copies of your contracts as well? Thank you

    0Reply
  • Claud Moffatt
    Theodore, AL · Member since 2017 · 1 post · 0 votes
    8y

    Hello Timothy Rogers! How are you? Thanks for the info, I would like a copy of the contracts. Thanks

    0Reply
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