Did you hire an attorney?

Question

Aspiring Wholesaler Here!

I'm continuing to read the blogs and forums here in BP about wholesaling. The dos and don'ts. Why you should and why you shouldn't

Etc. A bit of information overload on my own part. My question is about contracts. I read a blog about the out clause and the things you should have in your contract. I also have the Rich Dad contracts from The Rich Dad Poor Dad course. I'm wondering if I can pick one of those and adjust it to fit wholesaling. (If someone has done this please message me asap!!)  So is the norm to create your contract by yourself  and seek an attorney's advice or guidance or do you just have an attorney create the contract template for you that you can use time and time again?

Barry Pekin · Answer

@Ronald Rohde,

I couldn't agree more.  There is a balance.  When I look at my contract and the longer state contracts, I make sure they address the issues that need to be addressed and also get modified over time should something come up.

You need to fully understand your contracts.  I wouldn't present one where I didn't understand every little thing in detail.  So, to answer your question, when a seller asks a question, you need to be able to fully explain it.  In fact, you should be able to walk through the contract with the seller explaining each and every clause in detail before asking them to sign.

Barry Pekin · Answer

@Mashika Patrick,

I don't use the state contract.  It's very long, and mine is about 4 pages (plus a couple of state required addendums).

If you're using a standard state contract, then you just need to understand it completely, and a good lawyer is a good place to get that understanding.  If you're not using a standard state contract, then your lawyer may suggest changes.

Barry Pekin · Answer

@Mashika Patrick,

I actually wrestle just a bit with this. I'm all for the protection that contracts provide, while at the same time, I often laugh at things that can be in there that don't make any sense. I always laugh about the financing agreement for my house where there was a page that I had to sign that said that this was, in fact, my signature. What happened one day where someone tried to get out of an agreement by arguing not that they didn't sign it, but that they didn't sign with their actual signature?

I prefer the shorter contracts for their simplicity.  I just feel a shorter contract, as long as it has everything it needs, is sufficient.  I want something where I can sit down with the seller and explain it section by section and not overwhelm them.

I just skimmed through the standard Virginia RE Sales Contract used by RE agents.  There's a lot of stuff that doesn't need to be in there for a private sale, including a bunch of stuff to support the RE agent's position, financing, and a detailed list of what items in the property are to convey and which ones won't.

Mashika Johnson · Answer

@Barry Pekin

Ok gotcha. Thanks for answering all my questions!

Ronald Rohde · Answer

Sometimes the TREC form gives sellers the most confidence, othertimes a shorter, easier to explain custom contract does the job. Really just depends on the situation or so my clients tell me!

Ronald Rohde · Answer

Its a balance of legal concerns and business concerns. Shorter or simple can tie it up easier, but provides ambiguity in the later event of a dispute. Forms are great, but only as good as the person using them understands it. What will you do when a Seller asks a question?

Barry Pekin · Answer

@Ryan McKimm,

You make very valid points, even if it is a bit off-topic.

If you read any of my posts, you will see how I stress the importance of only pursuing strong deals.  I agree that when someone ties up a property where the deal doesn't have a chance, that they're doing a disservice to the seller and to themselves in the long run.

Barry Pekin · Answer

@Mashika Patrick,

The assignment contract is a separate contract.  It states that you are assigning the original contract, replacing yourself with the new buyer.  So the original sales contract does suffice for the new buyer, it just has to be assigned to them.

Ryan M. · Answer

I think gurus should stop spreading their 'wholesale' gospel.

It's not for beginners. They have no idea about the market, prices, repairs, costs, contracts, what's legal and not, etc.

I see tons of awful wholesale deals being advertised by people with no means or intent to perform on contracts they enter with sellers. Essentially these are invalid contracts that the seller could and should walk from if they knew what was going on.

If you do have the means and intent to close, go ahead,but most 'wholesalers' don't.

It would probably be better to find one or two investors who can perform and find deals for them and let them handle the contracts.

Mashika Johnson · Answer

@Barry Pekin

Totally understand now. So the longer ones are most likely used for more of a lender or realtor whereas a shorter agreement is used for the private sales which are built for specific cases such as wholesaling. Got it

Is there any real difference between the seller contract and the buyer's assignment? Or would the seller's contract suffice for the buyer as well?

Did you hire an attorney?

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