TREC Contract & Wholesale/Assignment Agreements for Texas

I received a question awhile ago about the kind of contracts we use to do our deals. This has come up a several times over the years and it's pretty simple. We use the standard Texas real estate commission or TREC Contract. You'll see at the top, Texas real estate commission. Disclosure: This is for folks in Texas and even if you are in Texas talk with an attorney or your broker. I'm not an attorney, but I'll tell you what we do and what's worked for us.

You can simply visit https://www.trec.texas.gov/forms/one-four-family-residential-contract-resale-0 or Google TREC Residential Contract. It's a nine-page contract at the time of this writing and most of the contract is standard verbiage.

You'll have to go through and edit some of the blanks – parties, the property location, price, financing etc. I'm not going to discuss every single piece of this contract – since this is more of a high-level discussion.

The standard TREC nine-page contract you download doesn’t have to be a 2019 version. Just download the most recent one from the site as they're all suitable. These are not good for condominium purchases (the contract states that on the top of the front page), it’s only to be used for one to four family residential purchases.

If you're going to wholesale the property, we use the standard TREC contract to first get the deal locked up so now, under law, you have an equitable interest in the property. Then you can wholesale the deal using an assignment agreement to somebody else for a profit.

If you want more details on the assignment agreement we use, check out the Emerson House Buyers YouTube Channel video #142.

We use the TREC contract in every transaction which gives us the right to buy the property. If we want to wholesale it, we use the TREC contract with the assignment contract to sell the property to an end buyer. We really like buying the properties for ourselves and we don't typically do a lot of wholesales.

Here’s a tip from your Uncle Larry, be honest with these sellers. Whether you're going to wholesale or keep it for yourself, let them know your intentions. Most of the time I tell the seller I really don't know what I’m going to do with the property. And I won't know until I can see what other deals we have on our plate at the time. If we have two or three deals hit in a week, we might have to wholesale one since we might not be able to close on all of them.

In my experience, if you’re honest with the seller, they're typically understanding. Don’t be worried if you don’t have cash. You can tell them you’re coming in with private money lenders since you’re busy with other deals right now or you're going to wholesale to a guy who can pay a little bit more.

“We're going to make a small profit on it, but we're going to handle everything. Rest assured that we close the deal with these people all the time.” That is usually all it takes, they don't really care if you make a little bit of a spread and they don’t have to know exactly what you’re making.

To recap, we use the TREC contract to get a property under contract. Then if we want to wholesale the deal, we use our assignment contract. If you want more details on how we fill out the TREC contract or our assignment agreement, check out the Emerson House Buyers YouTube Channel.

Again, consultant attorney if you're unsure. I know what has worked for us, and the business here in Texas, specifically related to single family residential real estate.

If you have any questions, please feel free to DM me. Thank you!