All Forum Posts by: Ryan Webber

You might check on this more thoroughly if you haven't already. Though it is always frowned upon, some Realtor Boards will still let you do this with some specific requirements (surprisingly, my market's board will let you). Most realtors I talk to about this have absolutely no idea that you can, and are rather adamant that you can't.

I, personally, do still consider that wholesaling.

Technically speaking, wholesaling is NOT assigning or double closing a house. Wholesaling is reselling to a NON-end user (i.e. another investor). Whether you closed on the property or not does not affect that issue. Now assigning the property or reselling it the same day via different strategies is definitely the most common closing method of wholesaling, but that is not what wholesaling IS technically.

I would argue that assigning, double closing, simultaneous closing, or land trust/LLC selling a house to an Owner Occupant is technically NOT "wholesaling", but rather "retailing". The closing strategy is not the defining issue of wholesaling. Who you are selling to is the defining issue. Not that technical definitions make much of a difference. If you are making money, who cares what they call it.

I actually close on just over half of my "wholesale" properties. I normally close them as fast as I comfortably can whether I have a buyer for it or not. This prevents dealing with cold feet sellers. I've lost deals because I didn't close them fast enough, so most of the time its just not worth the risk to me to wait.

So I've addressed this issue with Bill (financexaminer) on multiple occasions and now I guess I can with you too. Why would you not just do a simultaneous closing, where you don't have to bring your own cash or use transactional funding?

If you're answer is you can't, my question is why not EXACTLY? Which laws SPECIFICALLY, or attorneys or organizations EXACTLY say that you cannot? What laws do they specifically cite when they tell you that you can't?

I have and continue to do simultaneous closings in Texas. I've done well over a hundred of them and I have never had to fund them. I've never even been asked to fund them, and I have done them with several different title agents and companies. Now I've also had other title agents tell me that they can't do them, but they never have a solid answer why.

I understand each state has its own laws, but I've researched everything I can get my hands on in any state and I have yet to see any laws, regulations, or organizations that specifically say that you can not do them or that they are against the law in any way. The most I've seen is what BIll referenced with American Land Title Association's (ALTA) recommended "Standard Procedures", which stipulates that the buyer's lender be fully aware of the transaction before moving forward.

Not to say that there aren't laws, regulations, or organizations out there in some state that do ban, prohibit, or regulate them by statutes or by something more than just recommended procedures, but I have yet to find a single one.

Will, please enlighten me if you can.

I do not know. I have never seen or heard of any laws in any state prohibiting them, but that doesn't mean that they aren't out there. You should ask a qualified real estate attorney in your state.

The problem is an ignorant title agent or realtor will tell you that you can't do them even when you can. When you talk to someone who says you can't, simply ask them why. Ask for specifics of why. Which law, organization, or attorney specifically says you can't? What you'll normally get is a "I don't know but I know you can't" answer.

If you do get a specific answer please post it here and I'll help you research its validity.

I fully admit that. My comment was more in jest than anything.

I did want to point out that in the past you advocated a maximum "fair" wholesale fee, which I disagreed with for multiple reasons. The maximum fee you should make is the maximum the market can bear with whatever exit strategy you are using. I just found it interesting that you fudged your own rule, though I admit it was by a small percentage.

ATTENTION NEW WHOLESALERS:

Though rarely practiced, this idea expressed by Will of contracting great deals and attracting attention from multiple investors is exactly what REAL wholesalers do. That is what wholesaling is supposed to be all about. If you set up your business model around this idea of getting "great" deals, you will have a long and successful career as a wholesaler. If you are a new wholesaler, you should reread Will's paragraph above and base your entire business model on the ideas he expressed in it.

The comment I made about power was more in reference to the general attitude and perspective I saw KJ expressing in his post. Power in negotiations is huge and should be well understood and utilized, but IMO to ever actually tell a potential buyer to "get lost" is immature and has no place in business relations.

Well, I actually get the vast majority of my deals directly from homeowners, NOT from the MLS. Over 90% of my wholesale deals have never been listed on the MLS, so you and everybody else will NOT know what I paid for it (if I double closed it).

Good point, Will, but we're not talking about you. My point to Matt still remains, though, that the best way to do a "discreet assignment" is to not assign it at all, but to double close it.

I do seem a little hostile in my post. Sorry about that. Sometimes debating gets the best of me.

I meant to post my argument THEN, but I got busy and forgot about it. I'll go back and directly address it there later. :mrgreen:

Totally depends on how good the deal is. A smoking deal will take an hour. A good deal with no smoke can take a couple months.

Sometimes even after months, it won't sell unless you add value somehow ( fix at least major issues, rehab it entirely, rent it out, etc) which most of which normally consist of actually buying the property first.

Well, KJ, whether they "should" or "shouldn't" many of them DO care about how much you are making on them. Shoulds and shouldn'ts don't make a difference. Its human nature, and you need to learn how to deal with it in the most effective way.

As a business person, its about making money, not stroking your ego and telling a buyer to get lost. Being the boss is more about responsibility and less about power.

Bill, its been 2 weeks and still no response?

Unfortunately, I am going to have to conclude that you have NO evidence or case law to sight in which a simultaneous closing has been construed as fraud.

Therefore, I am forced to conclude that in this particular matter, you do NOT know what you are talking about, and people should not listen to your misinformation about simultaneous closings being fraudulent and about certain unspecified organizations now cracking down on them.

Bill, stick with what you know. Making up BS to fill in the gaps is never a good idea.

Again, I am always open to being enlightened in this matter with anyone's REAL evidence.

As Jon already shared, in at least Texas and any other non-disclosure state, it absolutely does insulate the entire transaction. In a disclosure state, like California, it would still stop them from negotiating with you when they read the contract. If and when they did research it in a public disclosure state, it would be AFTER the transaction is complete. Of course, we've already had this EXACT conversation before, Will. You should probably reread our last thread about it because it seems like you forgot.

http://www.biggerpockets.com/forums/93/topics/54940-contract-assignment-or-double-close-

And, yes, if they make money on the deal they will come back, but if they see you making "too much" money on the deal, when they do come back, they will haggle their hearts out on every deal from then on. Sometimes even walking away from it just out of ego. To me, its just smart business to use my understanding of human nature to my benefit.

Good point, Will, and that's exactly why I said:

My calculations put your profit margin above the "fair" amount of 10-20% of equity that you advocate when wholesaling. What gives? I guess even for you, Will, its hard to leave extra money on the table when you just don't need to. :D

Here's that thread in case you forgot that, too. At the very end, Jimmy C. also explains the whole purpose of assigning vs double closing again for you.

http://www.biggerpockets.com/forums/93/topics/35904-amount-of-fee-for-assigning-a-deal-versus-doing-a-double-close-on-a-deal-

You double close it. A double closing insulates information between your Seller and Buyer, including buy and sell price. Up to about a $5,000 profit is the most you should ever assign in most markets. Above that, your buyer and seller will often get very fidgety. A double closing will help preserve the relationship. Now in some higher end markets and with some very well established business relationships, going higher than $5,000 is no problem. On the other hand, sometimes even a $2,000 profit can be an issue to overcome with your seller and buyer.

Sorry I meant to say that my purchase and sell prices are normally under $50,000 but ARV's actually range from $50,000-100,000.