All Forum Posts by: Ryan Webber

Originally posted by Anthony E Russell:

Are 3 bed, 1 bath rehabs, that are less than 1,000 square feet worth investigating?

I buy them all the time. They're usually in the hood, which is where you will do most of your wholesaling anyway.

End buyers of these properties typically won't be more picky. They will be less picky. If they were more picky, they wouldn't be buying a thousand square foot 3 bedroom.

Either way all that matters is what your buyers will buy. Do you have buyers for 1000 square foot 3 bedrooms? If not, then find some investors that are looking for them or don't buy them.

My point is your buyers list answer these type of questions for you. If you have several strong buyers for 8000 square foot 1 bedroom houses near landfills, then you should go find 8000 square foot 1 bedroom houses near landfills. If you're finding lots of 8000 square foot 1 bedroom houses near landfills but don't have any buyers, then either find some buyers or stop wasting your time on those types of houses.

Your buyers list is the key.

Originally posted by Gregory Harris:

You have to have at least a dollar deposit on any purchase contract to make it a binding agreement.

No you don't. A single dollar of earnest money is NOT required for a legally binding contact

You really should do more research before you make statements like that. See I've bought hundreds of houses with no earnest money. I've done extensive research on general contract law and my state's specific laws, and I've also discussed it with other EXPERIENCED investors who have studied general contract law and their state's specific laws, and really on top of all of those I base my statements on personally having in-depth discussions with multiple attorneys who are EXTREMELY well qualified in real estate contracts and law.

95% of my deals I've put absolutely no earnest money on.

$0

The other 5% were listed properties except for 2 houses. The 2 non-listed exceptions, one seller was a title agent and one was an attorney. They both wanted earnest money because they understood the business and wanted me to have skin in the deal, not because it was required legally.

I've only even been asked about earnest money by less than 10 sellers. Motivated sellers don't know and normally don't care.

Yes, we all understand that you or I WOULD require earnest money IF we were the seller, but we are NOT the seller. If I was the seller I wouldn't be selling to you for 50 cents on the dollar in the first place, so going down the whole "why would anyone do that" road is kind of a slippery slope of idiocy. I've had this exact discussion on multiple occasions with NON-wholesalers and everyone of them seems baffled that anyone would be financially irresponsible enough to sell their property without earnest money. I find it amusing that we completely overlook the obvious fact that we are talking about people who are selling their property to you for HALF of its retail value. Why are we even debating whether they have the financial where-with-all to require you to give enough earnest money or not. OBVIOUSLY their priorities are different than yours. OBVIOUSLY if their priority was to make the most well thought financial decision they would NOT have even called you.

When you deal with a motivated seller, you will understand. They DON'T care. They just want to be done with the hassle of it all. That's their priority. Relief.

The verbiage used is EXTREMELY important.

Let's be clear, taking a home you don't own and selling it for a commission IS real estate brokerage, and if you don't have your real estate license, it WOULD be unlicensed brokerage.

Now taking a contract to purchase or an option to purchase that is between YOU and the seller and selling YOUR interest in YOUR contract is not real estate brokerage as defined by any state's licensing laws that I've read. Which to be fair I've only read 3 or 4 different states licensing laws.

You are NOT selling someone else's property for a commission. You should never allude to anyone that you are, because you are NOT. You are not selling someone else's property. You do not represent anyone. You are not their friend. And you are not giving them a service for a fee or a commission.

What you are doing is taking YOUR equitable interest in a property that you obtained via a sales or option contract and selling it to someone. You ARE selling YOUR interest in the property. Your interest is the right to buy the property for so and so price by so and so date. You are selling that interest, that right for a price.

You do need to be extremely careful how you present to sellers and buyers what you do. You are not an agent. You do not represent them. You are not there to help them. You are not trying to sell their property for them or to find a property for them. You are buying and selling properties for YOURSELF. You buy properties for yourself and you sell properties for yourself. That's it.

If you want to snuggle up to the seller and share with them that you are trying to find them a buyer for their property or in any way represent that you are working "for" them or "helping" or "serving" their interests then YOU NEED TO GET YOUR LICENSE!!! Because you are practicing real estate agency.

Wholesalers are NOT agents. We buy seller's houses. We do NOT find buyers to buy the seller's house. We sell houses. We do NOT find houses for our buyers to buy.

I just went through this with someone I'm training and you need to be very careful. There have been court cases over this very thing. You need to be careful how you present your services to buyers and sellers.

Originally posted by Financexaminer:

If they handed me a one pager, I'd probably simle, hand it back unsigned and think of an excuse to walk away. Amatures, I wouldn't even talk to them again, mainly because I would see that they don't have a clue as to what they are doing and would have serious doubts as to their ability to follow through with any deal they brough to me. Most sellers have done it before, at least they have been through a "conventional" transaction, so they aren't completely stupid.

Well obviously your assumptions are wrong. Many non-amateurs who are extremely experienced in investing and especially in wholesaling use 1 page contracts. I am one of them. I do have a clue and I will close, and I still use a 1 page contract.

I also COMPLETELY disagree that most motivated sellers have any real clue about what they are doing. In wholesaling, 95% of the time you are dealing with people who are very ignorant of just about all aspects of the process. A motivated seller will thank you for bringing them ANY contract. Most of them don't even read it.

I find it amusing, Bill, that you aren't a wholesaler and you even question whether wholesaling is even possible in your town, and yet you are on the Wholesaling Forum trying to teach wholesalers how to wholesale.

You should stick with pastures that you know because you are giving bad advice in a field that you have no experience in.

Well I have used a simple one page contract on about 300 deals on the buy and sell side, so that would be about 600 times. I have brought suit on it once but did not actually go to court. My attorney, though he didn't necessarliy like it, was perfectly confident in it's validity and enforceability.

To be completely honest, I use a one page contract because I am stupid and naive, and I can't understand anything else. :wink:

Sorry, Bill, I couldn't resist. No really it's absolutley a competitive advantage. I lost a deal once because the seller wanted an attorney to look over Texas' standared 8 page contract. I want something simple that addresses the issues that are applicable for my buying/selling strategy and I want the seller to be able to read, understand, and sign it in a couple minutes.

I also completely disagree that the standard jargon filled 8 page contract puts anyone at ease but a realtor. My experience is that the 8 pager increases inexperienced sellers anxiety and concerns.

Yes, a one page contract does not address every possible thing that might go wrong or that might need to be addressed, but I have only had one issue with it and changing it to correct for that issue was simple. Thinking about it, I don't believe the standard 8 pager would have helped with my issue anyway.

In reference to recording your contract, unless you are going to get the seller to sign in front of a notary, you won't be able to record it anyway. And going to all that trouble is misdirected. If an issue arises the easier method is just to file a lien against the property, which you could get notarized yourself. The lien will shut down a title agent from giving title insurance.

P NW, I agree that your statements about wholesalers "keeping" properites are probably true under most circumstances for most wholesalers, but on multiple occasions I have persoanlly decided to keep properties that I was trying to wholesale originally. It's actually part of my exit strategy with all my wholesale deals.

Again, though I agree that under most circumstances that a wholesaler is only in it for themselves, that is not always the case. I always try to keep my buyers best interests as a priority. I don't sell properties to investors that I don't honestly think will make them money. I also take into account their experience and capabilities. On multiple occasions I have steered investors away from buying properties that I was selling because I didn't think it was a good match for them.

I AM in it for the money. But I've found that the best long term strategy to make money in wholesaling is to be truly focused on helping your investor buyers make money. That creates long term, repeat customers that trust you.

Hi Matthew. Its always good to see local faces on here.

Not sure why someone would be charging you a $5,000 fee.

Now I'm assuming you aren't talking about an assignment fee. It sounds almost like maybe someone is just trying to wholesale you someone else's deals and there tacking on their fee. Did that wholesaler refer you to the deal and tell you it would be $5,000 more?

If you don't mind me asking, who's the wholesaler?

Also, there is absolutely no ethical issues in working with multiple wholesalers. I'd recommend it.

I'm a wholesaler and I'm still going to echo the other posters on here that just because its from a wholesaler does NOT mean its a good deal. Learn to crunch your numbers outside of what a wholesaler is telling you. YOU need to determine if its a good deal or not on your own. Most deals from most wholesalers are not good deals.

Its your money, and you need to become financially educated about investing or you will redistribute your wealth to someone who already is.

Jerome, as for taking earnest money when you are selling and to fill in some more of the gaps here, read through this old post:

http://www.biggerpockets.com/forums/93/topics/4274-assigning-contracts-wholesaling-questions

Originally posted by Bryan Hancock:

I put $10 earnest money down on all of the distressed properties I buy. To my surprise I recently got a trumped up demand letter for a property I bought subject-to where the opposing attorney claimed $10 was not sufficient consideration.

. . . It seems like $10 is well worth the cost to establish concrete consideration though. What else are you guys using for consideration? Is it worth $10 in the case that the contract is later challenged?

Obviously your $10 deposit wasn't "sufficient" enough to be above reproach as concrete consideration.

If the law doesn't require me to put $10 as a deposit for a valid contract, then I won't. The only times I ever have given earnest money when dealing directly with a seller is when they are adamant about it, which has been I think twice out of a couple hundred.

You either need it for a valid contract or you don't, and the fact is you don't. So why do it for that reason? Now there may be other considerations for why you give earnest money, but to do it so you have a valid, concrete, unchallengeable contract is a waste of your money.

"Consideration" is required for a contract to be valid. And from the dozen states or so that I have researched in the past, "consideration" can be just a "promise" to buy. An actual earnest money deposit is NOT a requirement of valid consideration or a valid contract.

I believe, but have absolutely no evidence, that this is a national courts interpretation/decision or a generally accepted interpretation of contract law because of how similarly I've seen it phrased in different states.

Not to say that there aren't states that interpret it differently, but the dozen or so I have researched are all the same.

In Texas at the least, I have had this discussion with several very well qualified attorneys, and they all agree that earnest money is NOT required for a valid and enforceable contract in Texas. They won't ever give me any definitiveness on any other states, though.

I personally only put earnest money on deals that are listed with realtors, and that's because any realtor worth their weight in dirt is going to require you to.