OfflineI have a few concerns about a deal I am working on with my good bud, Gorgeous Frazier. She seems to be a DG Star in her own right so I thought I would give her a shout out. We are working on a deal that involves the acquistion of 22 properties. We sent informal offers on all 22 to the seller today which he gladly accepted without any counters. Great so far, but the problems is with the contract he uses for his transactions. We don't really have a problem with any part of the contract except the Earnest Money Section. Below is what that part of the contract says:
CLOSING AND PAYMENT INSTRUCTIONS.
Upon execution of the REPC, Buyer shall deposit $1,000 as Earnest Money Payable to Direct Title Insurance Agency to hold this property
for 3 days of the contract signing date. After 3 days from the contact signature date the Earnest Money will no longer be refundable. The
full payment of the remaining purchase price to Direct Title Insurance will be due within 5 days after signing this contract after the 5th
calendar day the property may be resold if Direct title has not receive full funds or arrangements have not been met.
Our thoughts are this: We don't feel that we should have to put up a thousand dollars for all the properties combined let alone each individual one. We are trying to figure out how to get around this and actually, would like to use our contract. Actually, it is the one that DG provides. Seems to work well. It protects us as the buyer whereas the seller's does not.
Can anyone offer any advice or suggestions on this topic?
What we would like to do is attach a promisary note that says the end buyer will provide that money at closing since these contracts will be assigned. I have heard of people locking up properties for $10, in some cases for a dollar as crazy as that sounds.
Also, as the buyers can we put both of our names on the contract or will a seller usually only accept one.
Need to make this deal happen and get this deal done with Gorgeous because she totally rocks.
Any thoughts are highly appreciated.
Lou
It's not what we get, but who we become and what we contribute that gives true meaning to our lives.
I would submit the contract that I would prefer to use and not that of the seller as you two are the ones wanting to buy or assign the property so you two should have control or try and control how it all goes. Just three days and the earnest money is gone and after another five then the property can be resold, I would not go for this either my opinion. When I have put offers in I got to do the contract the way I wanted right down to the earnest money and such and as for the em I left the line open and said this would be filled in later. It could be that the seller is just wanting to rack up the earnest money quick and wants the closing done in a heart beat so to say.
Shawn
We should just submit our formal offers to him using our contracts and a promisary note saying the Earnest money will be paid upon closing?
Also can you put two peoples name on a purchase agreement?
IVe never had to deal with this most people took a copy of a check for 100 bucks
If you are going to wholesale these properties, do you have a buyer right now ? What kind of property is this, isn't there an inspection period ?
I think the 3 days is ridiculous to become non-refundable because usually there is a 5, 7, or 10 day inspection period(& that's usually for 1 property).
What happens if something doesn't pass inspection ? That is what we use, along with other escape/contingency clauses so you don't lose your deposit.
As for the 5 days, what is that ... you pay the title company when the search is done, title insurance is issued, & deed is signed, that's why is called a "closing"
Besides if your assigning these properties, the end buyer should be putting up the money.
As far as deposits, I would put down the deposit 10 days after the inspections are complete, balance due in full upon/at the closing. It sounds like this is a one sided event for the seller...he's going to make money off you without even selling you the properties.
Is this your 1st deal, I'm sure your anxious to get a deal under your belt, but I would use extreme caution with this seller.
Hi Shawn.
Thanks for your valuable feedback. I think we will use our own contract and see how it all plays out. To he honest, if the seller doesn't want to move forward because we aren't using his contract, it is most definitely his loss as he would be losing out on moving 22 properties. Thanks again.
Lou
It's not what we get, but who we become and what we contribute that gives true meaning to our lives.
Thanks for the great feedback. I have done deals before as a landlord and rehabber, but this is my first wholesale deal where I would be assigning the contract to another buyer. Gorgeous has done several wholesaling deals so I am learning so much from her.
I think we will use our own contracts and see how it plays out.
Thanks again.
Lou
It's not what we get, but who we become and what we contribute that gives true meaning to our lives.
Thanks for the Great advice like Lou said it is 22 properties and we will be submitting the formal offers with Our contracts because he is definitely trying to bulldoze us. i have never added an inspection clause isn't an inspection the buyers job? If we are wholesaling these properties do we really need an inspection period of 10 days? Please keep in mind they are out of both of our states so we would not be able to inspect anyway.
Thanks Again for any feedback.
Gorgeous
So today was a great day. Had a motivated seller call me because she saw one of my We Buy Houses Flyers and one of my property locator flyers. I met with her and am going to help her either save or sell her home and make some money at the same time. Feels really good to help her out. When we first began our conversation she was in tears because of her pre-foreclosure situation and by the end she felt comfortable and was thanking me for offering to help her. Two birds with one stone. Got a new seller lead and a new property locator. She showed me a property tonight and now have a second lead. Two in one day. Not too bad.Meeting with that seller tomorrow.
Networking and marketing are key. I actually joined my new potential seller and new bird dog tonight at a presentation at her business tongight because she asked if I would come along. I agreed to that because I knew if I went with her it would make her feel even more comfortable with me. Sometimes you have to sacrifice your time to get to where you want to be. Besides by going with her tonight, I had the opportunity to meet a real estate appraiser, another investor, and a real estate attorney. That can only be called a Good Day.
Now I am off to bed and back to the fun tomorrow.
Best to all,
Lou
It's not what we get, but who we become and what we contribute that gives true meaning to our lives.
When I do deals I tell the owner that I am just the wholesaler. The buyer will be the one who puts up earnest money. Then I tell them these are the contracts I use for wholesaling and then explain them to him. As many deals as I have done I have never put up one penny. My end buyer handles all the earnest monies. Good luck on your deals.
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
If the seller refuses to use your contract, add to the contract SEE ADDENDUM. On the addendum put that earnest monies will be not be given until after all properties have passed inspection.
Make sure you have 14 days for your inspection to get your buyers in and to inspect the property. Since you are going for 22 properties and buying in bulk, you may want to add something like 'Because we are buying in bulk, earnest money deposit to be $100 per property' or whatever amount you are more comfortable with.
If he's into investing himself, he will surely understand the concern for needing an inspection period and refund period of more than 3 days; especially for 22 properties.
Go get 'em tigers!
I'd be EXTREMELY concerned about the 5 days to close... WHY does he want to close in 5 days?
Sounds like they're counting on making a lot of money and reselling the properties over and over again.
We ditched his contracts and Will be submiting ours.. I don't know who closes within 5 days anywhere so were not to thrilled but hey things happen we will keep you updated!! Thanks for your positive feedback
the seller accepted your contracts. It sounded as if he may not have been willing to. Keep on going! NO FEAR! I like it!
I am really struggling with the managing of my To Do List. Really getting overwhelmed. Anybody have any suggestions or systems that work.
Thanks
Lou
It's not what we get, but who we become and what we contribute that gives true meaning to our lives.
on here somewhere from the Edge '09 (I couldn't find it
) but it is a behind the scenes interview with Dean and he talks about organizing your to do list and managing your time. It is so valuable. If anyone has the link, please post it. I wanted to rewatch it too 
Thanks for your input that was invaulable!!! Another thing I learned on dg today
Thanks for the feedback. This is great information and I know that we need to be careful with specific sellers especially when dealing with groups of investors that do buy in bulk such as this particular seller.
Thanks again.
Best of Luck with your investments,
Lou
It's not what we get, but who we become and what we contribute that gives true meaning to our lives.