OfflineI am currently in Dean's No Money Flip Master Class. I am extremely motivated to start making money using real estate and would like to start out by doing a few wholesaling deals to get in the deep end as fast as possible. But there are a few questions that I still have even after reading 30 days to real estate cash (and the Set for life blueprint), the Cashflow from wholesaling course and searching this forum.
1. When wholesaling how does your realtor get paid? If their are getting deals from the MLS, running comps and/or they're getting your contracts signed for you they will want and deserve to get paid but you aren't paying closing costs. Do you just negotiate a flat fee beforehand? And if that is the case in your experience do most realtors not want to mess with you because you aren't enough business?
2. Do you use the contracts available on this site or do you have contracts specific to your state ect. drawn up by a real estate attorney? Also is it really as simple as meeting with the seller (after you've negotiated a price that you can assign for a profit) and you both sign on the dotted lines?
3. After you have the house under contract and have found a buyer that has done their due diligence and wants to take the contract off of your hands you both sign an "assignment of contract." Then what do you do?
4. Do most real estate attorneys when handling assignment of contracts charge a flat fee if the deal closes?
Thank you all for your help and thank you Dean for building such a great community.
*Edit for clarity
*Edit because apparently I can't count 
If you haven't officially been welcomed yet... WELCOME!!!
I'm not a pro but do have some knowledge... maybe I can help you out?
1. Generally the agent gets a commission, you don't have to negotiate a flat fee. Their commission is included in the closing costs, they will give you a rough estimate of closing costs associated with whatever particular property your interested in. And since they don't get paid until the house closes, and sometimes in this business, especially starting out, you won't close on many right away, they feel its work for "nothing" (running the comps and contracts and etc.). They may initially start off working with you but might run out of steam... just have to find the good one and keep moving on when things turn sour with that realtor.
2. You can... especially if your dealing with a house that isn't listed or represented by an agent. Always run your contract by an attorney if not working with a realtor, shoot sometimes still if you want to be extra careful. Usually you can review the documents before you have to sign. With assign or double close (both essentially the same destination, just down a different path) yes it truly is as easy as signing an assignment contract and collecting a check at closing. Its easy!... then its not easy. You have to do your due diligence, and then you have to lock the property up into a contract, then you have to market or take a buyer out your back pocket, which means you have to get out your comfort zone (At least for me)... Once you have a little more invested time and resources its truly that easy.. but expect hiccups.
3. Make sure your end buyer gives you an earnest money check or earnest money cash. Make sure this amount covers the amount that you initially used to lock up the deal, I'm asking my end buyers for five times the amount that I initially used minimum. You can ask for the whole assignment/profit up front. To make sure they are serious I would say its non-refundable. After that you simply take your contracts and hand money to the closer... Your essentially "out" of the process now (if you assigned). You can tell the closer to contact the assignee from that point out. Once the house closes, or if the end buyer walks, you get paid.
2(? lol
) I don't have experience in this... BUUUUUUT If I think about it logically and from "real estate" point of view... the answer is yes... and it should be included in your closing cost.
Ok guys if I'm wrong chime in here... we don't like wrong information on these here forums!!
Thanks!
John
T and J Real Estate
1. You realtor gets paid after you assign the deal to your buyer and then you buyer closes on the property. You realtor would be representing your buyer when he steps into the contract. Your buyer pays the closing cost, unless you do a double close and sell it to your buyer on the say day, only then would you pay closing cost.
2. When making offers with a realtor you will use your agents contracts. When making offers to a for sale by owner you can use the contracts on this site and modify the terms to your interest. Or you can have your attorney draw up your contract but that would cost you anywhere from $200-$350, maybe even more.
3. After you and your buyer sign the assignment of contract you simply send the contracts to the buyer and have him give them to his attorney or you can send them yourself, then you just wait for the closing to happen to pick up your check. Unless you ask your buyer to pay your assignment fee upfront before closing.
4. The buyers attorney or sellers attorney would not charge you for the assignment of contract process. Your just the person in the middle and it doesn't take much paper work to handle the assignment.
Reynold Orozco
So just to make sure I've got this right
1. On a standard assignment of contract my realtor would get paid from the closing costs that my buyer pays (the C in the standard A->B->C wholesale model) and not from my assignment fee because they would be representing my buyer (C) from the time that they took the contract off of my hands.
2. Contracts available on this site are suitable but as with everything be aware and use your head.
3. Before you sign over the contract to your buyer (C again in the ABC model) be sure to get some earnest money to discourage buyer (C) from backing out. You both sign the contract and if you didn't get your whole assignment fee up front then you'll get the rest once the deal closes. And once you've singed over the contract their team handles everything and there shouldn't be anything else for you to do.
4. no clarification needed
New question 5. What is the process for backing out of a deal? Do I just need to tell my realtor that I need to back out and they take care of it?
Thanks a ton guys I wasn't expecting such a fast and complete reply
No problem man trying to help everyone!!
Thanks Ray for further clarification!!
1. Yes
2. Yes
3. Yes
4. GREAT!!
5. Your inspection contingency. You have up to 14 days with a realtor generally and a predetermined amount through FSBO that you negotiate to have the house inspected. If you can't find an end buyer or the numbers just don't match like you thought, you can back out at day 13. To ensure that you get your earnest money back make sure you state in your contingency one of two things in my opinion: a) Make sure the wording does not state that the inspection needs to be done by a license official. b) A simple way of wording that gets the same results is to state contingent on partner's approval (the partner can be your end buyer and you DON'T have to disclose this up front or at all for that matter).
Just be ready for hiccups... some sellers don't want you to have an inspection. Crazy honestly lol. I always offer a low amount of EM anyways. $10, see if they are motivated enough to come to the table.
Hope this helps
John
T and J Real Estate
1. When wholesaling how does your realtor get paid? Do you just negotiate a flat fee beforehand?
2. Do you use the contracts available on this site or do you have contracts specific to your state ect. drawn up by a real estate attorney? Also is it really as simple as meeting with the seller (after you've negotiated a price that you can assign for a profit) and you both sign on the dotted lines?
3. After you have the house under contract and have found a buyer that has done their due diligence and wants to take the contract off of your hands you both sign an "assignment of contract." Then what do you do?
4. Do most real estate attorneys when handling assignment of contracts charge a flat fee if the deal closes?
T
1) The realtors are paid by the seller if the property is listed on MLS. A seller's contract has him paying 6%--3% of which goes to listing agent and their brokerage and 3% to selling agent and their brokerage. So each realtor gets 1 1/2% and their broker gets 1 1/2%. If a property is not listed on MLS (a FSBO), you DO NOT use a realtor for this deal, so no fee is involved.
2) If you are working with realtors, you MUST use the state real estate agreement. If no realtors, use the ones here. You may want to take it to a RE atty initially to have them tweak it for you.
You and the seller will negotiate the deal, put it under contract (PA or Purchase Agreement) and then you will keep the original, give a copy to the seller and you will take a copy to the closing entity in your state (YOUR person). This will be YOUR escrow/title company or YOUR RE atty (depending on who does closings in your state) Tell them not to start doing the title work yet, because you will be assigning the contract to someone else. This way, if you do not find an end buyer, you will not have to pay for the title work. Also, if your end buyer has never worked with you or is not familiar with assignments, he can call your closing entity and they will verify that you do indeed have the property under contract.
3) You find a buyer who does their due diligence and agrees to the "new" price which includes your fee. Only THEN do you show him the contract that he will be assuming and then you both sign the Assignment Contract. End buyer gets a copy of original PA and a copy of the Assignment. You keep the original and YOU take a copy to the closing entity. DO NOT leave it up to the end buyer to do this! Until the closing entity receives this, you are still the responsible party on the contract. I get my FULL nonrefundable fee at the time that C signs and assumes my position. When they have the larger amount ("skin in the game") there is less of a chance that the deal will fall through.
When you give the Assignment contract to the closing entity, tell them to proceed with the title work and prepare for the closing.
The original seller (or any realtor, if one is involved) does NOT get a copy of the Assignment and is not even told this has happened. It is not necessary and will usually cause confusion and distrust because they don't understand the concept. Don't even try to explain it.
Then, you are technically out of the deal. A professional wholesaler will stay involved to make sure that everything closes smoothly though. After all, YOU are the one who has the relationship with all three parties.
4) There is absolutely NO need to involve an atty in the Assignment. Just use your forms and fill it out yourself. Unless the atty is the closing entity. But there should not be any additional fees because of the assignment. You pay nothing. All closing costs are paid by the seller and the end buyer.
IMPORTANT POINT TO REMEMBER!!! You are selling your position in the contract NOT the property. That is the fine line that makes what we do legal.
Best of luck!
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
Thank you for the detailed answers all. I really appreciate it.
New question 5. What is the process for backing out of a deal? Do I just need to tell my realtor that I need to back out and they take care of it?
This is the only exit clause that I use:
Other Terms: subject to buyer’s walkthrough and approval of walkthrough, in writing, within 14 business days of acceptance. Buyer and seller are to pay normal closing costs. Buyer is to have access to property upon acceptance.
Notice I have inserted "business" in the number of days. Give you an extra four or so days. If I need to back out of the deal, all that needs to be said is:
My partners and I have analyzed this deal further and it does not fit into our portfolio at this time. We are withdrawing our offer.
That is all that needs to be said. You can email this to your realtor.
This is all that is necessary. Short and sweet...
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
As usual!!! And I LOVE the idea of your contingency. I am definitely stealing the idea.
Reynold and Karen are correct, this might sound like a lot but its not after you understand it, yes read it again. I think all REIers need a good REAL ESTATE attorney on their power team just to make sure your ass is covered.
When we go into any deal we want what I call "Houdini clause" that's the wording you put in to get out of the deal. Everyone knows the partner one but if you feel like ****ing someone off put in the inspection part, "approval after termite inspection" yes they pay for it. Again only as a bad idea, it goes, when it comes back clean no termites and you want out of the deal simply back out because you wanted to raise termites and this house has none im out...lol funny but such a bad thing...lol
LOL ok I don't know how I got off on that but Karen should use that as a laugh, she knows what im talking about. Take note to what they have said its true..
You can do this
Aaron
Im sorry I shouldn't advise on that.