Question for the wholesalers on the website (Or investors with experience dealing with them)…I recently spoke with a wholesaler because I am tired of the dead ends on MLS. He talked me through the process which is something like – he calls with a lead that fits my specific criteria, I meet him at the house with a cashiers check and the signed first page of the contract (he says well fill the rest out later). After we walk through the property and I decide to purchase, he takes a copy (a physical picture) of the check and contract, sends it to someone on his end, and the house gets pulled off the wholesale market. My question, from the business end of things, is when I leave the house at that point, I dont have an executed contract in my possession (as far I as I understand the process) because the current contract that he is re-assigning is between him and the seller. So, where is my protection for the money I paid him? Can someone maybe explain the process a little better? I know the system has to be legit because there are thousands of wholesaler/investor relationships. I just feel like Im missing an important piece of information from the investor side of things. I appreciate any feedback.
Liana Cox: Have you considered using an escrow account in that situation? I know certain title companies that help with these kinds of transactions. I would ask your local real estate attorney…
Jaden Daniels: I pay cash. Did that make a difference? From what I understand, the check I bring the wholesaler acts like a finders fee. I just feel like I should get the contract at that point. The physical contract between the seller and wholesaler.
Liana Cox: Uh oh, be careful when you use the word finders fee… It can lead to certain general attorney to believe youre brokering real estate without a license… PM me, sounds like you need some personal help.
Jaden Daniels: The wholesaler has a license. Ill PM you.
Elena Scott: Use an escrow account and a legal transfer agent!Title company or someone that can execute a simultaneous closing.You are just asking to lose your money.
Maddox Barnett: No realtor involved? Think you should have signed the purchase agreement and the wholesaler/investor would had been an assignee on the agreement
Emilia Hoffman: Exactly!!
Theodore Martin: Get a real estate attorney and have them escrow the money for you. That way its protected.
Alexander Brown: Your money is paying for the contract in that scenario. All contracts are assignable as an inherent component of agreements. You are quite literally paying for the paper. You then take over and Close. You dont even have to meet or inform the Seller necessarily. If he is as seasoned as he intimates then the Seller should already be prepped for that eventuality by him…The scenario changes if his intent is to double close instead of assign.
Colton Moody: Can Zane cloud the title to protect his interest in the property guys?
Adelaide Roberts: With what? Theres no written agreement. He could file suit and record a list pendens. But, it doesnt sound like the wholesaler has title to the property. It just winds up hurting the initial Seller who may not be guilty of anything other than trying to sell the property
Colton Moody: Hence my question.
Adelaide Roberts: Agreements for the sale of real property should be in writing. If youre not working through a real estate agent or attorney where you have recourse to certain disciplinary bodies if you get cheated, my advice would be to have an executed, written agreement before money actually changes hands. Escrow accounts are good for setting money aside to be held by 3rd parties, but that still usually requires a written agreement. Its more difficult to try and enforce oral contracts after something has gone wrong. Good luck
Maddox Barnett: I agree ðŸ’¯ percent
Colton Moody: Make sure your real estate agent and attorney are insured as well.