What is wholesaling, what’s an assignment, how does it work, and when should you get paid? Want more information on what wholesaling is? Check out Episode 2 which explains how to flip real estate contracts.
How to do Business the Right Way
As a wholesaler, you’re selling contracts, not real estate. You are selling deals to flippers, investors, buy and holds, and possibly other wholesalers. Selling contracts is legal in all 50 states, which means wholesaling is legal in all 50 states – if you do it correctly. I am not an attorney so before you take my advice and begin wholesaling, you should seek out legal representation. Get an attorney to help with your processes, procedures, and contracts.
- What makes a contract assignable?
- Buyer line should say your name and/or assignable. This means you don’t need the permission of whoever is on the sales side. If you don’t have an assignable contract you will need the seller’s permission to do so.
- How do you market a contract?
- This is where your attorney comes in. Based on state boards, the department of commerce, real estate divisions – every state will be different. You need to be able to tell them what the real estate contract is for, need specifics including rooms, market rent, rent ready or needs to be fixed, price, etc. Is this marketing real estate? No, because you did not market the address or the exterior. Only gave general information. Do not market as real estate unless you are a real estate agent.
- When should you, as the assigner, get paid?
- Send the assignment contract with an assignment fee. When does the contract say you get paid? At closing, earnest money deposit? Never get paid at closing. If the buyer backs out and the deal falls apart then you do not get paid. You want to be paid! What about a non-refundable earnest money deposit? You marketed, you found a buyer, you made the deal, you have the signed contract so you should be getting paid whether the deal goes through or not.
- Start doing business the right way.
- Get paid up front.
- If you are not getting paid up front, you should be.
- It’s the correct way to be doing business in this type of transaction.
- Eliminates the fakers and tire kickers.
- There are too many links in the chain, stay in your own link.
- How to start getting paid up front.
- Put it in your contract!
- Some things that may happen:
- They send you your money and you get paid.
- They say “Wow, I’m in the wrong business.”
- They say they won’t pay you because you shouldn’t make that much money.
- The amount you get paid does not change the fact that the deal is still a good deal for the buyer. They had zero problems with the deal until they realized how much you will be getting paid. Get your money!
95% of the people are doing it wrong. That doesn’t mean that you should continue to do it wrong. Make sure your contracts include assignables on the buyer line so that you do not need seller permission. Rewrite your contacts – add in an assignment fee, and get paid upfront. If you did your job then you should be getting paid.
If you love the returns of real estate investing, but don’t want to deal with any people, you have the option to be the bank. You can be part of a trust or a fund. Right now, I have a fund set up for accredited investors with over $5 million in assets. The fund has preferred interest and 70% profit sharing. Visit me at investwithdrmatt.com to find out if you have the opportunity to invest with us.
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