Re: How to Protect Yourself in Wholesale Deals? - Posted by Elizabeth NJ
Posted by Elizabeth NJ on April 13, 2006 at 22:28:47:
Don’t assign your deals, continue with your double closings. Your closing costs are the cost of doing business and you should factor them into your selling price. I don’t know what you’re paying for at closing but my contracts say what I will and what I won’t pay for at closing. On the other hand, there have been many times when I’ve paid my seller’s attorney’s fees for closing because it sweetened the deal for me.
When you assign a contract, you lose control of the deal and you’re pretty much in the back seat the rest of the way.
When you buy with a contract and sell with a contract, you’re protected both ways. If your contracts are properly written and contain specific required legal clauses, then no one can do an end run around you. No builder or investor would risk their reputations by trying to push you aside.
I think you should be more concerned about using contracts that fully and clearly state your intentions. For example, if I sell to a builder or another investor, my sales contract specifically states that no financing provision is conveyed to my buyer because he’s buying all cash. It puts the onus on my buyer to come up with the money quickly (30 days) or he’s out of the deal, no extensions [also stated in the contract].
There are some good contract forms on this site, or perhaps you already have one you use. Take some time and carefully review the language. Modify the contracts to suit your terms and when you’re satisfied with what you have created, have your attorney review it for legal compliance, and use that contract for your deals. You should have a purchase contract and a sales contract that you can pull up and just fill in the variables for each specific deal. And make sure that the only back doors in these contracts are just for you.