UNDERSTANDING WHOLESALE REAL ESTATE CONTRACTS
Understanding how the wholesale real estate contracts work can be a game-changer for those looking to invest in properties without a hefty upfront investment. Today, I am going to uncover the two essential components of these contracts; the Assignment Contract and thePurchase Agreement.\
- The Wholesale Real Estate Assignment Contract
The assignment contract is a legal document that transfers the right to purchase a property from the wholesaler to the end buyer. It kicks in once the seller and wholesaler agree on a deal, and an Assignment of Real Estate Purchase and Sale Agreement is drafted.
This agreement outlines that the new buyer will take over property ownership, including buying the home from the seller. The wholesaler can then sit back and relax, as they're released from any responsibility.
The assignment contains a copy of the original purchase and sale agreement, giving the buyer full insight into the deal's terms, contingencies, conditions, and prices. It also includes the wholesaler's payment terms, with a portion of their profit received as a deposit upon signing, and the remaining balance paid after closing.\ - The Wholesale Real Estate Purchase Agreement
The wholesale real estate purchase agreement is a comprehensive document that covers every aspect of the transaction. Here's a sneak peek into its components:
●The Foundation:
Parties involved: The new buyer and seller.
Property description: Address and legal details.
Deed type: The type of deed accompanying the property sale.
Condition of premises: A rundown of the property's physical state, damages, and necessary repairs.
Purchase price and financing: Agreed-upon price, financing terms, and deposit details. Closing date: The day when the deal is sealed and delivered. Contingencies, Clauses, and Extra Layers:
● Financing contingency: Lets the buyer back out if they can't secure the needed financing
(not a problem for cash buyers).
● Inspection contingency: Gives the buyer an exit if they're unhappy with the home
inspection results.
● Marketable title option: Allows the deal to be canceled if title insurance can't be obtained.
● Default clauses: Outlines the consequences if either party fails to uphold the sales
contract.
● Risk of loss and damage clause: Safeguards the buyer in case of property damage while
under contract.
● Adjustments clause: Accounts for property taxes, utilities, and other charges, varying by state.
● Addenda: Standard legal language and any post-signing additions to the contract.
It is important to note that the elements that make up this document might vary from one location to another. Please use a reputable lawyer or contact a reliable real estate agency like Dukiya to help you with this process. It's also vital to always review the terms and conditions of the contract before signing. I am always happy to help if you find anything confusing.
Next week, we’ll talk about building a buyers' list