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Wholesaling Real Estate - The Power of And/Or Assigns
To be able to wholesale real estate without first closing on it yourself, you need to be able to have your buyer take over your position in the contract that you have with the seller. Usually, we accomplish this by assigning our rights in the contract to our buyer and having our buyer close directly with the seller.
However, as a real estate investor I occasionally get a real estate contract that does not have a section that would allow me to make the contract assignable. How do you deal with this? Well, my late mentor, Brent Grove taught me
Follow up:
the power of "and/or assigns." While you will want to verify that contract law is the same in your state, in most contracts anything that is hand-written into the contract takes precedence over anything typed. So, if, when you write out your contract, you use your name as the buyer name and then add in the words "and/or assigns", even if the contract states that it is not assignable, then the contract becomes assignable.
So, as an example, if I was writing a contract with Suzy Seller and my name was Bob Buyer, I might fill out the contract so that for the name of the buyer it would read:
Bob Buyer and/or assigns
If Suzy Seller agrees to the terms and signs the contract, then that contract becomes assignable. So, if I then sent out an e-mail blast to my list of thousands of real estate investor buyers to tell them about this new deal that I have, I could assign my contract to them. For a small assignment fee (which is often also called a wholesale fee), I would assign my rights and interest in that contract to my investor buyer and they could then purchase the house directly from Suzy Seller using my contract.
So, with that tiny phrase, "and/or assigns", you can take just about any contract and make it instantly assignable.
Until my next post,
James
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2 comments
As is the case all over the country, my area is litterally swamped with bank owned or REO's some of these are less than 40 cents on the dollar, which would make excellent wholesale candidates, however I keep running into a wall when I attempt to make offers on these REO's The banks want letters of credit or proof of funds.
How do I get around this? I have attempted to locate partners with either or to no avail? How would you deal with this issue, and where do you find your wholesale buyers?
any help would be appreciated.
Thanks,
Roland B.
James replies:
Here's where I disagree: bank REOs are NOT great wholesale candidates for the reason you mentioned. While these can be done, they are MUCH, MUCH more difficult than dealing with For Sale By Owner and even other listed properties.
Banks are much less likely to accept a contract that is assignable which means you need to get creative there. They often require proof of funds, so you need to get creative there. They are often winterized and have been vacant for sometime which often means potential and unknown issues.
So, I don't think that bank REOs are great candidates for wholesaling nor do I recommend it for most wholesalers.
Sincerely,
James
James replies:
I am not an attorney and I certainly do not know all the laws in every state. It is my understanding that it varies from state to state, but I am not 100% sure on that. You can ask your dream team members what the local law is for you or include the assignment phrase just to be clear.
You're very welcome for the articles! Enjoy!
Sincerely,
James
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