Real Estate Wholesale Contract Template: Fill & Download for Free

Of course! For some reason, I often find myself answering this question because it’s a big misconception with new real estate investors, but becoming a real estate investor doesn’t necessarily require a lot of capital.Because of how often I’m asked this question, I actually wrote a blog post about it here: “3 Alternative Ways to Invest into Real Estate with Little to No Money” but to sum it up, I presented three alternative ways to invest into real estate with minimal capital. Obviously there are more ways than three but these three are the ones I like best:#1 - Real Estate WholesalingAs a real estate wholeseller, your goal is to be the middleman between a home seller strapped for cash and a real estate investor who’s looking to find an ideal home to invest in (usually to flip, which is to renovate it and sell it back at a profitable price).In a wholesale situation, a wholeseller usually signs an agreement with a home seller to buy their home at a specific price, with a closing date (ie. you agree to buy a home for $1mill anytime but no later than Aug 30).Make sure the contract has a clause that lets you get out of the agreement in the case you can’t find any buyers.You then market the home to potential buyers, usually other real estate investors, who will be willing to take the right to buy this home off your hands. An assignment fee is normally charged to the buyer, which is your profit from the deal.How does this benefit home buyers and home sellers?People often ask this question because they aren’t sure where the value comes from in being a wholeseller, but there are a couple of key value adds to everyone by dealing with a wholeseller rather than a realtor. The main benefit is:The home seller is usually someone who’s strapped for cash and needs to sell the home quick.This means most of the time, they don’t have the time to hire a realtor, perform inspections, fix up the home and make it presentable to home buyers.This is where you, as a wholeseller comes in. You’ll make it quick and easy for them by helping them sell the home as-is. The ones who are normally looking to buy the home as-is without any sort of renovations are other real estate investors.For real estate investors (usually home flippers in this scenario), they’re ALWAYS looking for a good deal. That means once you’ve earned a reputation around for finding good house flipping deals, you’re going to quickly build a network of real estate investors eager to get the home off your hands. This is when real value comes in as a wholeseller. As long as you can find good deals from home buyers looking to sell their home quick, you’ll be able to close it quickly and make something like $5,000-$10,000 (more or less depending on circumstances) per deal.What should I watch out for as a new wholeseller?As a new wholeseller, you should be extremely careful when you are setting up your legal contracts.I mentioned that the contract with the home buyer, in other words the Purchase Agreement, should include a clause that lets you back out of the deal.If you don’t do this, you’re going to be legally obligated to buy the home if you can’t find another buyer.You should understand all the little details and intricacies of your contract. For the most part, the two main contracts you’re going to be dealing with is the Purchase Agreement, and the Assignment Contract.I wrote a bit more details about it in my blog post, but basically, you can start with some templates online and you should consult with a lawyer on your first contract so that everything is okay.#2 - Sandwich LeaseA sandwich lease, when done well, is an amazing source of income. You’re basically the middleman between a leasee and a leaser.This usually happens when you have a home buyer who’s looking to sell or rent out their home, but for whatever reason, they don’t want to deal with being a landlord.You, as the real estate investor, comes in and tells him about the benefits of a sandwich lease, and he wholly agrees.He’s going to give you a lower than fair market value lease, because he knows you’re basically going to manage all the hassles of being a landlord for him. He won’t have to do anything.Your profit will come from a combination of rental income, option fees and capital gains when the house is sold. I gave an example of this in my blog which goes like this:Bob has been thinking about renting his vacant home in Vancouver but as he’s out of the country, he does not want to deal with the responsibilities of being a landlord.In comes real estate investor Mark, who’s an expert with sandwich lease strategies. He talks to Bob about his plans and together, they decide to sign a 10 year lease agreement.Mark signs the 10 year lease, agreeing to pay $600 in rent per month, along with an option to purchase the home anytime before the lease ends for $300,000. Mark pays $2,000 in option fees in exchange for the option to purchase the home during the lease period.A week later, Mark then finds Rachel, who’s interested in doing a lease with buy option for the same home.Mark and Rachel then signs a 5 year lease agreement, agreeing to pay $900 in rent per month, along with an option to purchase the home anytime before the lease ends for $350,000. Rachel pays $3,000 in option fees in exchange for the option to purchase the home during the lease period.After the 5 years, Rachel decided she would buy the home, paying a net $347,000 ($350,000 – $3,000 option fee) to Mark. Mark subsequently pays $298,000 ($300,000 – $2,000 option fee) to Bob, thus transferring the legal ownership of the home from Bob to Rachel.Again, more details in my blog but just look at how much you would make from the example above: $65,000 in five years, with almost no capital invested.#3 - REITsOkay, if you don’t want to deal with all the hustling, and all the hassles of a landlord, you should honestly just invest into REITs.REITs stand for Real Estate Investment Trust, which is a real estate company that focuses specifically on buying or financing for income producing real estate properties.As a REIT, these companies are legally obligated to distribute at least 90% of its net income to shareholders.Investing into REITs work the same way as investing into stocks. Publicly available REITs are generally available in most stock brokerage platforms like Questrade, Interactive Brokers, etc.The benefit here, is that you can invest as little or as much money as you want into a REIT, similar to buying shares in any other corporation.You also have the flexibility of investing into the types of real estate properties you normally wouldn’t have access to, such as senior housing, shopping malls, etc.Compared to the other two, this will be a completely passive investment with no hustling or property management needed on your end.Most REITs will yield you somewhere between 2–6% in dividends each year, along with any capital gains you may make from the shares appreciating.Hope that helps, let me know if you end up choosing any of the 3 options and run into questions. Will be happy to help to the best of my abilities.

Here are the 7 steps of how to wholesale real estate:1. Find a Distressed Property to WholesaleDistressed properties are typically best for wholesaling because they can be purchased under market value. Distressed properties are those in disrepair or those with owners who are motivated to sell quickly. Finding a distressed property will enable you to sell the property for more than what you put it under contract for.Since part of the appeal of wholesaling real estate is the low capital requirements, those new to wholesaling real estate will typically look for free or inexpensive ways to locate distressed properties. Seasoned investors will have other means to locate distressed properties, which we discuss below. Three of these sources for finding distressed properties are real estate wholesale and real estate investment groups, online real estate sites, and using the services of an assistant.Real Estate Wholesale Groups & Real Estate Investment GroupsReal estate wholesale and real estate investment groups are organized meetings between local real estate professionals and investors. They’re a great opportunity for new wholesalers to network with real estate agents, title companies, contractors, and appraisers. You may meet lead sources, partners and even mentors.These clubs send out weekly emails with available properties for sale. This information can help you understand what is being bought and sold, how much they’re selling for, and what neighborhoods have inventory. This insight will be valuable later on when you apply it to your own wholesaling business. The properties in the email occasionally come from Realtors, but most are properties that distressed sellers have turned over to wholesalers to quickly sell.You can find local real estate groups by doing a quick google search, joining a Meetup group in your city or joining a Facebook or LinkedIn group. Contact your local Chamber of Commerce and ask them if they have any upcoming real estate investor meetings. There are also online directories that list local real estate investor groups which you can reach out to directly.Real Estate Sites for WholesalersReal estate sites are are a great place to find distressed properties but you need to know which ones to look at. You want to utilize sites where motivated sellers are able to post their own properties.You can find these motivated sellers and their distressed properties by looking on craigslist, FSBO and HomesByOwner.com. When using these sites, type in the city or location you are looking for and consider using keywords in your searches, when available. Keywords will narrow down your search so you are finding the most motivated sellers, thus the best deals. Some popular keywords include:Motivated sellerDistressed propertyFixer upperSold as isMust sellEstate saleHire a Property FinderAnother popular and affordable way to find distressed properties is by using an assistant to help you find these properties. This property finder will locate properties that you can potentially wholesale. They will identify these deals by scouring neighborhoods, knocking on doors and cold calling home ownersThis assistant won’t be an hourly employee and won’t be paid upfront. Instead, they will only be paid when you purchase one of the properties that they found and it goes to settlement. The real estate industry term for this type of assistant is a bird dog. The name is derived from the dog that hunts for birds; just as the assistant hunts for property deals.A bird dog can be found in college students looking to make part time money, and job board advertising sites. They play an integral role in wholesaling because they will save the wholesaler so much time in finding properties. This time saved can be put into other areas of the business such as finding buyers and connecting with other investors.“In a low inventory high demand market like New York City, wholesaling is incredibly difficult, and as a result avoided by most agents. That said, I have heard of intrepid souls venturing deep into Brooklyn and working as “bird dogs” for investors. The ones that I knew of that saw success went from door to door with a solid door knocking script. The selling point here is obvious; it’s a low risk way of feeding around the edges of real estate investing. It can also be a good way to hone your pitching skills. That said, the odds of finding a deal are not great especially in a low inventory market like we’re in now.”— Emile L’Eplattenier, Real Estate Sales and Marketing Analyst/Editor for Fit Small Business.Other Methods of Identifying Distressed PropertiesAfter you have completed a few real estate wholesale deals, it is fine to try out other methods of identifying distressed properties. Three common methods include putting up bandit signs, mailing flyers and working with a realtor who specializes in investment properties.These methods take time and require upfront capital. You will need to delegate several thousand dollars to get bandit signs made and put up. These signs are designed to attract home sellers who need to sell their home for whatever reason and opt to not go the traditional route of using a realtor.Creating and mailing out marketing flyers, letters, and postcards are another way to encourage distressed sellers to contact you. In order for this to be an effective strategy, you need to know who to send them to. You can buy online mailing lists, or use direct mailing services which do the work for you.Another often overlooked way to find distressed properties it by searching probate court documents for recently inherited properties. You can look at divorce court records and public tax records to identify past due homeowners too. Once you compile a recent list you can send them flyers or letters including your contact information and mention that you buy properties in any condition. It is also important to mention you pay cash.The last resource for identifying distressed properties is the help of a Realtor. A realtor can assist you in finding a property, but keep in mind, most realtors are not comfortable with the wholesale process. It is best to use a realtor who is also a wholesaler or get a referral from another real estate wholesaler or from one of the other real estate investment group members.The realtor’s commission will need to be factored into the purchase price of the home too.Realtors tend to steer clear of wholesalers because they prefer to use their own contracts, and realtors feel more comfortable with the standard contract they are already familiar with. Realtors want to present a good faith deposit when making an offer on a house and since wholesalers don’t want to put up their own money, they often skip this step.Realtors also don’t feel comfortable with assigning contracts because the property is essentially being sold twice and the homeowner is unaware of this.in general, realtors feel like the wholesaling industry is scrupulous and their reputation will be tainted if they are associated with it. Realtors are licensed and insured and want to uphold the code of ethics they undertook.2. Make an Offer & Convince the Owner to SellOnce you’ve identified a property that is a good deal and it is time to convince the property owner to sell the property to you and sign your contract. This step is important because it will be how you secure properties to wholesale and make a profit.Approach the OwnerWhen approaching a homeowner, it is important to go about it in a delicate way. SInce a wholesaler is not a conventional real estate professional they will need to gain the homeowner’s trust before moving forward. This can be done by being professional, courteous and on-time when meeting the homeowner.Make an Offer & Get a Low PriceOnce the homeowner has agreed to meet with you, you’ll want to discuss the benefits of selling the home to you. Most wholesalers focus on how selling to them will alleviate whatever pain points are motivating the seller in the first place. An example might be helping someone avoid defaulting on a mortgage they can no longer afford.Wholesalers will typically also emphasize how they will handle the contract, a property inspection, the appraisal and the closing process. This won’t put any additional stress on the homeowner since these things are being taken care of. Many wholesalers will highlight the fact that the homeowner won’t have any upfront costs.It is also important to tell the homeowner about the property repairs that need to be done in order to fix up and rent or resell the house. This is important because the money spent on repairs will justify the offer you make to the homeowner.SigningThe homeowner will need to sign your contract. You can use the help of a local attorney or realtor but most wholesalers write their own contract, alter a generic real estate purchase contract, or use a wholesaling agreement template. They do this so they can add their own clauses and do not have to adhere to all of the clauses in a standard Agreement of Sale. This will be discussed more later in the article.Most wholesalers tell the property owner that the buyer is, in fact, their partner. They do this so the owner doesn’t know that they’re assigning the contract and making a profit. Although this is legal, from what our legal experts have told us, it’s not recommended because it’s deceitful. They tell the seller about a partner, who is actually the assignor. This person is who they sell the deal to. That way they can show the site to them and tell them not to talk business according to Sherman Toppin, PA Attorney, and Real Estate Broker3. Find a Title Company, Contractor, & AppraiserA real estate wholesaler needs a title company, a contractor and an appraiser on their team. These professionals add a level of professionalism to your team and help your entire wholesale transaction run more smoothly. Each professional will save you time and money in the long run.An appraiser that you work with can come out on short notice and give you an appraisal for the property you intend to wholesale. This will ensure you are paying the right price for the property and have room in the price to resell the contract and make a profit. An experienced buyer will also want to see an appraisal before purchasing the property.A title company ensures the buyer is buying a legitimate piece of real estate.They run a title search on the property to see if there are any liens on it. The title company will be used at settlement and they will need to be investor friendly. This means that they are comfortable dealing with assigned contracts, which we will get into in a later section. Make sure to ask them this upfront and be honest about your intentions with the property.Finding a reliable, reasonable contractor or knowledgeable handyman goes a long way in this business. The contractor can come with you to look at the potential property and can draw up an estimate of repairs. You may not think this matters since you aren’t fixing up the property and are selling it in ‘as is’ condition but it is helpful when you find a buyer.All three of these professionals can be found through referrals, online searches and from recommendations from a real estate wholesaling group. Another real estate wholesaler will be able to tell you who he recommends using in your area too.4. Assess Property’s Renovation NeedsBy assessing what renovations a property needs, you know the costs and ensure they fit with your plan to profit off the deal. A distressed property that needs renovations means a higher margin for the investor that you sell the property to. This higher margin will allow you to make money off the deal as well.You can give the estimate of repairs, that your contractor drew up, to the buyer so they know what to expect. They won’t be able to make you too low an offer based on overpriced repairs because you already know what repairs need to be made and how much they will cost. Having this estimate of repairs is a valuable negotiating tool and will increase your overall profit.Knowing what renovations the property needs and how much they cost will also give you an idea of how much the ARV of the property will be. This is particularly important to show investors so they can see the value and potential profit that your particular property will bring them.5. Find a BuyerYou found a property to wholesale, have the necessary professionals in place and know what repairs the property needs. It is now time to find a buyer. This won’t be a first time home buyer or a family, but instead, it will be an investor or a contractor who will be buying and repairing the property.Finding a buyer is important and needs to be done quickly since there will be a settlement date on the contract which needs to be adhered to. When you are first starting out wholesaling, you may not have a list of buyers but you can find them in a variety of ways. Some of the most cost effective places to find buyers include:Advertising the property on free websites such as Craigslist and Zillow.Distribute flyers with the property information on it throughout the neighborhoodEmail investors that you have met at investor meetup networking events with the property infoOnce buyers start calling about the property, save their name and contact info, even if they aren’t interested in this property. You can create a quick spreadsheet or use a customer relationship management(CRM) software to save all of this info and this will be your buyer’s list. Every time you have a new property to wholesale, you can send it out to your buyer list. This will decrease your advertising costs, in turn increasing your potential profit.6. Negotiate a Deal with the BuyerOnce you have found an interested buyer, it is time to negotiate a deal with the buyer. This negotiation is critical because it will determine how much money you make off the deal. Your profit will be the difference between what you purchased the property for and what you’re wholesaling the property for.When negotiating with the buyer, use the contractor’s estimate to your advantage. Let the buyer know that you have other buyers interested and if they want to get this great property, time is of the essence. The buyer will need to leave a good faith deposit, which can be made out to the wholesaler, or the title company and held in escrow until the property goes to settlement.When you are negotiating with the buyer, make sure all of your costs are coveredAppraiser feeContractor walk through feeTitle fees, if you paid them, to get a head start on the title searchAny marketing fees including what you will owe your birddogEnsure that after your costs are covered, you will make enough profit to make the process worth your time, effort and gas money. In general, most wholesalers aim to make at least $2000 profit off of each wholesale deal. If you aren’t making that amount, the deal isn’t worth doing. Most wholesalers calculate a flat fee but ARV is still important for the investor, as is discussed in the Numbers section later in the article.7. Closing on the Wholesale PropertyThe closing, or settlement as it is also known, will take place at the title company’s office and will last about 90 minutes. All parties will come together and the deed will be transferred to the new owner. Once this is done, it will be the completion of a wholesale deal.The closing date will be mentioned in the contract you signed with the property owner and the contract you signed with the new buyer. All closing costs will be paid by the buyer and the seller unless otherwise agreed and the new buyer will receive keys to the property.You chose an investor friendly title company that will conduct the closing to keep all parties satisfied. Since there were assignment clauses in both contracts, the wholesaler will generally not transfer the property into his name. This person, usually an investor, will put the property in his name, or more likely his company’s name. This is a way to avoid paying transfer taxes on two separate transactions.The Philadelphia Department of Revenue and most Pennsylvania municipalities have been alerted to double transactions. They consider each transaction, even an assignment, a property transfer that needs to be taxed. The City of Philadelphia has been cracking down on wholesalers according to Sherman Toppin, PA Attorney, and Real Estate BrokerSource; How to Wholesale Real Estate the Right WayRelated Post: https://dosramosteam.com/are-you-looking-for-best-realtor-in-burlington/

If you are a beginner real estate investor, you’ve probably heard about flipping houses. A similar concept is wholesaling real estate. However, instead of flipping houses, you’re flipping contracts. What this means is that you find motivated sellers, negotiate a below-market sales price before you ultimately find a buyer to sell the purchase contract to. This positions you as the middleman between the buyer and the seller. As the wholesaler, you make a profit once the deal is finalized. The profit, in this case, is the difference between the contracted price with the seller and the amount paid by your buyer.Wholesaling is a great option if you want to get into real estate but don’t have a lot of cash. An advantage is a time it takes to wholesale, which is much shorter than flipping houses. Not only that but unlike house flips, you don’t have to make any repairs or renovations. As a result, you take on significantly less risk. However, the process of wholesaling real estate step by step isn’t without its challenges. Some of the downfalls of wholesaling real estate include confusion about its legality and complicated contracts.With that said, are you interested in learning more about what it takes to get into wholesale real estate? Here is an easy-to-follow guide on how to wholesale real estate step by step:How to Wholesale Real Estate in 6 StepsStep #1: Look for a Motivated Seller (or Distressed Property)Your job as a wholesaler is to find motivated sellers that have distressed properties they want to sell quickly. These kinds of properties are best for wholesaling real estate since they are easier to purchase under market value and sell for more than you put it under contract for. Start to market yourself as a wholesaler via direct mail, internet marketing, door knocking, signs, posters, or whatever method best suits your time and budget. You have the options of looking for a property seller via investment groups, online real estate sites (such as Zillow, Airbnb, or Mashvisor), and/or an assistant. We go over these in greater detail below:Real Estate Wholesale & Investment Groups: Get involved in a group, as it gives you a great opportunity to network and meet with real estate professionals, agents, partners, mentors, etc. These clubs provide information on real estate in terms of what is being bought and sold in the area and for how much. This information will give you valuable insight on how to wholesale houses and essentially how to start a wholesale real estate business.Real Estate Websites: There are sites that can help you find distressed properties and motivated sellers who are looking to quickly sell. Such sites include Craigslist, FSBO, HomesByOwner among many more. You can narrow down your search by including the most popular and relevant keywords such as: “motivated seller,” “distressed property,” “must sell,” etc. Mashvisor also has short sale listings as well as foreclosures and bank-owned homes which are known to have motivated sellers.Check out the Mashvisor Property Marketplace right now and find the perfect property for wholesaling.Assistant: Another way to find motivated sellers is to work with an assistant dedicated to helping you narrow down your search. The real estate term for this kind of assistant is a bird dog. A bird dog can help you save time finding real estate properties so you can focus on connecting with other real estate investors. An assistant can identify the best real estate deals by searching neighborhoods, knocking on doors, and cold calling property sellers.Step #2: Negotiate a Deal with the SellerOnce you’ve got the marketing down, start talking to property sellers and negotiate. Be sure to negotiate your price low enough to leave room for your wholesale fee. Also, make sure to leave enough profit to make the deal attractive to your property buyer. Below are the specific steps you should take to close a deal with the property seller:Approach the Owner: Meet the property seller in a professional manner. Wholesalers are not typical real estate professionals. For this reason, it is essential to gain the homeowner’s trust. This can be done by being on time, courteous, and professional.Make an Offer: Discuss the benefits of selling the property to you. Focus on the pain points you are looking to alleviate that is motivating the homeowner to sell in the first place. An example is helping a homeowner avoid defaulting on a mortgage they no longer can afford. You should also emphasize how you will handle the contract, property inspection, appraisal, and closing process. Moreover, inform the homeowner that they won’t have any upfront costs. Additionally, let the property seller know of any repairs that need to be done prior to resale. This is important because the money spent on repairs will help you justify the offer you make to the property owner.Sign: As a wholesaler, you can get the help of an attorney or real estate agent to help you draft the contract. However, most wholesalers write their own contracts by editing a generic real estate purchase contract or using a wholesale agreement template. This is a great option for you if you want to add your own clauses.Step #3: Look for a Property BuyerOnce you have the property contract signed, look for an end buyer. The end buyer most likely won’t be a first-time homebuyer. Instead, it will be an investor or contractor who will buy and repair the real estate property. Effective ways to look for property buyers include:Call or email all of the investors in your real estate network and let them know about your new dealAdvertise on free online classified sites such as CraigslistMarket your property via signs located near the premisesDistribute real estate flyers throughout the neighborhood and in investor meetingsBasically, you will want to market your deal to as many prospective buyers as possible. Keep track of your prospective buyers by building a buyer’s list which is equivalent to your “book of business.” Ultimately, you need to find an end buyer quickly since there will be a settlement date on the contract that needs to be adhered to.Step #4: Negotiate a Deal with the BuyerThis negotiation is critical since it determines your profit or how much money you will make off the deal. Again, the profit is derived from the difference between what you purchased the property for and what you’re wholesaling the property for. To ensure a quick sale, inform the buyer that you have other buyers interested in your property. Ensure that the buyer leaves a good faith deposit to be held until the investment property goes to settlement.Also, during this negotiation phase, ensure that all of your costs are covered such as:Appraiser feeContractor walk through feeTitle fees (if you paid them)Marketing fees (i.e. bird dog wage)In general, aim to make at least $2,000 profit off of each wholesale deal.Step #5: Assign the Purchase Contract to the End Buyer and Collect a DepositNow that you’ve found an end buyer and agreed on a purchase price, it’s time to assign your wholesale contract over to them. You can do this by executing an assignment of the contract agreement. An assignment agreement is usually a one-pager which states that you (the wholesaler) are assigning an interest in the original purchase contract over to your end buyer for a certain amount (the assignment fee). Let’s say that your original contract with the property seller was for $100,000 and your end buyer agrees to buy it for $110,000. In this case, you would fill out an assignment agreement where you assign all of your rights in the original contract to your end buyer for the amount of $10,000. Don’t forget to collect the deposit from your buyer after the assignment agreement is executed.Step #6: Close on the Wholesale PropertyThe closing of the wholesale deal is also known as the settlement. This is where you and all relevant parties meet, sign all of the necessary documents, and transfer the deed to the new owner. It is also where you and the end buyer pay all closing costs. The settlement basically concludes the wholesale deal.To Sum it UpWhen it comes to your real estate investment strategy, knowing how to wholesale a real estate is a great option. This is especially true if you don’t have a lot of money and want to make a quick sale with minimal risk. The wholesale business is also an ideal way of making money in real estate without owning property. It shouldn’t have to be difficult to manage, grow and scale your wholesale real estate business. All you have to do is take the first step!