In this episode, you’ll hear:
- 01:32 – [5-7 time stamped highlights]
- 01:32 – highlight
- 05:11 – highlight
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How Real Estate Wholesalers Should Evaluate an End Buyer
Mike and Jae shared 4 great tips on how to vet buyers in a wholesaling situation. They involve documents, personal finance, experience, and team.
The documents you should request from Buyers include previous HUDs to show proof of past deals, proof of funds, and LLC formation paperwork.
You should also conduct a credit check and proof of income through tax returns or pay stubs. This part is especially important if there is any sort of financing like Seller Financing involved because you need to ensure the Buyer can afford the payment.
To vet a buyer’s experience, the HUDs will show you proof of deals done, however you can take it a step further and ask for proof of resale, active leases, and more. You can also ask if real estate is a full time or part time gig. Also ask whether the deals the completed were solo or with partners involved. Someone acting just as a money partner has very different experience from someone who understands rehab and property management.
Finally, confirm they have a team. Ask to speak with their lender, their contractors, their attorney. Their attorney may not be able to tell you much without the Buyer/client’s express consent but this conversation can give you a sense of how strong the team behind the Buyer is. Ask attorneys about turn around time, preferred communication style, and experience in the transaction type. Most real estate attorneys should know how to do an off-market transaction. However, when you start layering in creative financing, wholesaling, and post-closing creativity like lease-options, the pickin’s get slimmer.
Not All Real Estate Contracts are Made Equal
Mike and Jae shared how their attorney-prepared contracts covered them when their end buyer breached them. Even though their real estate coach gave them templates, they worked with a local lawyer to create solid contracts for their exit strategy. Some contracts—like lease agreements or to purchase agreements—are best designed by local attorneys. Why? Well, they vary incredibly from state to state and sometimes even by city! Most major cities have unique real estate laws and you want to make sure you’re following them. For example, I wouldn’t use a generic New York state lease in New York City.
For that reason, you won’t find those types of contracts in my template shop. It would be out of integrity for me to do so. As an attorney, I know better than to sell templates that will do more harm than good.
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