wholesaling question

[pfen]

Hello,
I've been studying real estate for awhile and Im anxious into getting in the game. I've just attended a real estate convention for the acre of pittsburgh. I want to get into wholesaling, but i have a few questions

1. What are the names and how many contracts do i need for wholesaling transaction. I know I need some kind of contract for the seller and the buyer. Is that it?

2. Do i sign the contracts in my name, or should i form a LLC before I start wholesaling and signing contracts.

3. Should i give the seller a deposit for the contract, and typically how much?

In general im just confused in the process, i know what wholesaling is, but not sure how to excute and start

Please help!
Thank you
Pfen

ps. I live in PA

[tedjr]

Howdy Pfen:

Most purchases and sales of homes are done on a 1 to 4 family resale earnest money contract. You can get them at title companies or even on line perhaps thru your local Board of Realtors or from local Realtors and Brokers in Pa. You will need one for the sellers and one for the buyers that you sell to. You can also do a simple assumption agreement with the buyers where they agree to assume your contract with the sellers and pay you a fee. Your title company may have a simple assumption agreement. It is basically one paragraph naming who and what contract and when and how much you get etc.

Start with your name and do a few deals and then you may want to for an LLC or small Corp.

The earnest money deposit should be made out to a title company or an attorney who will close the deal. Never give the seller money as you will never see it again if you decide not to do the deal for some reason.

It is really not that hard of a process to figure out but it will take some hard work to find a great deal that you can resell for a fast profit. Some of the books and tapes and classes make it seem so easy that anybody can do it with ease and without risk. It ain't that easy. It is hard  and may not be for you.  Just finding a deal is hard and getting someone to buy it quickly takes time and risk.

LOL and hope this helps some.

[pfen]

I talked to an attroney today, he said wholesaling is very risky, but other real estate investors have said it is the best way to start. What do you think?

Also, the attroney said i have to give a payment to the seller to ensure that i will assign the house to another potential buyer, and , if i don't the seller walks away with the money. The attroney said usually around 500 dollars or less. I don't have that money to be throwing around incase i lose. Is there another way?

Final question:
If the vacant lot or house for sale is advertised by a realtor such as howard hanna. Can i still wholesale the house eventhough the real estate agent has it. Or is that illegal?

[tedjr]

Howdy Pfen:

If you want somehing for nothing then do not do real estate. The lottery is your best bet or a dice game in Vegas.

I answered the earnest money question above. You will have to risk something to play. Some wholesalers only put up $100 to play. I have used $250 on smaller deals of $30,000 or so.

You can wholesale deals with Realtors involved. It may be harder especially if every investor in town has seen it before. It has to be a steal of a deal at least 40% or so below market. There are a few listed like this but hard to find on MLS.

LOL

[kimesha]

tedjr,
how do you come up with your earnest money amount? say you want to flip a 200,000 dollar house, do you have to give the seller a large amount? i mean is there a state law or somrthing that says if you don't put down at least a "considerable" amount the contract is not enforcable?