How to Back Out Of A Wholesale Deal
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- čas přidán 3. 09. 2019
- One of the most common questions new wholesalers ask Is...”what happens if I don’t or can’t find a buyer?” If you’ve wondered that then this video is for you. I’m going to break down exactly what your obligations and risks are with entering into a contract as well as a hack strategy to easily and legally back out of a wholesale deal without any negative consequences so you have zero risk.
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Renegotiation Script to Seller:
”During my inspection, I discovered that the repairs were more than I originally anticipated and therefore I would still like to purchase this property but will need a $10,000 price reduction from $150,000 to $140,000.”
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Jerry Norton went from digging holes for minimum wage in his mid 20's to becoming a millionaire by the age of 30. Today he's the nation's leading expert on flipping houses and has taught thousands of people how to live their dream lifestyle through real estate.
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Thank u sir
This clarified everything thank you Jerry! I was stressing over the whole finding a buyer situation afraid I would be stuck! You are awesome! Keep these videos coming. Great content!!!
been watching your videos for a year now learning everything I can while also preparing for my real estate exam once i get my first deal ill make sure to thank you you have some of the best content!
Love this strategy
Thank you much for this info!!!
👍🤛
Your videos are amazing Jerry thanks for all the help you do
This guy is teaching me so much when I get my first flip I. Gotta hit em
Up
Jerry You are a Flipping Genius!!
🐐
Thanks dawg!
You my mentor & I don’t even know you
My biggest takeaway from this was everything! Thanks
You are amazing
Man you have helped me so much. Thank you. I love your videos keep it up your AWESOME
👊
Great break down 👌
he always does a good job explaining
🙏🙏
Awesome content. Always try to close all your deals! If you have to JV or re-negotiate price do that, but I understand that does not always happen.
I love you Jerry you helped me so much since last year and I will be finally taking the leap of faith. I know these next ten months will change my life. Thankyou
Facts
Thanks for the new information but would like to learn more into wholesale real estate
Clear and concise!!! 🎤
🇺🇸🇿🇦
🙏
So if for both negotiation and getting out, I can use your script "during my inspection I found that the repairs will be more than I have anticipated...". Is this correct, thank you in advance and God Bless you more
Flipping genious
Hello, so should you make a contract between you and the cash buyer before the 10 days inspection expires? What happens if the cash buyers agree to buy on the 9th day but can't sign the contract until after the 10-day inspection period expires? What do you do, basically, do you trust it? What if you trust it and the cash buyer don't sign the contract and your 10 days inspection was already expired? How do you get out of the contract with the seller if can? Also, does the inspection period in the contract have to be 10 days. Does it have to be a earnest down deposit?
Awesome! I had a 10 day inspection clause with $200 in escrow for earnest money and I informed the closing attorney I needed to back out. The attorney said he already ran title and charged me $200. How do I back out a deal without losing my money to the attorney?
I’ve never heard of that. I’d find a new closing Atty or wait to open escrow until after your 10 day
Jerry thanks for all your content! If you renegotiate the price and the seller agrees, does a new Purchase & Sales need to be signed to reflect the new purchase price?
Jerry you are too good.
🙏👊
Jerry your videos are great, and simple to understand, learn. I have a question, I know you run numbers for repairs for fix/flip, but is it necessary to run number for a assignment of contract?
Yes because you need to bring the deal to a cash buyer and understand his numbers.
Thank you for this information! What prevents the cash buyer from waiting until the contract is cancelled to approach the owner themselves?
They could try but they risk missing out in the deal.
Here’s a good question/video. What makes it a good deal aside from the arv formula are there other key criteria that is important to making it a good deal for example bedrooms bathrooms dead-end street middle of nowhere etc. location location...
Watch this:
czcams.com/video/EGgK869cbU0/video.html
You should be consider doing a whole episodes from beginning to finish of a deal, so we could see the whole process. Great content by the way!
He has. Check through his videos.
Start here:
czcams.com/video/xkzoNG2y61c/video.html
He has part 1 through part 3 the whole process of the deal.
So if you don’t do anything about it and just let the seller know that they could keep the earnest money then the contract terminates after the inspection period?
How do you actually go about terminating the contract? Is there a contract for that too that both parties sign?
Hey, who do you contact to cancel contract? The title company?
Can you use the inspection contingency with never actually physically inspecting like for example you live in another state so they know you were never there and still back out?
Thank you
This is exactly what was holding me back from starting. Just hadn't got the answer to this question yet.
One other question: what is the appropriate way to get the assignment form and the other contract forms?
Thank you so much for this! What is the point of getting an inspection done if i'm assigning the contract to the cash buyer. Is this so that when i'm looking for cash buyers, I can present the inspection report to them and persuade them to accept the deal? And i'm assuming the inspection report fee will be covered by the myself or the wholesaler? Thank you!
You don’t have to actually hire an inspection but it gives you 10 days to do your due diligence and also find a buyer. If you can’t, Re-negotiate or terminate the contract.
When agreeing on a purchase price with a seller and you're ready to move forward with a Purchase and Sales agreement, how do you come about bringing your own purchase and sales agreement to the table between you and the seller and how does this work if they are represented by an agent does the agent do the Purchase and Sales between the you and the seller(Agents P&S Document) and how do you come about adding clauses if that is the case, and you aren't able to use your own P&S document? how does that work, because there are some good clauses with your P&S that you provided us and I was just wondering how does this all come to play! Thanks, so much great video!
Hi Jerry what if your wholesaling a on market deal that’s being represented by a agent and can’t find a buyer what’s steps can you take to keep yourself protected in this situation
Does the Emd I pay go to the title/closing company to lock it in? Or directly to the seller?
Who holds the EMD at the time of signing?
Jerry what happens if you cant find a buyer and you need to give the emd after 10 days do you typically mail it to him or give it to him in person .
Hey Jerry. Love the videos. Been watching the past two days non stop trying to learn. Is there a book you would recommend that teaches wholesaling for someone who had no idea what it was days ago.
FREE Best Selling Wholesaling Ebook:
flippingmastery.com/ebook-10k/yt/
Is it possible to do the same thing by just adding a cashback check from the deal?
Great! This answered my question. What if I I'm backing out because I can't find a buyer? I know I can exercise my inspection contingency but how would I word it? Do I still say "during the inspection, I noticed (blank)? Thanks so much for your videos.They've made me very knowledgable and I'm looking to purchase Flipster in the very near future.
Yes still use the inspection as your way out
@@FlippingMastery I swear you make whole saling sound sooo easy I been taking notes from you for 4 days now can’t sleep cause I’m busy taking notes from you make everything understandable Im actually thinking of doing this next month crazy but since your videos gave me confidence and courage I think I can do it I know it’s gone be hard but ima film my journey as well but thank you for the inspiration like I really need it 💯
@@FlippingMastery but if the end buyer is the one paying for the inspection then technically you wouldn't have the inspection as an excuse right? Then what?
@@pixieandthepirate I am also trying to get the real bottom of this contingency. Everyone says use this "inspection time" to lock in your cash buyer, but no one is really explaining how to go about terminating the contract. Since us virtual wholesalers don't ever see the property we don't personally inspect or have a professional inspect the property. The actual inspection would be up to the end buyer in cases of assignment. So I have the same question... How do we word this to the seller to get out of the contract?
@@saraobrock1483 Well I have since learned that the contract terminates itself if you don't put up the EMD which your buyer will be putting up. However, you typically only have 3 days to get that in - 5 most. The problem is getting finding a buyer and having them put up the emd quickly. At that point, you will reassign the contract and you're out. I ran into an issue where the buyer put up the emd but then wanted to re-negotiate the contract for a lower price and the seller wouldn't budge so I lost the deal and the contract just expired. My question to Jerry is how to work with this. I've lost two houses this way.
Do you include the certain amount of days for inspection contingency in the purchase and sale agreement?
Typically 10 days
Jerry if you have to re-negotiate the contract does that mean that you and the seller sign a new contract, and what happens to the old contract?
Wait? I can't I just set a farther closing date? I recommend just setting a close date that's at least 30 days away so I have plenty time to find a buyer
If a contract says it requires a professional to perform the inspection on the property where he/she must find a minimum of $X in damages in order for the contract to be terminated, that adds on an extra cost to the deal. Is there any way around this or would you have to risk it, hoping to find a cash buyer and then decide if it's worth getting a professional inspector if you can't perform? There's also a possibility that the inspector might not be able to find the $X amount of damages so you lose your EMD and used your own money for a professional inspector.
What exactly does "if the buyer doesnt perform.." mean? If i back out using the inspection clause, does that mean I as the buyer dis not perform?
How can I obtain a contract that will have those reasons on there? Please help
Awesome I need cash buyer Jerry
Check out my cash buyer playlist!
czcams.com/play/PLNDQ7qfA7mTiolRXaxbHz25a9h5gbugvV.html
This was such a big concern for me and I love the way you explain it with the inspection contingency. What if I don’t want the seller to see what I’m putting in there for my wholesale fee or the buyer for that matter? Because, can’t they change your mind at that point if they think it’s too high?
seller would not know but buyer would so get a significant non refundable deposit when you assign the contract
Thank you so much!
I need a script if I don't get a buyer and need to back out using the inspection contingency.
If you have to renegotiate does the agreement need to be re- done ?
what would you do if you agree with someone who had a report inspection and for that reason the agent doesn´t want to take any contingency days?
I just got my first contract and have contacted a few sellers who showed interest. I fear I will have to ask for a price reduction and the seller may not agree. We will see. Thank you so much Jerry you have helped me get started in wholesaling!
Keep us updated!
@@games_gains well the seller got multiple offers and is going to sell it himself so I'm moving on to my next property. I did find some cash buyers to add to my list though and it was learning experience.
@@superglen99 wait the seller backed out of the contract? wasnt aware they could do so
I appreciate your content so much! However I’m still confused on how to exercise the inspection contingency if I need to back out of the contract … do I just verbally tell the seller I’m backing out or do I need to sign another contract that clarifies I’m backing out ?
Watch this - czcams.com/video/_hUULl3TYjs/video.html
How do you release contract off market?
What about if you lock up a deal on the MLS, if you can’t find a buyer how often do you usually have to cancel a contract.
While there is def room to wholesale givin a seller may have a property listed for awhile...why would a buyer need a wholesaler?
What are some costs associated with cancelling a contract? If there was an inspection, there'll be an inspection fee and do you normally also pay for escrow cancellation fee?
I don’t ever pay to cancel the contract
So if your just wholesaling a property. Me the wholesaler has to put down the EMD when obtaining a signed contract? Or is that the cash buyers job when me the wholesaler assigns contract to cash buyer.
Is it possible to find cash buyers looking for homes prior to finding the home? So this way you know a price range a buyer is in and a locale and can then just find them what there looking for essentially working this backwards
Yes , watch this
- Reverse Wholesale Explained
czcams.com/video/-sxBgU6L_qU/video.html
Has anyone seen his webinar on earning 10k for homes that you submit to him? How do you submit the homes to him to review?
Jerry how often do you order an inspection when wholesaling? I prefer to leave that to the end buyer but should I consider getting an inspection before marketing the deal in case there's undisclosed structural damage?
I work as a plumber and working towards my C36 Contractor license. And honestly, I think its best to get an inspectiin before marketing. A lot of people only look for pretty walls, carpet/floor, counters, etc. But now that I underatand plumbing (which is a HUGE structural component of a house) I know that there can be SO MANY things wrong withing the walls of a house. Just a slight knocking of a pipe, can lead to needing a whole new drainage and vent system in the whole house. Ive done repairs where the owner had a slightly higher electricity bill than usual. Turns out his pressure relief valve hadalfunctioned and caused leak and some type of short cicuir in his sprinkler system. He was close to burning his house down if that short circuit had been worse
@@mariogutierrez2965 many wholesalers starting out don't have the extra out of pocket expenses for an inspection and feel it's not necessary when your end buyer is going to order one anyway. Unless there are property inspectors who are willing to wait until closing to get paid (same as for title searches or legal fees if needed) not many wholesalers will be willing to foot the expense.
So the buyer is responsible for payment of the inspection. In order for the wholesaler to not pay for the inspection would that responsibility then go to the cash buyer once the wholesaler finds one? I'm sure not paying for inspections with are upwards of 300 dollars on each deal. I'm wondering how exactly that portion works.
Jerry, if i have to renegotiate the price with the seller, then i should do it within the inspection period correct?
Yes correct
You say exercise your inspection contingency. But I am wondering what exactly do you so and say? Especially as the wholesaler because we are not actually paying for and doing a formal inspection? What do we say to the seller? How do we exactly go about this? Thank you!!
Do these strategies apply in the state of Oregon?
Yes
@jerry is there a cancellation agreement available for download?
No put that’s a good idea. 👍
🙏🏾
is the ernest money mandatory ?
With on-market yes, off-market no
@@FlippingMastery Thank you 🙏🏼
I am waiting for money. May take 30 days. I want to make a bid on an auction property now. Can I get out of it?
that 10 day inspection contingency falls under the option period with (realtors)contacts on a retail deal and the seller is stating no option period and a’ non refundable deposit or EMD
I noticed you said to use the 10 day inspection period to find a buyer... Do you use the buyers inspector?? I'm new to this and don't know any inspectors personally yet. So is that a way to get an inspector to view the property??
I usually don’t get a real inspection. I just use the window of time to find my buyer
@@FlippingMastery Exactly, but then what do you say to the seller when you aren't ever even setting foot on the property and have not had a real inspection?
What does it mean to exercise the inspection contingency?
use the inspection contingency to negotiate or terminate. the contract
So, even when you're backing out you're going to have to pay for the home inspection right?
If you do one yes. Just because you have an inspection contingency doesn’t mean you have to hire an inspection
@@FlippingMastery would your cash buyers be the ones paying for inspections?
what are the risks of skipping the inspection while wholesaling ? I feel like they're minimal since I'm not the end buyer and would not have to deal with fixing a home.
Your buyer will have to complete the fix.
How do I pay the EMD? Can I simply do it through something like PayPal?
Wire
Flipping Mastery TV but an alternative like PayPal could be used as well... correct?
If you back out, then what about the money that the title company or attorney charges for their work? Do they still get paid even though there is no closing?
Great question I called a title company an asked they would still get paid around $140 or something around there from them running the title on the property I believe it comes out of your pocket
Do I have to pay the EMD on the spot or can I pay it using the money I make off of flipping the house?
czcams.com/video/iE3ivuc4oGs/video.html
Lets say you get the house sold at agreed offer price , do you get your emd back ? What do u mean it goes towards the purchase? Purchase as in closing costs etc orr?
the EM get applied toward the purchase and subtracted from what's owed the seller. If the contact is $50k and the EMD is $1k then you owe the seller $49k.
@@FlippingMastery appreciate the response jerry always
I want J. Norton new software now!
Do it! GetFlipster.com
My first Vacant Lot under contract, but I can't find an end buyer!! They all want RM1!! It's almost 30days..what do I do and what do I tell my seller??
In a contract right now and past the contingency period and our buyer now backed out! We are scrambling to still find a buyer so we don't loose our EMD. We had asked the seller for an extension on inspection period and he denied it. Couldn't that have been the same as ending our contract?
You could still terminate the contract but would loose your emd. Next time get a bigger deposit from your buyer.
Jerry, i negotiate a price with the seller. I then email him the P&S contract with all the contingencies. Do i specify that i will give the EMD check or wire to the title company after the inspection period?
Yes correct
I’m confused on this? I thought you had to pay the EMD while your in the 10 day inspection contingency ? Why would you do it after the 10 days? Confused now ...
@@FlippingMastery could you answer question from wavy boy please? I thought the EMD would have already been in escrow?
i just started looking into this. and i watched a few videos and im just curious if this is still a active and if you reach back out to anyone? i am not going to say i have a bunch of money to get into this. but i do have the motivation and intelligence to master it if i find the right person to learn. or mentor. i know this is a big reach. worst thing is i wont hear from you.. nothing to lose. but everything to gain if this reaches the right person. thanks!
Josh H
Let’s go!
Fasttrackwithjerry.com
So even if I don't actually get an inspection, you're saying that I can still use that clause to get out of the contract? And I would say something like "The inspection showed blah blah and this is not longer a deal that is good for me" Even though I haven't actually had an inspection done?
Correct
@@FlippingMastery Jerry, however if the contract counters that by stating " buyer notifies seller with a written estimate by a qualified or certified contractor" would you then have to get an actual inspection?
So when you have the inspection contingency, is the wholesaler the one who is expected to do the inspection? Or should the buyer be hiring someone to inspect the property?
Also this question doesn’t have anything to do with the video but who should paying all the closing costs and fees at closing? Will buyers pay everything?
depends on the deal
Awesome stuff! Also, I'm an investor in India but like to invest in flipping properties in the US. Is there a way for me to partner up or are there companies that help people like us in the US ?
My10kcheck.com
What happens after the 10 day inspection period and you sign a contract with a cash buyer who then drops out of his deal? To clarify, you’re out of the 10 day inspection period
Wow no replies from Jerry? This is a solid question. I am assuming you then keep your cash buyer non refundable earnest money. You don't want flaky buyers so your EMD to your cash buyers should be at least 5k. Non refundable. If they back out you keep the 5k. And you would lose your EMD to the seller. (Hoping is 500 bucks or 1k)
I am absolutely no expert, and am still looking for my first deal and in my first week of doing so, but I’d assume that once you assign the contract, as well as your responsibility, the fallout of backing out of an executed contract after all escape clauses expire will only affect the investor who you assigned the contract too.
@@frankgarcia153 how has wholesaling been treating you?
What if you didn’t have any earnest money deposit on the contract?
then nothing at risk
i'm past my 30 days actually 3 days late with zero traction on this deal i need to cancel the contract. Jerry how can i word a cancellation letter to get out of this
What did you do?
What happens if I have a 3 day inspection period and I get a cash buyer but they back out a day or two before closing?
You keep their big non refundable deposit
@@FlippingMastery Ok would you then continue searching for a cash buyer, or terminate the contract with the seller side?
Can you back out just by saying your anticipated repair costs are higher than you anticipated? What if they already gave you the seller’s disclosure statement and they want proof for any surprises you didn’t expect during inspection that would increase your repair cost.
yes you can..."During my due diligence it came to my attention that the repairs are more than I originally anticipated."
Jerry, I need to back out of a contract and already have the title company $500 in earnest money. I’m within my 10 day inspection period and the seller is threatening to call his lawyer.
Call title and tell them to terminate contract and release you emd.
Would love an update to hear how this turned out @The Holy Superior
@The Holly Superior. Any chance you can update us on what happened after you backed out of the deal?
What happened after?
Can realtors wholesale? In CA
Yes, just disclose that your licensed
My agent is saying I can't back out even with the 10 day inspection without having an actual inspection done, as a reason for backing out. what do I do?
Tell them you did your own independent inspection. Give reasons why
@@FlippingMastery Thank you!
Hi Jerry, what happens when the Seller needs to close in 60 days (because Tenant is moving out) and you find a Buyer in the 10 day Inspection Period, and you want to lock that Buyer in, and not have them wait around for another 50 days?
If you agree upon a new price do you need to fill out a new purchase and sale agreement?
I usually do. Or you can do an addendum
So you find a cash buyer wants to buy for the 150, seller agrees to go down to the 140k but something happens and cash buyer decides not to buy after all, do you just call around and find new cash buyer? Or guess back out and lose earnest
find another buyer
@@FlippingMastery but what if it’s already after the 10 day inspection period? Maybe we would already have that EMD from the buyer, typically 5k non refundable is what I see here in Indianapolis a lot. So if they do back out you have their EMD?
What if they refuse to give back the earnest money? Take it to court ?
Always give emd to the title company. Its much easier to get it back from them.
How exactly would you go about terminating the contract (within the inspection period)? Would you need to involve a lawyer?
ask title and they'll handle it