Is Wholesaling Really Risk-Free?

Jul 7th 2010 at 2:30 PM
You hear it all the time.  Wholesaling real estate is risk-free.  I've heard it.  Heck, I've even said it.  You know what that means?   It must be true.   Look, if I said it, I meant it.  And if I meant it, it's true.  I would never intentionally lead anyone astray.  Not for money, or fame or any gain whatsoever.   "So Maestro, if flipping houses carries no risk, then please tell us how?"   Man, you ask the absolute greatest questions ever.  I swear you're the smartest individual I've ever come across.  You ask the smart questions...

Ok, here it is.  And it's as simple as this.  Your risk in the deal is determined entirely by the verbiage on your purchase contract.  And the verbiage centers around your inspection of the property.  Here is what my purchase contract states:   This contract is contingent upon the buyer's inspection and approval of the property prior to transfer of title.  Seller agrees to provide access to the Buyer's representatives for inspection, repairs and to market the property, prior to transfer of title. 

Did you get all that?    In that one paragraph, you now have an unlimited inspection period (at least up until your closing date), AND the right to immediately begin marketing the property.    So Maestro, how does this help me?   It's helps you by allowing you an "out," should you fail to find a buyer to flip that house to.  So, say you contract on a property.  You immediately begin marketing the property to landlords and rehabbers in your area.  You get a few bites, but the close date is just days away.  And, you found out the house needs about $20,000 more in repair than the seller originally told you.  What do you do?   You send over a letter cancelling the purchase contract... due to failed inspection.  And you'd be right to do so... legally and ethically.   "But Maestro, I have no purchase contract.  I can't seem to get my hands on a good one.  They're all so complicated to fill out."
  Uh, have you checked the first announcement at the top of this page?  Have you bothered to check out my resources page?  I created it just for you!  In it, you'll find my very own, personal purchase contract, assignment contract... AND directions on how to fill them out.    Who loves you like The Maestro!   Your login and password are down the left hand column of this page.  Utilize your resources!  My old man used to like to say (about me, unfortunately), "You can lead a horse to water... but you can't make him drink."  That was his way of calling me hard-headed.   Now, you have your contracts.  And, with these contracts, you have zero risk in the deal.  You get into a jam, you cancel.  And, you move on to the next one.   

That's how we do it. 

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