Wholesale Real Estate Contracts | PART 1 | "Buy-Side" Purchase & Sale Agreement | Ben Clardy | Skillshare

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Wholesale Real Estate Contracts | PART 1 | "Buy-Side" Purchase & Sale Agreement

teacher avatar Ben Clardy, Real Estate Coach

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Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

4 Lessons (24m)
    • 1. Introduction

      0:36
    • 2. "Buy-Side" Purchase & Sale Agreement | Part 1

      10:41
    • 3. "Buy-Side" Purchase & Sale Agreement | Part 2

      10:20
    • 4. CLASS PROJECT: Make It Your Own

      2:38
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About This Class

Welcome to PART 1 of Wholesale Real Estate Contracts!

In this class you'll learn how to use the "Buy-Side" Purchase & Sale Agreement.

This contract is especially useful for double-closing on a wholesale Real Estate deal. This "Buy-Side" version of the Purchase & Sale Agreement would be signed by YOU and the SELLER of the property you intend to wholesale. This allows you to safely and effectively control that piece of Real Estate as you arrange a double closing with your End Buyer.

I will slowly walk you through each line of the contract so that you understand why each line is there, why it's important, and what it can do for you.

Every word of the contract is there for a reason - whether it's to help you get offers accepted, to control deals, or to protect you from liability. By learning how the contract works, you'll be a more effective and confident Real Estate investor.

Remember to download your contract from within the resources section of this class.

Finally, be sure to enroll in the other 4 parts of this class series:

Wholesale Real Estate Contracts | PART 2 | "Sell-Side" Purchase & Sale Agreement

Wholesale Real Estate Contracts | PART 3 | Assignment & Option

Wholesale Real Estate Contracts | PART 4 | Invoice & Marketing Fee Agreement

Wholesale Real Estate Contracts | PART 5 | Amendment & Finding A ROCKSTAR Closer

Meet Your Teacher

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Ben Clardy

Real Estate Coach

Teacher

My name is Ben Clardy.

I'm a Real Estate Entrepreneur, but I'm a teacher at heart.

I create HIGH-QUALITY / LOW-COST Real Estate courses for my students.

I've made MANY of mistakes in my investing career. One of them that I will always remember is the day that I wrote a $25,000 check to a "Real Estate Guru" that promised to teach me everything I needed to know to succeed in Real Estate. That was a BIG mistake.

I lost an incredibly large amount of money that day, but I did learn something important:

I learned that I wanted to save other people from making the same costly mistake.

You see, it's not uncommon for people so shell out 10k, 20k, or even 50k dollars in order to learn the ro... See full profile

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Transcripts

1. Introduction: Hi, there been clarity here. I'm a real estate investor in coach and I'd like to welcome you to my class on wholesale real estate contracts. This is a five-part series. And in this part one, we're gonna be talking about the buy-side purchase and sale agreement, which looks like that. We're gonna be going through it line by line so you understand how it works. And I'm also going to be providing you with a downloadable copy that you can put to use and your business. It's a very valuable contract to have and I know you're gonna get a lot of use out of it. So without further ado, let's get right into it. 2. "Buy-Side" Purchase & Sale Agreement | Part 1: Okay, so let's go into detail on the first form, then the first one is the buy side, purchase and sale agreement. So I'm gonna open that up. And a few things before I start in a few of the lines, I'm going to kind of breeze through it. In some cases, it's not. In some cases things might be more self-explanatory than others. And, you know, you're going to know what this stuff means. And other cases, am I really 0 in and dig a little deeper on stuff and really explain why it's important because at face value, you may not really get it. But I just want to be sure that some of these little details are in there because they can really make a big difference. Okay? So first again, this is the buy side, purchase and sale agreement. So first let me define that there are two purchase and sale agreements. Then I'm providing you with one is a buy-side and one is a sell side purchase and sale agreement. And here's what you use it for. And this is somewhat self-explanatory to the buy-side purchase and sale agreement you're going to use when you put a contract together with a seller. On the sell side, purchase and sale agreement. You're gonna put that contract together with a buyer. And the reason there's two different ones is because in both cases, the contract is it's basically written in your favor. Ok. So whenever you use that buy-side purchase and sale agreement with a seller and you're putting that house under contract. The house, the contract is worded in your favorite, gives you, it basically gives you more leverage, more control. It's safer for you. It's not trapping you, it's not locking down your earnest money deposit. Okay. And the same goes on the sell side, purchase and sale agreement when you're putting a contract together with a buyer, it's still, it's giving you the leverage, is giving you the control, its locking them in tight. And it's basically just gives you the horsepower in the leverage that you need to get your real estate transactions closed smoothly. So that's why you want to use those in the right places. Ok, so again, here we're talking about the buy-side contracts. So appear at first the top blank. This is where you put it in the property addressed that you want to buy, and next you put it in the sale price. Basically the price that you are purchasing the house for. The smaller blank is where I write out the digits. So if it's a $50 thousand house, I'll write 50 comma 000. And then this next blank here, the longer one is where I'll write it out kinda like you're writing out a check. You'll write out $50 thousand and no slash 00. So that's what the second blank is for there. Okay. So next, for terms, this is where it says Cash paid I'm sorry, cash at closing paid in US funds, property purchased as is. Now, there's two things here that are important. The first is where it says, paid for in US funds. Well, cash at closing paid in US funds. When you write this contract, what you're saying is that it is not a financed purchase. You're not going through a bank or anything like that. It just gives you more horsepower because the seller knows that it's not a financed offer. Basically, you're not trying to get financing through a bank and they're going to deny you the loan and you're going to waste their time so they don't have to worry about that. The second thing is where it says US funds. Well, at first you might be thinking, of course it's US funds. What else would I be buying this house with? But I've actually gotten into some situations where this needs to be specified. Not so much on the buy side because whenever you're buying the house from the seller, that's going to be in dollars. But where I've had some confusion before is where I've doubled, closed on houses and have actually sold the house to people who are overseas or in a different country and they're actually using a different currency on that side of the transaction. So that's why it's important that my mind to put US funds here that you're buying it with dollars and not pesos or again, her soul or anything like that. The next part here, part property purchased as is it basically means, you know, there's not any kind of, you know, as the house sits in the condition it sits in right now is the way that you're buying the house. And again, this contract looks good in the minds of the seller because they want to fast closing. They want don't want to have to do any repairs to their houses. And you're going to be the guy that comes in and gets them out of the, you know, the situation that's pressing them to cell. So this is some stuff that the seller wants to see in this contract. And this contract does two things. It helps you get offers accepted, and it also protects you, okay. So that's why some of the verbage is the way it is. Okay. Next down here it says deposit. And what I've heard copied into the contract is a $1 thousand deposit that is held in escrow. Now, don't get worried about this $1000 then that's something that stopped me in the beginning is I was worried about losing money whenever my deals would fall through. Listen, you're deals can fall through and you're not going to lose your deposit, okay. So don't worry about that. Yes, you will have to send in money to escrow. But all that $1000 is doing, it's moving from your bank account to your attorneys BankAccount. And if anything happens with the deal, it's going to move back into your bank accounts, so don't sweat it. Yes. So whether you're in a an attorney I'm sorry, whether you're in a state that uses closing attorneys retitled companies is. Pretty well irrelevant with this contract because it's written to accommodate either a title company or a closing attorney. But yeah, your $1000 we'll actually go into escrow and it'll be held by your title company or your closing attorney, not the seller. Okay. You never want to give your earnest money deposit to the owner of the house. Okay? Now, this next little bit here, this line here is very important. So be sure that this stays in there. It says, if tidal fails to transfer in accordance to this agreement, that deposit will be returned to the buyer. This is one of those lines that's just, this, just magic, okay? This protects you in a big way. And just think about what it says there. It says, if titled does not transfer, the deposit goes back to you. You're the buyer, the deposit goes back to you. So if anything, it all happens that causes titled Not to transfer. You get your deposit back. So if the seller messes up the deal, you get your deposit back. If your buyer messes up the deal, you get your deposit back. If you mess up the deal, you get your deposit back. Okay. So this is one of those lines that are strategically placed in there for a very specific purpose. So this is a good lines and that's what it's there for. It protects you. Okay. Closing time frame here it says to be conducted by a closure of the buyers choosing within 30 days of contract acceptance. So that gives you 30 days to close on this house from the time that the seller signs the agreement. And it also gives you an additional 14 days if you run into any kind of title issues. Okay. So here's a point where I can kind of think that some people might have a question, well, what if I don't close? What if I need longer than 30 days? What if I need 45 days or whatever? That's where you can use an amendment. If you want to extend your timeframe. Whenever you use an amendment, you might even want to change that 30 days to 15 days if you wanted to give your offer more horsepower or if the seller wanted to see you close quicker, you can do that. But I would suggest leaving in the second part regardless because that way if you run into any kind of title problems, then it gives your title company or closing attorney a little more time to sort that stuff out. Okay. Okay. The next line down here is existing financing. That basically says that if there is a loan on the property, basically if the seller still owns the house, but there's a mortgage balance on the property. They'll give you permission to coordinate with whoever holds that mortgage that lets you get the actual pay off. Because the seller might not actually, you might ask the seller how much do you owe on your property? And they're like, I don't know, maybe about 35 thousand when in reality maybe they owe 50 thousand or more. Who knows? But if there's a mortgage on the property, it's better for you if you can go directly to the mortgage holder and ask them what the balance is and coordinate with them directly, instead of having to go through the the owner of the property that may or may not have the answers you need. Okay. That's what that line is. Forward lets you go straight to the lender and get the information you need. Okay. The next line down here, proliferations. This is talking about property taxes and also rent for the property. And basically what proliferations means is that whenever you take over ownership of the property, you are only responsible for the taxes that have not been paid from that point of the year. So if you if you buy the house, you know, halfway into the tax year, you're only responsible for the taxes from that point forward. Okay. Same goes for the rents. If the rent has been collected up to the halfway point of the year, the rent that you can begin collecting or the breadth that your buyer can begin collecting goes from that point forward. So that's what pro ration is. 3. "Buy-Side" Purchase & Sale Agreement | Part 2: Alright, the next point down here for judgments, it basically says that let me just read it. Seller warrants that there are no judgments against the subject property and that there is no bankruptcy pending or contemplated by any title holder. It's basically means that there's nothing going on in the background behind the house that you don't know about. So there's not a bankruptcy pending that could kill the deal. There's not a lien against the property that could kill the deal. So basically, whenever the seller signs this contract, they're written this line or you read it to him and just, you know, whenever they signed it there basically saying no, there's nothing weird going on with this house that's going to prevent us from closing. That's basically what that line means. Closing cost will be paid by the buyer. Now what happens in the event of a, if you assign this contract or if you double close on the contract, who's gonna pay the closing costs for the transaction is going to be the end buyer. So it's actually not you. Well, actually, I'm sorry. Let me let me let me better answer that question. If you assign the property sorry, redo if you assign the contract to another buyer, the buyer is going to pay the closing costs, okay? If you double close on this property, there's two sets of closing costs. There's one between the seller in you and there's one between you and the end buyer, you are going to pay the closing costs for the a to B transaction, but your buyer is going to pay the closing costs for the B2C transaction. So that's just saying that the seller is not responsible for the closing costs. It is on the buyer. Now, the next part down here, inspection, this is another one of those lines that's very important because it gives you two things. It gives you the ability to access the house for inspections or to let people in the house to check it out and see the condition to get their contractor in, such as that. And it gives you the ability to get out of the contract if the inspection does not meet your approval. So let me read this. It says the seller agrees to cooperate and making the property accessible for inspections prior to the transfer of title. And this agreement is contingent upon the buyers approval of such inspections. So the first thing it says, you can get people in the house to access it for inspection. And the second part says, funny thing happens during those inspections that does not meet your approval, then the contract is void. So again, that's one of those things that gives you flexibility. If you need to get out of this agreement for whatever, then, you know, the the inspection did not match your approval and you get your earnest money back. Or again, going back up here to the top, if the title doesn't transfer, and according to this agreement, you get your earnest money back so you're covered in more ways than one. The next one down here is ease of access. This is a really handy one to have it on here because with this one allows you is the ability to put a lock box on the house. If you can put a lockbox on the house, all you have to do if you want to send somebody over is you get on the phone and you send them a text and you tell them what the lockbox code is. And they go over the house, they open the lock box, go through the house, check it out and you don't even you don't have to be over there. The seller doesn't have to be over there. It just makes inspection of these houses so much easier. So this line gives you the ability to install a lockbox on the house. Pretty cool. Next line down is fixtures. And just to summarize this, when it says anything that's in the house or attached to the house or a system of the house. It's all encompassed by this real estate agreement. So for instance, fixtures to the property including, but not limited to, HVAC equipment, ceiling fans, appliances, carpeting, mirrors, light, storm doors, windows. All that stuff is included in this agreement. And then you can see right here it says except as otherwise noted. So for instance, let's say you go under contract with a seller that wants to, you know, they want to sell her house, but they want to keep their refrigerator, you know, everything is included with the house except the refrigerator. What she would do right here, you would just make a little note beneath this line item that the refrigerator is not included with the sale and then everything is covered, you know, everything else goes with house, but not the refrigerator. And that's how you can use that particular line. Alright, the next line here down is acceptance. And what this says is the agreement is void if modified from the originally offered terms and conditions. Here's why I put that one in there. Sometimes I'll talk to a hormone or on the phone and we'll talk about a price and all the terms and such as that. And I'll send the contract to them for them to sign just like this. I'll fill it out. I'll pre sign it and I'll send it to him. Well, what happens sometimes is they would they send it back to me, but they would write that thing all up. You know, they'd write in all kinds of lines that just have a hard time coming up with examples. But basically they were modifying the terms of the agreement and the timeframe and where it would close and the earnest money deposit and just all this stuff. And what this line does is it basically says, if basically if the agreement is void, if anything is modified, so if the seller adds any weird stuff to the contract, you know, you know, that doesn't work. So the agreement is void. It's just another way to protect you and may even save you some time and some frustration because once the terms are here, It's send it over there and take it or leave it. I mean, I mean, that's that's basically how it is. It just prevents them from getting carried away and modifying your contract because you need these terms. You need particular things in this contract to give you leverage and to give you protection. And whenever the seller of the homeowner starts modifying all this a kinda, you know, it can put you in a position of liability so we don't want that. That's what this line does. It protects you. Alright. Excuse me. The last line down here is successors. Basically what this one means. And the best example I can give in this, it's, it's a little morbid, but I guess it's the best example I can say is, let's say, let's say, I kinda hesitate to do this, but let's say you go on contract with somebody. They fill out the contract and everything and the deal is coming together. All the pieces are coming together towards the closing and then, God forbid the person you sign the contract with the seller. They pass away or, or maybe they don't even pass away. Maybe they're incarcerated or, you know, they're they're in some kind of position that prevents them from carrying on with the sale. Okay. What this line does is it gives you the ability to still close the transaction with the sellers, airs, executors, or somebody else that is permitted to assign or signed the contract on their behalf. Okay. So it basically gives you another option of being able to still close the transaction. If the person you sign the contract with is unable to sign basically for for whatever reasons, not necessarily just death. So so yeah, that's what this line here, successors is all about. And then all that's left of this buy-side contract is you got a spot here that these, these four blanks collects all the sellers information. You've got the the most important things. You got their name and their phone number. And then you have this blank for their email. And you have where they actually sign and date the contract. It's very important that they need to actually sign and date the contract. But because again, remember up here in the closing line, it says it's happening. The closing occurs within 30 days of contract acceptance. Well, that 30-day period begins right here when the seller signs and dates this contract. Okay. So again, that is pretty much it. This is just a one-page form, but it gives you everything you need to take control of a house and move it all the way through closing and turn it into money. Okay. And this one page form is a lot less a lot less intimidating, I guess, to homeowners and private sellers because, I mean, just imagine imagine, you know, put together a purchase and sale agreement that's like, you know, eight pages long, like a lot of the real estate or the realtor contracts are my goodness. They're written through their line by line and, you know, it's confusing language and such as that. I mean, you might lose a deal. We'll just because you intimidate the heck out of a seller because you're throwing this massive pile of paperwork, Adam, this one-page contract is, you know, ten years in development and everything that you need is right here. It keeps you safe. That gives you the power you need, gives you the leverage, that gives you the control. Everything right here in this one page contract. So again, this is the the buy side purchase and sale agreement for when you put a contract together between yourself and a seller or or a homeowner, okay. That's what this contract is for. Now. Let's move on to the sell side, purchase and sale agreement. 4. CLASS PROJECT: Make It Your Own: Okay, so now that you understand how the contract works, it's time to work on your class project, which basically means going through the contract and seeing if you want to make any potential changes to it that may basically improve or enhance the contract. So what you wanna do is download the files to your computer. You have both a word or an OpenOffice version, which is the editable version and also a PDF. So take the editable version and go through the contract line by line. And you want to consider making changes to things like, you know, kind of formatting things like fonts and margins and things like that. And also go through all of the terminology and be sure that everything is clear and would make good sense to both you and anybody who would be potentially signing the contract. And also maybe considered things like if you want to add a header or a footer, or a logo or a watermark, just things like that. You want to, you want to consider making this your own. Now, I want to I want to say that it is not mandatory that you make changes. I use these contracts exactly the way they are, but you may want to make some changes to make them more user-friendly and just make them your own. And that's what this class project is about. So once you've been through them and you approve of the way they are and you've made a potential changes, you want to export it again as a new version of the PDF. The PDF is basically your working copy. It's your general use copy hits the one that you would potentially print off or e sine or email to somebody. Again, the PDF is basically your work in copy and the other version is the one that you would potentially make any edits to. So once you have it, you know, any edits made and you have that final version that marks the completion of both this course and also your class project. Now the one other thing I want to say is regardless if you make any edits to the contract or not before you put them to use in your own business and your own market. I always advise that you have it approved by either your title company or your closing attorney. That kind of thing varies state to state, but have it approved before you put it to use. It can potentially save you some time and hassle. So that is always a very, very good idea. So with that said, that marks the end of this course. So Ben clarity, signing off and wishing you the very best and you were real estate investing endeavors.