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

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

teacher avatar Ben Clardy, Real Estate Coach

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

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 (18m)
    • 1. Class Introduction

      0:28
    • 2. Invoice

      7:43
    • 3. Marketing Fee Agreement

      6:50
    • 4. Your Class Project!

      2:38
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About This Class

Welcome to PART 4 of Wholesale Real Estate Contracts!

In this class we'll be covering the Invoice & Marketing Fee Agreement.

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 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 1 | "Buy-Side" Purchase & Sale Agreement

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

Wholesale Real Estate Contracts | PART 3 | Assignment & Option

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. Class Introduction: Hi there. My name is Ben clarity and I'm a real estate investor and coach. And I'd like to welcome you to my class on wholesale real estate contracts. This is part four of five. And in this part we're going to be covering the invoice. And also a marketing fee agreement will go through both of those line-by-line. And I'll also be providing you with a downloadable contract that you can put to use in your own business. So without further ado, let's get started. 2. Invoice: Okay. The next one up is the invoice, and this is a real estate contract that I use all the time. Now here's here's what you've got to think about. For an invoice. An invoice is a way that you can pay somebody else from your closing proceeds and the amount that you pay them is not on the HUD one. So you're basically paying them after the transaction from your closing proceeds. Here, here's an example and there's a lot of different reasons you might want to do this, but I'm just gonna give you kind of a tangible example. Let's say that you put a house under contract for $50 thousand and you advertise the house for sale for $60 thousand. Okay. And you have a buyer that wants to buy the house, but the buyer is coming to you through somebody else who wants a referral fee of $2 thousand. Ok. I hope that makes sense. So once you can do is you can you can sign up that buyer, you can close the transaction, but instead of having that $2 thousand referral fee that you're paying out to somebody else on the HUD one, you can pay them after the closing and you're the closing attorney of the Title Company will handle this. But the way you put it together is you write up that invoice for the person that you're gonna pay after the closing. And then once the closing occurs, whenever your tile company or your closing attorney is writing checks, instead of riding you the full check for $10 thousand. The difference between fifty thousand, sixty thousand, they're gonna write you a check for 8 thousand. And the other $2 thousand is going to go to that person that gave you the referral. So so all of that check writing is happening after the closing occurred, but it happens because you have it documented on this invoice. Now. It's a cool tool because it keeps all of those extra fees and expenses off of the HUD one because I've had closings fall apart. Because if you've got all of these other line items on your HUD wanted form where this person's making $1000 and this person's Meghan $2 thousand and your Meghan $8 thousand. And you've got all of these other mystery phase that in the minds of, you know, the seller and the buyer there, like what the heck is going on with all who are all these other people? You know, I don't want to pay this person this and this and that, you know, to me the invoice is a handy tool just to kind of help keep all the closing all the parties involved with the closing on track and documented, but not necessarily on the HUD one form where people could raise an eyebrow and wonder, what the heck are all these other fees. So that's the beauty of the invoice. Again, you can pay people from the closing proceeds, but not on the HUD one form, it happens after the closing. The closing attorney, your title company will divvy up those checks based on the information on the invoice or invoices. Alright. So that's what an invoice is for. Let's get down through this one and I'll show you just a kinda line by line and look how simple this thing is. I mean, it's one page, it's like, you know, ten or 12 lines along. There's not much to it, but it's very handy. Alright. So this invoice relates to the sale of the subject property located at and this is simply the blank where you'd put the property address. Next, I'll marry this whole paragraph here. For services provided to blank for the sale of the above described property upon closing disperse funds and the amount of blank directly to this person. So let's say you can use this a lot of different ways and paying people, you can pay yourself, you can pay somebody else. It just depends, but going back to the previous example, I mean, let's say you're paying somebody $2 thousand for bringing you a buyer for your wholesale deal. Ok. So for services provided to blank, this would be this would be u the actual contract holder or me if I'm the one that's paying people. So for services provided to you for the sale of the above described property upon closing disburse funds and the amount of blank, it would be $2 thousand. Going back to that previous example, directly to and then this next four lines has the information for the person that you are paying. Ok. So if they have a business name which they probably do you put like their their LLC or their, you know, their corporations such as that. But their phone number and the next blank there email in the next blank and then tax EIN is their employer or employee identification number. And basically, if you if you have an LLC, you have a tax EIN and that's where you would put this blank, and that's where you would put that particular number. The next little thing is just kind of a it's a, it's like a little it's like a little contingency basically. So it says, this agreement is subject to the transaction closing as outlined in the original contracts. So let me let me bring that back to the previous example. Let's say that you put together this invoice saying, Yeah, I agree to pay your referral partner $2 thousand for bringing me a buyer. But let's say sadly that the deal falls apart and you can no longer pay that person for whatever reason. Well, this line here is a way of covering that way. I mean, if the deal falls apart, obviously you don't have the money to pay them the $2 thousand. So this line says, hey, you know, if the deal falls apart, I can't pay you. Sorry. And that just that just kind of gets you off the hook if the transaction does not close as plants. So that's a good line to have in there. And then the signature here is just whoever's putting together the invoice. So if you're putting together the invoice to pay somebody else, then your signature goes here or you can flip it around. If you're the referral partner, you can put together this invoice to actually pay yourself. And if that's the case, then the signature that would go here as the person that's actually doing the paying, if that makes sense. So this is a very simple but very handy tool. And the more you get involved in wholesale real estate, the more you will see that a lot of times the deals come together kind of dynamically. Sometimes, I mean, I've I've advertised houses for sale that I thought would be just a really easy quick sale. But then, you know, I might have trouble selling it and I might need I might need some help for somebody to bring in a buyer for me, and this is a great way to pay somebody for bringing in that buyer and to keep their referral off of the HUD one form so that it doesn't raise eyebrows and give anybody involved in the transaction cause to doubt because you definitely want the pieces come together. You want to do everything you can to keep the train on the tracks and having a bunch of weird line items on the HUD one form as a way to derail a potential deal. So this is a way to keep it nice and clean and pay your people after the transaction occurs. So that's the invoice. I hope you got some benefit out of that. So really handy for start using this thing and it's going to be a real benefit to your business. With that said, we're moving on. 3. Marketing Fee Agreement: All right, the next one on our contract list here is the marketing, the agreement, and this is what it looks like. This is another simple one page form. I mean, there's not much here at all. Okay. What this form is for is for allowing somebody else to market your house deals for sale. And whenever they bring a buyer to the table that can close on your house, then, you know, the deal closes, you get paid and your partner who did the marketing gets paid as well. And you can do, you can do a flat fee, you can do with $1000.2 thousand dollars or you can set it up where they get paid a percentage of the total profit that comes in. There's a lot of flexibility in how you pay them, but this form is what tracks your arrangement with the marketers who are promoting your houses for sale? Now, depending on what your experience is with real estate or specifically wholesale real estate, you might be like I was and I had this mentality where I was basically kinda close minded and protecting all of the money that I could make. I was scared to work with other people because I don't know. I guess it was just being greedy. I guess I didn't want to work so hard to find this deal and negotiate and put the contract together and market and all this stuff. Just to split my profit with somebody else. That was my mentality. And that mentality cost me a lot of money. Because now I know that there's strength in working with the right people and getting more eyes on my house deals. It helps me because I can sell more houses because I get the houses in front of a larger audience and I have some somebody else is basically doing that back in negotiation on my behalf. And it helps them because, I mean, they're just looking for houses to sail. The marketing partners that I sign up with these marketing fee agreements, they just want to sell more houses. They wanna make money too. And what I usually do is I I usually don't do a flat fee you I'll usually do is I split the profit right down the middle. So if it's a $10 thousand deal, we each make $5 thousand deal, we each make 500. But the beauty in working with other people is that you can concentrate on what you're best, that you can have your marketers concentrate on marketing and you can focus on building your business and advertising and such as that. But anyways, that's what this form is for. So let's get down through this now I'll explain what's going on line by line. So again, this is the marketing fee agreement and it says this addendum to the contract for the subject property located at. And then the property dress goes in the blank. So the marketing fee agreement is an add on to the contract that you have on a house. So if you if you have a contract between yourself and a homeowner for $50 thousand, this is an addendum and add on to that contract, essentially. The next little bit here says the marketer will be paid a marketing fee at closing of blank. Now, the way I worked at this, I worded it that way because you can put in either a flat fee. You can say flat fees such as 500 bucks for 1000 bucks or whatever. Or you can say a percentage. You can say, you know, 10%, 50 percent, whatever. So whatever you agree to pay your marketers is what you're going to put in this blank. And you, you know, depending on how your businesses set up and what's your relationship is with your marketers, what your profit margins are and your expenses and everything else that will determine what you're comfortable paying your marketers. The next line down here, again, as you've seen in some of my other contracts, this is just a little bit of a contingency that protects you. And it says, this agreement is subject to the transaction closing as outlined in the original contract. So again, if you sign up one of your and again, this is a, this is a worst case. You don't want it, you don't do this kinda stuff on purpose, but it happens, deals fall apart. So let's say you sign up one of your marketers on this marketing fee agreement for a specific house and they're gonna make 1000 bucks. And then the deal falls apart. For whatever reason the buyer flakes out, the homeowner disappears, or the house burns to the ground, who knows, for whatever reason the deal falls apart. This line keeps you safe because if the House does not close as originally outlined, then you are not on the hook to still pay this marketer whatever fee you agreed to on this form. So that's why that little contingency is in there. Beyond that, all you have is this section here which is where you sign up your, your marketer. You know, they'll they'll put their name in this blank. They will date it. And then contract holder signature is where you would sign it or or whoever is on contract to buy the house from homeowners who would sign this bottom part here. And then once you have all this signed up, you just turned in this marketing fee agreement into your closing attorney or your title company with the other relevant documents such as the purchase and sale agreement or the assignment. If you're assigning the contract, and then the closing will come together. You're closing attorney your title company will handle the closing and be sure all the pieces come together. And then once the once the closing occurs, your marketer will be paid the fee that you agree on right here pertaining to this marketing fee agreement. So that's how it works. This is just a form where you can track how much you're paying your people who are helping you out with selling your houses. This is again, it's it's actually turned in to the closing attorney because a lot of times, especially if you have a new relationship with somebody there kind of concerned that they're going to do all this work and then they're not going to get paid for whatever reasonable this document tracks what's being paid on what property and who's paying it. And it gets turned into the closer which makes everything official and I can follow up on it and be sure all the paperwork is there if they'd like to. So again, another really handy form for paying your people and for building your team and be interior. Everything is tracked and everybody's getting compensated appropriately. So another very handy form to have, especially for wholesaling real estate. I hope that helps you out. And let's go ahead and move on to the next one. 4. Your Class Project!: 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.