Here is a very brief overview of the closing process for selling real estate wholesale to another investor.
He went out and found a great real estate deal from a motivated seller. He has placed the house under contract or under option so that you have rights to purchase the property and the right to assign your rights to another buyer.
You then find an investor using various marketing strategies who is willing to buy your rights to purchase the property.
With your help, your buyer has completed their due diligence and is ready to buy. You complete a contract assignment to assign your rights in the contract to your buyer for a wholesale rate. The wholesale fee is often paid at closing, although you typically receive an earnest money deposit when they sign the contract assignment agreement. You can use this money to reimburse yourself for the security deposit you gave the seller, or you can pay your security deposit directly to the seller.
You may turn over all of your documentation, including the purchase agreement and your assignment, to your title company or escrow/closing agent. From now on I will refer to them as the title company since that is what I use in my state.
The title company will prepare the closing paperwork, obtain a title insurance quote, determine the payoff amount of any loans on the properties, and help facilitate the closing process. Expect to have to troubleshoot to close the deal. Something almost always comes up.
Unexpected title issues, financing challenges, inspection report surprises are par for the course in many of these transactions, and it’s impossible to cover everything that could arise. Part of what you get paid as a wholesaler is your ability to resolve these issues and keep the transaction together by dealing with both your buyer and seller.
In this example, I’ve assumed you’ll do a contract assignment, but you could also complete a double close, which can be a bit trickier.