Wholesale Contracts and Exit Strategies

Check the state table above and Lesson 2. If your state requires a disclosure, use the exact wording and give it at the right time. Some must come before the contract is signed, and Missouri's comes at least 14 days before.

If the seller has a right to cancel, put it in the contract where they'll see it, and plan your marketing around it. A seller in Delaware with a 21-day cancellation right can still back out while you're showing the house. Your buyers need to know that too.

Electronic signatures are fine for most contracts. The federal E-SIGN Act says a contract can't be denied legal effect just because it's electronic. Your title company may still want ink signatures or a notary on some closing documents.

When you find a buyer, the assignment of contract hands them your rights. It should name you, your buyer and the original purchase agreement, state the assignment fee, and say your buyer takes on all your duties under the purchase agreement.

Ask your buyer for a non-refundable deposit when they sign, held by the title company. It shows they're serious, and it protects you if they walk. Send the signed assignment to your title company right away.

Some states require you to tell your assignee things in writing, like Alabama and Tennessee's notice rules and Texas and North Dakota's equitable interest disclosure. Put those in or with the assignment.

Before you sign a purchase agreement, know what you'll do if things go wrong. Here are the common exits, roughly in the order I'd try them:

Assign it to a cash buyer. Double close it if the contract can't be assigned or your state's rules point that way (Lesson 16). Partner with another wholesaler on a JV if your buyers list is thin, with a written agreement and attention to your state's license rules. Buy it yourself if you can and the numbers work. Renegotiate honestly if the walk-through missed a real repair. Cancel inside the inspection period if none of that works.

The inspection period is there to let you check the house and the numbers. It's a real right, but it isn't a free option to hold a seller's house for weeks while you shop it around. Sellers stop trusting wholesalers who do that, and some states have added cancel rights and disclosures because of it.

If you need to cancel, do it in writing, before the period ends, the way the contract says. Call the seller first and tell them why. Then send a signed earnest money release to the title company so your deposit can be returned. If you're going to renegotiate, show the seller the actual repair or the buyer feedback, not a made-up reason.

Pay a local real estate attorney to review your purchase agreement, assignment and any state disclosures before your first deal. You'll reuse them on every deal after that, so it's a one-time cost that protects all of them.

Bring your questions: Is my assignment clause enough in this state? What disclosures do I owe and when? How does the seller's cancel right work? Your title company from Lesson 6 can usually recommend an attorney who works with investors.