Here is the conclusion to my Facebook rant regarding wholesaling. If you missed Part 1, CLICK HERE to read it.
If you try to cloud someone’s title, you had better be prepared to show that 1) all contingencies in the contract have been satisfied or removed, meaning all those wholesaler “weasel” clauses are gone, and 2) that you have communicated in writing with the seller repeatedly that you are ready, willing, and able to perform the closing. That means buy the house! That means fund the deal! That means close on the contract! It’s put up or shut up time!
I can already hear it – “But, Jeff…!” No buts. If you are going to cloud someone’s title, you need to be in a position to legally document and establish that you are ready, willing, and able to perform. That is the only way you are going to be able to cloud title and ultimately make a claim for specific performance. Specific performance is the underlying goal of clouding title. You ultimately want to buy that property. The only reason you should ever cloud title is because you are ready, willing, and able to perform, and you remain – repeat, REMAIN – ready, willing, and able to do so! That means you can prove that you have had and continue to have the funding available to close and fully perform on that contract. This means if your wholesaling business is mostly all assignments, you should NOT be clouding title. It also means that your business is NOT legal!
I’d like you to do two things. First, if you found the information in this article and my previous one to be informative or interesting, please share it in its entirety, including the links. Do that even though there is no upsell or joint venture relationship involved. Just share the information for free.
Secondly, I’m calling every wholesaler, particularly those who think they are teaching wholesaling, to a higher standard of character, conduct and practice. It’s time to teach the truth and be honest! It’s time to be clear and communicate the FACTS! No, you cannot flip houses with just the spare change you find between your couch cushions! You have to have resources to be able to wholesale. You have to pay to market, you need funding, and you must have relationships with good, quality individuals. Most importantly, you must have a knowledge of your state’s real estate license laws!
If you are wholesaling, or especially if you are teaching others to wholesale, share this article and remind everyone that you are not to market for or “put another property under contract” until you have done three things:
1. You have reviewed your state’s real estate license laws, particularly the definition of a real estate broker. This should take about 45 seconds on a Google search to find that site and 5-10 minutes to read the definition and hopefully understand it.
2. Don’t market for or put another property under contract until you have established that you actually have multiple funding sources to be able to close all the deals you are putting under contract.
3. Make sure you are using a valid, legitimate contract, and that you are entering into it with the intent, ability, and capacity to be able to perform. That means if you put a property under contract and cannot find someone who will take that contract from you on assignment, you actually go ahead and buy the house, fix it up, and sell it.
Since your marketing says, “I buy houses and pay cash”, then that is what you need to do. Otherwise, quit lying, stop cheating, and find something else to do!