Thread: Buying a house on contract.

You are looking to assign the contract. It could be legal but it would be best since most here are not legal professionals and the question you asked needed to be addressed with a local attorney familiar with real estate law in your area. There are ways to write the contract to give you loopholes, but again you must consult a RE attorney in your area.

But another question to ask yourself: Is it ethical? Would you like to be selling a property and have someone put it under contract that has no intention of ever actually buying it? The seller is taking it off the market for you, meaning they could miss a real legitimate buyer, so you can try to make money at their expense. If you do not find someone to buy, you back out and the seller has lost time, possible sales to real buyers, and possibly money because of your scheme.

Many things may be legal but not ethical. Boils down to what kind of person you are.

It sounds like your trying to make a quick buck at somebody else's expense. I also think this might be a hard thing to do with a listed property. If somebody is going to pay top dollar for a home don't you think the MLS is the first place they would look?

You might be better off marketing for motivated sellers that don't have their homes listed and then finding an end buyer.

There are definitely ways to become a real estate millionaire, but I promise you that it isn't fast and it isn't easy like the books may say...

Good points made by both replies I've read so far. I'm not saying i agree or disagree with this form. To me, it seems very closely related to "bird dogging", if not that exactly. I found out about bird dogging mostly by google articles, etc. The only difference I've seen is that they let the investor know they've found a property, and instead of acting like it's theirs, they just basically say "I'll give you this property for an attached percentage fee" and then they take it. Since the bird dog has a house contract, the investor can't exactly steal the deal. I've read a little about backing out of contracts, and I've heard this and that, but yeah, I wouldn't trust what I read if it's not coming from someone in that profession. Bottom line, I think people doing this are sort of shady. That's why I didn't even think this was legal.

Well, thanks as always!

Oh, and one more thing I wanted to add. Some of these times, the houses aren't even for sale. If a house is not even on the market, for example. A high grass grown, boarded up house in a decent area of town, not on the market. If i would research and find the owner, send him a letter with an offer, would this be unethical, seeing as if he's not taking the house off the market for me, it's not even on the market? Just another discussion I was having with my same friend. Thanks.

It's just flipping the contract. Nothing illegal here if every parties know and agree (in writing ).
It is legal and ethical if every parties understand and agree what's going to happen.
If you are licensed, disclose it as well.
The contract should always be assignable though.
And for an exit, make sure it is in the contract as well.
Thousands of investors are flipping contracts on a daily basis.

I wrote an article about flipping contract at
http://ezinearticles.com/?Flipping-Contracts&id=385854

More flipping tips at
http://www.myforeclosuretips.com/info/Flipping.html

The scenario you describe is very common. I have a business colleague in Minneapolis who makes a very good full time living doing exactly what you describe. Disclosure is key; I've done deals like this and always write, "My name and/or assigns" in the buyer line on the purchase agreement. The worst that can happen if you aren't able to flip the contract is you lose your earnest money however most people will write the contract contingent on a variety of things which will give you an out.

BUT....
what do you do if the house is real estate owned, and not for sale by owner? Does flipping contracts not work in that case?

I have heard that you cannot assign reos. There are people that wholesale reos to investors. I have a friend in Tampa that does it for a living. PM me and I can send you her info.

Most REO cannot be assigned and short sales are a real pain as well although I understand there are some strategies that will work such as the LLC method for flipping them.

Regarding your other point. There is no reason you can't contact an owner directly. I used to filter all of the tax records for out of state owners and send them all letters offering to buy their property. I figured out of state owners would typically either be really savvy investors or really motivated owners. I got a number of great deals this way.