Steps to Flipping a Property
Anyone, even a beginning investor, can wholesale properties and make some fast cash. The following are the basic steps that should be taken in flipping a property.
Make your offer
Whether you pursue properties on the Multiple Listing Service or ‘For Sale by Owner’ properties, you cannot flip a property before making an offer. When making the offer, it is important to keep the rehabber in mind. Your offer needs to be based on a reasonable estimate of the property’s market value after repairs less money for closing costs, money for repairs, money for holding costs, the rehabber’s profit and your profit as the wholesaler.
Sign contract to purchase
Once the offer is accepted, you need to have a meeting with your real estate agent or your seller (for FSBO properties) to sign the contract as well as give a down payment.
Start title work
After the contract is signed, contact your settlement attorney (escrow company, title company etc) to begin title work. They will carry out a title search and then schedule a resettlement date. The title work should start immediately so that you are ready to settle whenever you need to. If you happen to find a buyer that is ready to buy, you would want them to settle right away.
Begin marketing
There are several ways you can market your property. You could call people on your buyer’s list to find out if anyone is interested. The other way of marketing is to have an ad in the properties section of newspapers or magazines, or posting adverts in leading real estate websites.
Negotiate with the prospective buyer
At some point, a prospect will be interested in your property. Depending on your price, you will have one or multiple prospective buyers. The more the prospective buyers, the more bargaining power you will have towards the final sales price.
Qualify the potential buyer
Make sure the potential buyer either has a line of credit (if they claim to have one, ask for proof) or cash. Alternatively, they should be in a position to borrow cash from a private lender to buy your property.
Sign the contract and take a deposit
After confirming the buyer’s source of funds, execute an assignment agreement or sales contract with them and take a deposit. The sales contract is basically the receipt for the deposit. Once you take the deposit, you could type or handwrite somewhere on the contract statement something like ‘Received (insert full amount) as a cash deposit on (insert appropriate date)’. You could also write CASH if you were paid in cash or include the check number.
Submit executed items to the title company
Submit the executed assignment agreement/sales contract with your buyer and the contract with the seller to your attorney (closing agent, escrow company, title company, etc) and schedule a dat for settlement.
Go to settlement
Go for the settlement, collect your check and have a celebration!
Stephan is a freelance writer, who often writes about wholesale homes and wholesale property.
Processing your request, Please wait....
