Amp » Purchase & Sale Agreement Walk Through

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Amp » Purchase & Sale Agreement Walk Through

Purchase and Sale AgreementWe hear from people all the time how intimidating the paperwork side of a real estate transaction can be if you’re not used to it. How do you know whether you’re using he right type of contract, with all the right clauses in place?

Well the fact is, there is no “right” or “wrong” contract — You really only need a few key clauses in there to keep you safe, and in most cases you can make most any real estate contract out there work for you with a handy blue/black in pen in your hand to tweak it.

However there are some noteworthy aspects of how you use the contract — and nuances in how you explain it to your seller — that can be incredibly powerful in working for you (or against you, if you don’t know what you’re doing). Think of it as “best practices” for investors when using a purchase and sale agreement.

So in this session we’ll gingerly walk you, step by step, through a simple, time-tested, proven contract we use in our own business.  We’ll go through it line by line with you, and not only show you how to fill it out, but also explain exactly what each term actually accomplishes for you (as an investor). 

It won”t take long, because it’s an intentionally short, plain English contract. And it’s perfect for your DBP deals of course.

But pay close attention, because we share a few, subtle “Jedi mind tricks” with you that we use when walking sellers through the agreement. It’s all about helping them feel more comfortable with you and with your deal. This is the kind of stuff typically only years of real world experience can teach you, but we’re happy to share.

Click here to download our simple contract to use in your own business…

Now Watch and Enjoy…

Questions? Concerns? Madman mumblings? Let’s hear it…

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Whoa there, partner…turns out this training isn’t quite ready for you yet. But our little elves are working on it, and as soon as it’s posted, we’ll send you an email (how nice of us!) and then it’ll magically appear here for you. Patience, Grasshopper…we’re eating the elephant one bite at a time. 🙂

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30 Responses to “Amp » Purchase & Sale Agreement Walk Through”

  1. Judy Berrett Reply

    Good video. My question is about a form to use if we decide not to go through with the sale due to inspection or anything else. Every Realtor uses a form to release the seller/buyer and to give escrow/attorney to release the earnest money. Could you give us a form to fill out?
    Thank you

    • Justin Wilmot Reply

      Hi Judy, in most states the inspection period is built right into the state contract, so there is no additional addendum. Read through your state contract and get familiar with it. Make it happen.

  2. Fredrick Austin Reply

    Patrick and J.P. great information on contracts! I now have more tools for my real estate toolbox.

  3. Cornelius Baker Reply

    Shoot, how do I delete my last post? Too many typos. Smart phone my eye!
    Here’s what I was trying to say…

    Great content! It’s a major hurdle you’re teaching us to overcome… the fear of screwing up on filling out and implementing a legally binding agreement. As, Patrick suggests to me, I’ll be coming back to this, maybe several times to refresh my understanding.
    My question is more to JP on using options and flex options. I used one earlier this year-the deal didn’t work out.But, I found out my county does not accept “digital signatures” but because I had live signatures on my separate “receipt of lease option consideration” they were able to record that and use my “lease option” as “supporting documentation.” Have you run into the “live signature” mandate before? I thought with a signature I could make using a computer mouse in some paint function, then cutting and pasting that to my “option” with promissory note contingency was clever, and binding;
    Just like real estate contacts that have been faxed and signed are.
    I promised to pay the option consideration of $10 within 5 business days having modified JP’s Flex option and to attach signed receipt. We wholesalers agreed and I did just that.
    I’m running into to wholesalers that are reluctant to enter into flex options but say if I have a buyer just tack on my fee and bring him to buy. But without having an option or contract doesn’t that limit what I can do or say? What’s the work around? Some of the deals they’ve had control of have been very good, but without at least a flex option how can I market it other than to tell a partner of a possible lead? I used to be licensed years ago and do not wish to misrepresent or defraud or even get accused of practicing without a license.
    I met with an investor-friendly title agent and she informed me that payouts can no longer go to “marketing” or “consultant” fees but to assignments, contracts, and options. There’s been a statewide audit. So, lead generation fees, for example, would be handled outside of escrow. Can I not team up with my friends that wish to be wholesaling with me on a joint venture agreement? Is the following “daisy-chain” a common workable method: Seller to wholesale company purchase contract. Option between company and me, assignment contract between me and friend, assignment between friend 2 and friend 3, then we market it and have friend 3 assign to end buyer? Is that the safest way in today’s market? It seems like the joint venture agreement may not allow for equity sharing to be paid out at close of escrow, anymore. So, please tell me… am I on the right track?
    Bumbling along afraid of doing nothing in AZ, – Cory

  4. Cornelius Baker Reply

    Great content! It’s a major hurdle your teaching us to overcome… the fear of screwing up on filling out and implementing a legally binding agreement. As, Patrick suggests to me, I’ll be coming back to this, maybe several times to refresh my understanding.
    My question is more to JP on using options and flex options. I used one earlier this year-the deal didn’t work out. I found out my county does not accept “digital signatures” but because I had live signatures on my separate “receipt of lease option consideration” the were able to record that and use my “lease option” as “supporting documentation.” Have you run into the “live signature” mandate before? I thought with a signature I could make using a computer mouse in some paint function, then cutting and pasting that to my “option” with promissory note contingency was clever, and binding;
    Just like real estate contacts that have been faxed and signed are.
    I promised to pay the option consideration of $10 within 5 business days having modified JP’s Flex option and to attach signed receipt. We wholesalers agreed and I did just that.
    I’m running into to wholesalers that are reluctant to enter into flex options but say if I have a buyer just task on my fee and bring him to buy. But without having an option or contact doesn’t that limit what I can do or say? What’s the work around? Some of the deals they’ve had control of have been very good, but without at least a flex option his can I market it other than to tell a partner of a possible lead? I used to be licensed years ago and do.not wish to.misrepresent or defraud or even get accused of practicing without a license.
    I met with an investor-friendly title agent and she informed me that payouts can no longer go to “marketing” or “consultant” fees but to assignments, contracts, and options. There’s been a statewide audit. So, lead generation fees would be handled outside escrow. Can I not team up with my friends that wish to be wholesaling with me on a joint venture agreement? Is the following “daisy-chain” a common workable method: Seller to wholesale company purchase contract. Option between company and me, assignment contract between me and friend, assignment between friend 2 and friend 3, then we market it and have friend 3 assign to end buyer? I’d that the safest way in today’s market? It seems like the joint venture agreement may not allow for equity sharing to be paid out at course of escrow, anymore. So, please tell me… am I on the right track?
    Bumbling along afraid of doing nothing in AZ, – Cory

  5. Odikro Emmanuel Reply

    Hello Patrick and JP, grreat stuff and teaching you giving out here. Thank you.

    I have a question, There is a nice vacant house which has been vacant for about 5 years with a faded “for rent” sign on it. The sign has no contact name or number. 9 months ago I place a note on the window saying “interested. Please call me” . The owner has call me with a message to call her . How do I go about this to get her to sell me the house at a discount?

  6. Cornelius Baker Reply

    Very thorough. I feel like you helped tie up some of the loose ends in my “knowledge and training”.

    And the comments and answers section addressed even a few more points and made them clearer.

    Digging it… Oh, and it was Steph Davis that sent me here.

    I think I’m in good company…

    • Patrick Riddle Reply

      That’s great that the comment section has been valuable to you as well as the Amp session. Nice 🙂

      Steph is awesome. We’re glad to have you as part of our little tribe here.

      – Patrick

  7. THOMAS WASSMANN Reply

    Do you ever record your contract against title?

    • Patrick Riddle Reply

      Hey Thomas, good question…

      In one of the bonus amp sessions in week 5, The Shady Seller Lockdown Trick, we go over this in detail. And to answer your question, yes, we record our interest on public record against a property. Check out that amp session when it’s available and let us know if you have other questions.

      – Patrick

  8. DARWIN MICKELSON Reply

    Wow, I feel pumped after listening to the two of you discussing the process of conveying this contract information to the seller.

    I have a question about the inspection to determine any needed repairs. Do you get permission to inspect the property BEFORE you make your initial offer (that you put on your Purchase Agreement?)

    In your training you talk about a preliminary rough estimate inspection to determine ballpark repair costs and later a more thorough inspection later or opinion by some secondary experienced rehab party. My understanding was that you do a brief analysis before you make your offer and then you do a thorough analysis AFTER you have it under contract (after you have signed the Agreement). Seems like you wouldn’t want to commit to an offer price until you had done a thorough analysis. Maybe explain the timing of these things again to me.

    Is the Purchase and Sale Agreement the same document as your offer? If it is, do you sign it first and then provide it for the seller(s) to sign second?

    Not really about this agreement, but if we are flipping to another investor for rehab or buy and hold, sometimes the investor-buyer may be chagrinned at the margin that we are receiving if we disclose it by selling /assigning them our contract with the seller. In those cases, does one have to do a double close to avoid that disclosure. Am I wrong to be thinking that I would like to keep my actual purchase price private from the investor I am selling to?

    Do experienced cash buyers differentiate between “bird dog fees” from “wholesaler assignment fees?”

    You both are such good talkers, it will take some time for me to be able to be as smooth as you both are with your prospects. My phone weighs about 2000 lbs, and my stomach gets all tight, when I need to make outgoing calls. LOL But you both are so enjoyable to listen to…. I start laughing at how easy you navigate the usual possibilities for trouble in your contract talking.
    Darwin

    • Patrick Riddle Reply

      Hey Darwin,

      Alright, on the repairs, I just do a rough estimate and use that to make the offer. After I get a contract, then I have a contractor do a thorough analysis. You can include a contingency in your contract so that if the repairs come back much more than you thought… either you renegotiate a new price based how much it actually needs in repairs or you move on to the next deal.

      When I sit down with a seller, I go over the contract, we fill it out together, and sign it at the same time. If the seller lives out of the area, I’ll mail a filled out contract to them, get them to sign it and mail back, then I sign.

      With assignments, I tell my buyers upfront that if they have a problem with me making a large assignment fee, I’ll just move on to another buyer. Basically, if I offer a deal to a buyer and it makes sense based on their buying criteria, they shouldn’t care how much I’m making. And if they do, next!

      … or yes, you could do a double closing to shied what you’re making.

      Bird dogs basically just refer leads to investors… wholesaler’s get properties under contract and get paid with assignment fees.

      – Patrick

  9. Dominic McGhee Reply

    Great info.. Will you guys have a session on placing REO’s under contract?

    Thanks Again,
    Dom

  10. Nick Smith Reply

    my question is …..I have a broker that I want to use and pay to belong to 3 board of realtors and other expenses and to write offers for me and list those homes probably a flat fee . the question is with all the expense involved I would like to form a LLC and DBA with him as a partnership of sorts ? or could we do some sort of limited partnership?

    The reason is with the expense and tax deductions and protection I would want to be in charge of….any help would be appreciated

    • Patrick Riddle Reply

      Hey Nick, it doesn’t cost that much to file an LLC. In SC, I think it’s $110 bucks. For questions on how to structure your entity, it’s best to talk to a legal professional who can advise you based on your situation, area, business model, etc.

  11. Theresa Cashe Reply

    Great information. Thank you.

  12. Shelly Woodford Reply

    Hi Patrick, you are one of the only real mentors out there right now…just wanted to let you know. 🙂

    I sent out letters for the first time, I have an appointment with an owner and I’m also writing up my first offer. I will let you know how it goes…:))

  13. Joanne Mines-Sims Reply

    Thanks for the info guys! Couple of questions:

    Is the 2nd Seller signature space suppose to be the Buyer assigning/selling it to the actual buyer/Investor?

    When wholesaling: where does the assignment fee (Investor bringing two parties together) go?

  14. Michael Campbell Reply

    Thanks Guys!
    In the event that closing is possible before the stated closing deadline, would it just be a matter of contacting the closing company to arrange that?
    Also
    any suggestions on what would be appropriate to have as love and affection for legal consideration? LOL!
    ” said property shall be conveyed with legal consideration in the amount of (3 endearing compliments and 1 hug accompanied with an expressive brow conveying utmost sincerity and longing for first party)”

  15. Jeff Elliott Reply

    Wow you have just covered some of my biggest concerns and converted them into knowledge and usable tactics. Thank you.
    P.S. The Tony Robins video was huge in helping me understand my own faulty thought process.
    Very cool stuff.

  16. Roger Ordonez Reply

    IPOD TEAM, WOW GREAT AWESOME walk through!!
    Not ever have done a deal, however as I am learning this straight forward method of how the processes work & what is needed, has really built my confidence to start approaching deals. I have learned so much on these AMP sessions. Taking the real estate contract law class is something I will be doing.
    You guys are really showing the in’s & out of how to crush it .
    Never really knew that a contract was so simple to execute, however I will consult a real estate attorney & the title company to verify I completely understand & get any updates if there has been any changes in the real estate contracts.
    THANK YOU!!!!!!

    • So glad you got so much out of it, Roger. I remember all too well how intimidating the contract was for me at first. Thrilled to play a part in getting you past that, my man. Thanks for tuning in with us.

  17. Christian Phillips Reply

    Solid training & great reference to the JotNot application. (Just downloaded it & definitely see where that app will be useful. Thanks!)

    One point I wanted to share/offer for discussions was this: It was recommended to have date of closing be phrased as “X days from contract signature”. This ensures you have a full X days (30/60/whatever) to complete due diligence & it is based on the seller signing the contract. This can ensure you don’t get in a pickle if the seller signs belatedly & you are then working with a defined closing date that may make completing good due diligence a challenge.

    Just a thought. Comment or not as appropriate. Thx!

    • Great thought there, Christian. I’ve done that before…just be sure you check with a local real estate attorney who can tell you whether or not local contract law requires a specific closing date to make the contract valid and enforceable. I’ve heard that in some areas this may be the case.

      If so, another easy way you can buffer against he possibility of being inadvertently stuck the way you described (if a seller keeps your contract for a while, then waits a long time to sign, thus truncating your remaining closing time frame) — you could simply include an expiration of offer date… meaning when you submit your offer on the contract, it says something like, “This contract expires and is null and void if not signed and dated by all parties by 6:00 pm on (Date)”

      Make sense? Thanks for commenting!

  18. Mark Reply

    Hey J.P. and Patrick, great job explaining the various parts of the contract. I liked the “Jedi mind tricks”.

    I especially liked the part where you explained to the seller that “It makes more sense to close this deal in your funding partner’s name”. Quick and simple. (So many buyers don’t know how to say this and think it’s such a big problem!)
    .
    Thanks

  19. DON JACOBS Reply

    Good info. I have my own purchase agreement which is a little more buyer favorable. This was a good review of contract law that insures that what I am doing is in good stead as a contract.

    I also have taken the RE Agent Law course for getting a RE License in Ohio, where a lot of this and Landlord/Tenant Law is covered.

    Thanks for being so thorough.

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