You bet we can.
So you’ve got yourself a contract and you’re ready to hit the ground running, but you’re worried about how it goes here in Georgia, right? You’d like someone to look your contract over and check it out, yes? Groovy. You’re not the only one. We get asked by new investors to review their contracts a lot. A whole lot.
So here’s a little secret: if everybody performs, then anything even remotely resembling a contract will work. A cocktail napkin that has a buyer, a seller, a property address, a price, and a couple signatures scrawled on it will hack it as a contract if everybody shows up for closing. Performance is everything, and we’ve seen pretty terrible “contracts” work just fine.
But here’s the other thing: if there’s a default or dispute and somebody doesn’t perform, then the language in the contract becomes very, very important. Very important. And truthfully, that contract you got from who-knows-where? Unless it was written by a Georgia attorney specifically for Georgia property and Georgia laws, then that contract is most likely going to be, well, not good. Contracts can be complex. They require a high level legal expertise to draft properly.
Real world: Your contract is likely to be poorly written. It’s likely to be chock full of ambiguous language. It’s likely to be missing things that ensure its enforceability. It’s likely to be all of these and more. By likely, we mean, almost certainly. We’ve seen thousands of investor contracts over the years. We haven’t really seen a good one yet.
And here’s the other, other thing. Paying a lawyer by the hour is expensive. Fees add up quickly.
Will we review your contract? For sure. We have someone that absolutely can do that for you. But don’t be surprised if you end up with a hefty bill just to find out your contract doesn’t make the grade. Contracts, like piranhas, are a very tricky species, after all.
Want a better solution? Just reach out and ask for one that we wrote. We’ll happily share it with you.
Harlan Florence is an Atlanta-based boutique law firm that believes there’s a better way to handle your real estate closing. We’d love to work with you. Contact us today, and let’s see what we can do together.
No. All financial matters between a buyer and a seller must be fully disclosed on your settlement statement. All means all, and full disclosure means full disclosure. If there’s an assignment fee, it’ll show up on the settlement statement. Other profit sources? They’ll be there too. And, truthfully, that’s what you should want as well.
So. We will not use “blind” HUDs, ALTA settlement statements, or other closing disclosures to help you conceal how much money you’re making.
Here’s the thing. Assignment fees and the like are material to your transaction, and keeping them under wraps could lead to accusations of fraud. That’s bad. That’s really bad.
But that said. We’ve handled thousands of investor closings over the years, and every single one of them has fully disclosed how much each investor was making on the deal. The number of times a seller has walked away from the table because of an investor’s profit is exactly zero. Or nil, if you like soccer. Soccer is pretty cool. So, nil then.
You’re a real estate investor. Everyone expects you to make a reasonable amount of money with every closing. If you didn’t, then there’d be no reason to start investing in the first place, right? So be proud of what you do. Be honest and respectful in how you deal with your buyers and sellers. You’ll go far.
We get it. It happens. Nobody sets a deal up expecting it to fail. What would be the point, then?
But. Every deal, if it closes or not, involves hard costs that have to be paid. Take title exams, for instance. The title exam fee is a hard cost that someone has to pony up for even if something ultimately doesn’t cross the finish line to closing. The examiner going to the courthouse to search the deed books? They don’t do that for free. It’s not their hobby and they’re not just doing it for fun. They get paid.
So then. It’s really good practice, and common courtesy as well, to pay for for those hard costs even if a deal completely falls to pieces. After all, you would never go to a restaurant, order a dinner, and then decide not to pay pay for it because you just weren’t hungry, right? You wouldn’t even think of it.
That said, there are ways to minimize the times that this happens. Some wholesalers hold off on ordering a title exam until they’ve already assigned their contract. Others may wait until they’ve done all their due diligence. There are ways.
Stiffing the closing attorneys’ hard costs is not a great way to make friends and influence people. Just the opposite, really. Any investor whose deals regularly don’t close and then doesn’t pay the hard costs will soon find themselves without closing attorneys to work with. But if you do good work and handle your business professionally, then amazing things will follow.
Nope. Not unless you want to, anyway. The end-buyer and the seller naturally have to attend closing. But you? You can do what you want!
Some of our wholesaler customers attend every one of their closings. They like the meet and greet and the personal touch.
Some never come to closing. Maybe they’re out-of-state. Maybe they don’t have the time.
And others come to some and don’t come to others.
Really, it all depends on what you prefer. As a wholesaler, you’ve already done your job by the time closing comes around. You got a property under contract with a seller. You assigned that contract to an end-buyer for a fee. Now it’s time, should you choose, to step out of the way. Or not.
Prorations are the adjustment of property taxes between the buyer and seller at the time of closing, ensuring that both each are responsible for their fair share of the property taxes. Prorations are based on the number of days each owns the property during the tax year and appear as a separate line item on the settlement statement.
If a tax bill is already out, then its proration will be based on the actual amount owed and will be shown as a credit from the buyer to the seller. Essentially the seller is paying the property tax for the entire year and the buyer is crediting their portion to the seller.
If a tax bill is not out, then the proration will be based on an estimated tax amount. Typically that’s just the previous year’s amount. Then there’s a credit from the seller to the buyer for their portion. When the tax bill finally does come out, the buyer is responsible for the full bill.
Overall, tax prorations are a beneficial aspect of real estate transactions that help to ensure fairness, clarity, and simplicity for both the buyer and the seller.