Should I Sign an Exclusive?

Greg,

If you have Dean's book '30 Days to RE Cash' he does a great job of outlining RE Agt criteria that Matt Larson looks for beginning on page 42. If you don't have the book, PM me and I will try to summarize it for you.

Regarding exclusives, I have read posts where some serious players here on this forum will sign an exclusive on a per property basis (ONLY). That way they are not tied to a particular RE Agt for an extended period of time.

A little funny anecdote about this; I have a friend who is a RE Agt. I have wanted to work with her due to our friendship for some time, but she does not understand the true Investor business side of RE at all. To her an investor is a landlord who buys a nice property for nearly full FMV and sticks a tenant in it to CF for the long haul. But I digress....

So anyway my "friend" the RE Agt sends me an exclusive form wanting me to sign it if we are going to 'work together'. It was the standard Texas TREC Exclusive Agt form, so no surprises there. Until I read the "area" that she had designated for the exclusivity.....Harris County Texas (which is Houston) and the five (5) surrounding contiguous counties that abut Harris County [so now we are up to the greater Houston metro area including all six (6) counties, down to Galveston and the Gulf Coast]...but we are not done yet. Then she also added all of the counties that surround these additional five (5) counties!!!

When all was said and done, and after I had finished looking at my Texas State map, she basically was going to get an 'exclusive' if I bought anything from Victoria Texas to almost the Louisiana State line!! For those of you that do not know Texas, we are talking about a distance of approximately 200 miles West to East, and almost half-way to Dallas (another 200 miles North of Houston). Needless to say I did not sign the Exclusive Agent....and we have never worked together on any RE deals. As I said earlier, she just doesn't understand the RE Investment BUSINESS side of the equation at all.

So I cannot tell you what to do, but others sign on a per property basis and they and the RE Agt seem quite content with that. Keeps everything tidy and everyone is happy. I believe Dean has said in several places that it is better to work with several RE Agts, so that you do not 'burn any one agent out'. Of course that is when you are up to full speed and submitting several offers every day, 5 or 6 days a week.

Good luck in your endeavors.
--Walter

Hey Walter,
Since you are from Texas I wanted to ask you if assigning a property to an end buyer is legal in Texas. I live in the Dallas/Ft. Worth area and will probably start my RE investing by wholesaling. I read Dean's book a couple of years ago and like you got side-tracked. I've been thinking about RE investing more and more lately and do not want to put it off any longer. I think my biggest obstacle will be time since I work full time have 2 kids and my wife works full time as a nurse on the night shift. Do you know where I can go to get more familiar with the Real Estate laws in Texas? Thank you so much!

Michael

Michael if you find a really good realtor he/she is not going to be looking at an exclusive contract. They need to prove what they are worth in my eyes. To many realtor, and others, want to capitalize on others efforts. I work with three realtors and that's because my area is quite large. My main realtor is rock star, when ever I ask him do find something for me he is johnny on the spot. He likes to stay in his main area and I can understand that especially due the gas prices. But he help me find just about anything I need especially if he can pull it up on line.

So if the realtor you are trying to work with wants an exclusive I would keep on looking. Use the criteria that is already spelled out in Dean's books. You will find one that is a great one to work with.

Having said that I'd like to add to this list a private money lender. I almost got hooked into a bad arrangement with a PL when in his contract he was wanting the same percentage of any deals I made even if I used my own money or someone else’s. It's a good thing I read it very carefully, he had pretty well hidden in other terminology. Once I found it I back off and told him that I would have my attorney read it and interpret it for me, man am I glad I did. I wasn't about to give him my hard earned money if he had nothing to do with helping me earning it. Needless to say there was no contract.

Just something to watch out for.

Now go flip a house.
Gene.

You did not address this question to me but I would like to say this: You are not assigning the property. You are assigning the CONTRACT. Big difference. And this point is what will make it legal or not legal.

It is legal to assign your contract in every state of the Union.

Karen

Michael C,

I'm not a lawyer and I do not play one on tv, so I am not giving 'legal advice'; but in answer to your question and as Karen said, Assigning a Contract is 100% legal in Texas.

Banks do it all the time; *IF* you have a mortgage, I will bet that your mortgage has been sold at least once, if not more than once. It is the same concept; the Bank that has your mortgage (Note), sells the Note (or a portion of your note) to another Bank and you get a letter in the mail telling you of a new address and new bank where you should send your mortgage payments. They have essentially 'sold' (Assigned) your note (mortgage) to another bank for a fee (wholesale fee). Hope that helps!
--Walter