A flipper I do tile work for said he'll pay me to find him houses. I have no idea what I'm actually agreeing to

6k is more cushion than most people start with. Ask what earnest money is normal in your market, in a lot of places on a distressed cash deal it's 500 to 1000, so you can be live on several at once.

The thing I'd nail down before anything else is whether he actually means eight a year or whether he means "I say yes to things I like." Ask him how many he bought last year and where they came from. If six of the six came from an agent he already works with, your order isn't as real as it sounds.

Sequence, plainly.

1. Get the buy box in writing. Text message counts. Price ceiling, condition, areas, how fast he can close, and how he funds it. You already have most of it, you're missing the funding proof and the geography.

1. Find a seller and sign a purchase and sale agreement with the seller, you as buyer. Your name, not his. That contract is what gives you something to sell. Two clauses matter: language allowing you to assign the contract, and an inspection or due diligence period that lets you cancel and get your earnest money back. Ten to fifteen days is common. That period is the answer to your question about being stuck. If the flipper passes, you cancel inside the window.

1. Assignment agreement between you and the flipper. One page. It says he takes over your rights and duties under the contract and pays you a fee. Fee is usually paid at closing through the title company or closing attorney.

1. Title company closes it. The seller gets their price, the flipper funds, you get your fee off the settlement statement.

On licensing, this is where you need to be careful and where I can't give you an answer that's good in every state. Some states treat marketing a property you don't own as brokerage, and a few have added disclosure or registration rules specifically for wholesalers. Illinois and Kentucky are the ones people bring up most. Because your buyer is already known to you, you can do this without any public advertising at all, which is most of why people prefer the buyer-first version. Confirm your own state's rules with a real estate attorney there before your first one, it's a one hour conversation and it's the cheapest thing you'll buy.

The piece you didn't ask about: get proof of funds from him now. Not a promise, a bank letter or a note from the partner whose money it is. Everything after that is easier.

Adding to girder, put the fee in writing before he sees the address. Once he's standing in the house, the conversation about what you're worth gets worse.

I'm about where you are and the thing that finally made it click for me was that the contract itself is the product. You're not selling a house, you're selling your right to buy it at that price. Once I got that the assignment fee stopped feeling like a finder's tip.

Where's the seller coming from though? Everyone in this thread is answering the paperwork question and the paperwork is the easy half. He wants under 150 on a house that retails for 265. That house doesn't sit on the MLS. You're looking at door knocking, mail, or knowing somebody. Solder, do you have any of that, or is the plan to go find it after you understand the contracts?

@meridian fair, but I'd rather someone understand the contract before they generate a motivated seller they then have to disappoint. I've watched somebody get a yes at the kitchen table and have nothing to sign.

What happens to your earnest money if the flipper backs out after you assign it to him? Does it come back to you or is it his problem at that point?

@rigging depends what the assignment says. Usually the assignee reimburses your earnest at assignment and then the default risk sits with him. If your assignment is silent on it, you can end up eating a deposit on a deal you didn't kill. Make it explicit.

Solder, one more from doing this on thin margins. His all-in number of 190 has to include your fee. So if repairs are 35 and he wants 190 all in, your purchase price plus your fee has to land around 152 minus closing costs. If you sign at 150 you have almost nothing left. Work backward from his all-in every single time, not from what the seller will accept.

That's the calculation that scared me off. The whole spread lives inside somebody else's math and he can move it any time he wants by saying repairs are higher than you thought.

@kestrel he can, but that's exactly why you get a second and third buyer with a similar box before you need them. One buyer is a client. One buyer is also a hostage situation.

Repairs. You do tile and light plumbing, so you'll be better than average at reading a house, and you'll still be low the first several times. Roofs, panels, sewer lines, and anything behind a wall. When you tell him repairs are 35 and they're 52, he doesn't pay you less, he stops calling. Give him a range and let him do his own scope. You're not selling him a repair estimate.

Reading this thread mostly to understand where the money physically comes from at the end. It's the settlement statement, the fee shows as a line item, that's it? No invoice, no separate payment?

@vellum usually a line on the settlement statement, yes, though some title companies won't handle an assignment fee on their statement and want it paid outside closing, and that practice varies by state and even by company. Call the title company or closing attorney before you're under contract and ask if they close assignments. Plenty don't.

Solder, one thing since I'm going through licensing right now. Nothing about the buyer-first approach removes the license question, it removes the advertising. Those are different exposures. Still worth the attorney hour girder mentioned.

Eight a year from one guy is one relationship away from zero. That's the whole risk to me.

You have the rarest thing in this business already, which is a buyer who told you what he wants and can prove he closes. Most people spend a year trying to get to where your tile job put you. I'd spend the next month on two things, the attorney conversation and finding two more flippers with a box that overlaps his. The seller hunting will still be there.