I NEED HELP WITH A WHOLESALE PURCHASE

Here is my situation. I found a wholesaler who's selling a duplex that needs to be rehabbed for 75k. The property will need about 25-30k in repairs, and I am ok with the numbers. My situation is this the wholesaler is closing on the property on 9/15/09, he said we need to submit a contract with a non refundable deposit of 5k. What gaurantee do I have that he will close? Why shpuld my deposit be Non refundable? Can I ask to see his contract with the seller?
I need as much help as possible on this.
Many Thanks,
Myriam

Edited: 06/26/2010 at 09:20AM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Aug 12 '09, 11:26 PM

How is he wanting you to submit that deposit? It should be done in such a way that you get it back if he doesn't close. If you get cold feet, he keeps the deposit. That's the same as on any RE transaction. You just want to be sure the money is held by a title company or lawyer, and not by the seller.

Edited: 06/26/2010 at 09:20AM

Jon Holdman, Flying Phoenix LLC

Cary Donham

Real Estate Investor · Dallas, Texas

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Aug 15 '09, 12:56 AM

Well the non-refundable part of this transaction makes me a little nervous however I'm not looking at your paperwork either. 5K for a 75K property is pretty steep. So on one hand I'm leary of the deal because it should be set up like a normal transaction whereby if they seller doesn't perform then you get your money back and the money should be held in escrow with a closing attorney or title company as Jon stated.

On the other hand a wholesaler trys to protect himself from buyers who aren't serious and may not perfom. Still the 5k is steep in my opinion.

Edited: 06/26/2010 at 09:22AM

Anne Furtado

Real Estate Investor · Allentown, Pennsylvania

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Aug 15 '09, 01:32 AM

Just wanted you to know that I wholesale property and I do refund the wholesale fee if the property can not go to closing due to no fault of the investor. This is what I have on my assignment sheet which is signed by both;
1) the Seller or their proxy does not show up on the agreed upon closing date, or;
2) title issues exist that cannot be resolved by Seller and Seller cannot fully complete the transaction as it is detailed in the said contract.
I will take the wholesale fee on the date we sign the assignment and the money is held until after closing.
Hope this helps. [WEB SITE AND SOLICITATION REMOVED]

Edited: 06/26/2010 at 09:22AM by Moderator

Aly L

Real Estate Investor · Middletown, New Jersey

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Aug 15 '09, 10:21 AM

Hi Anne, are you by chance related to an Al Furtado of NJ/FL?

Edited: 06/26/2010 at 09:22AM

Jaime Vasquez

Real Estate Investor · San Antonio, Texas

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Aug 15 '09, 02:52 PM

I have been involved in a similiar transaction. The wholesaler wanted 10K non refundable if we didn't perform. We just made the title company hold the cash in escrow and would only release it to the wholesaler if we didn't fulfill our end of the deal. It worked out fine. I would say if you hand him the check, you must be OK with never seeing that cash again. on the wholesale/birdog end, I always got paid after the keys were in the buyers hands and the cash in the sellers.

Edited: 06/26/2010 at 09:22AM