NEED ADVICE ASAP!!!!

On the 2nd one, seller is asking $139k(mort balance owed) w/ an ARV of $254k w/ repairs running roughly $42k. I just got these deals so they're not under contract yet and the owner is in Atlanta. Now, here's the fun part: HE ASKED IF I WAS GONNA WHOLESALE THEM, I SAID YES AND NOW HE'S EXPECTING AN EARNEST MONEY DEPOSIT. IN ADDITION HE SAID HE NORMALLY DOESN'T LIKE TO DEAL W/ WHOLESALERS. I'm really starting to get a bad taste in my mouth w/ this wholesaling crap(I can't win) but he's motivated so... anywhoo, what should i do, I have no earnest money to put down and besides, he's in Atlanta and the contracts will have to be done by fax. How would i get the earnest money to him in the first place. I see the potenetial in these deals but I'm not sure how to go about it. Your help is GREATLY appreciated

Edited: 06/26/2010 at 04:42AM

Sean Mark

Real Estate Investor · Spokane, WA

2 posts

Icon_minipost Feb 14 '08, 10:35 PM

For your safety, always use a title company, choose anyone you want, send a Certified Check to THE TITLE Company, use the biggest name in the area you are looking at to hold until closing, not to the individual, bad mistake, plus the title company can tell you about the legal ownership, any lienholders etc.... Due Diligence!

Edited: 06/26/2010 at 04:42AM

Jorge Caicedo

· Metairie, Louisiana

165 posts
2 Influence
1 Award

Icon_minipost Feb 14 '08, 10:42 PM

Snowbird, thanks but I HAVE NO MONEY TO PUT UP! This is my concern, unless maybe my end buyer wants to put something up?

Edited: 06/26/2010 at 04:42AM

Jonathan (JB) Borchers

Real Estate Investor · charlotte, NC

17 posts

Icon_minipost Feb 14 '08, 11:07 PM

also, how strict is your seller being on terminology of the EMD in the contract? i'm also assuming he won't allow any escape clauses - and even if you bail during your dilligence he wants to keep the money. so more importantly, make sure he'll accept your escape clauses that allow you to walk if the repairs are way off, etc. last thing you want is no buyers since repairs are jacked up, but your contract wasn't worded correctlly and the seller keeps your EMD.

if selling as low as he is, you should have some bargaining power for YOUR terms.

you as the buyer need to create what's comfortable for you - i.e. EMD to be deposited within 3 days of acceptance of this offer, to be deposited following inspection period, etc. that can give you time for your buyer to front the EMD instead of you.

do you have friends, family, etc that you could borrow from in the meantime? offer them an extra $50-$100 as interest when you pay them back in a month - a credit card cash advance? if these are deals (as they appear to be), then you should be able to wholesale them quickly. and once closed, collect your money and pay off the source of your borrowed funds immediately. the costs of these sources are pretty low if it means not losing a real deal.

Edited: 06/26/2010 at 04:42AM

Jorge Caicedo

· Metairie, Louisiana

165 posts
2 Influence
1 Award

Icon_minipost Feb 14 '08, 11:11 PM

Jonathan, i usually put a financing contingency in my contracts so I don't see where he'd have a problem w/ that. As i type, I just sent out blast e-mails to about 50 people, not counting Craigslist or my local REIA site!
Correct me if I'm wrong but at the time the contracts are faxed should I do like snowbird said and, if my buyer wants to front the EMD, deposit it w/ the title co? at the closing, the seller could get this paid to him, correct?

Edited: 06/26/2010 at 04:42AM

Jonathan (JB) Borchers

Real Estate Investor · charlotte, NC

17 posts

Icon_minipost Feb 14 '08, 11:24 PM

good deal, it sounds like you've got your ducks aligned -

that is correct - the EMD will be paid directly to the seller at closing (or refunded to buyer if their financing already covers the purchase amount)

Edited: 06/26/2010 at 04:42AM

Jorge Caicedo

· Metairie, Louisiana

165 posts
2 Influence
1 Award

Icon_minipost Feb 14 '08, 11:28 PM

snowbird, jb I'll let u guys know how this pans out! Thanks a million for the info, it's truly appreciated!!

Edited: 06/26/2010 at 04:42AM

Jason Cummins

Real Estate Investor · Katy, Texas

430 posts
32 Influence
2 Awards

Icon_minipost Feb 15 '08, 06:03 AM

First of all, and I believe it was mentioned, never send the earnest money to the seller, always to a title company.

Since you don't have the money for the earnest money, you may not even need it. If you can get it under contract, get your buyers to put an earnest money down to you, use that to pay for your earnest money. If the end buyer wants to send it to the title company, thats fine too, that can be used as the earnest for you to the seller.

Edited: 06/26/2010 at 04:42AM

Jorge Caicedo

· Metairie, Louisiana

165 posts
2 Influence
1 Award

Icon_minipost Feb 15 '08, 06:23 AM

Jason, well a guy just called me on the props-he's a contractor and is willing to do a bond for deed and assume his note on the 2nd prop for 1 yr and then refi.. hopefully the seller will go for it... i should be able to get $8-10k after closing and holding costs..not too shabbyfor a first deal..here's hoping it's a go..and thanks

Edited: 06/26/2010 at 04:42AM

Jason Cummins

Real Estate Investor · Katy, Texas

430 posts
32 Influence
2 Awards

Icon_minipost Feb 16 '08, 08:45 AM

Wow!

Hope that works out for ya!!

Good luck!

Edited: 06/26/2010 at 04:43AM

Jorge Caicedo

· Metairie, Louisiana

165 posts
2 Influence
1 Award

Icon_minipost Feb 17 '08, 12:13 AM

Hello guys, update! went and met w/ my end buyer, now i just have to fax the contracts to the seller in Atlanta, of course this contingent upon his Tx hard money lenders giving him an extension, cuz then my buyer sd he'd have something to work with.My buyer and i both signed the purchase contract and my buyer signed the Bond for deed and the seller is gonna call me Tuesday. The prop is $254k seller is asking $139 to clear the mort. Repairs and my buyer's profit will run $96k closing cost about $1500
Now, I asked for an assignment fee for $10k and my buyer said he'll do everything he can to make the deal work. Am i on the right track here?
Also is $10k too much or not enough?

Edited: 06/26/2010 at 04:43AM