Backed out of a deal because something smelled fishy...
Hi guys. Just wanted to share my story and get some input... hopefully some affirmation that I did the right thing. If I didn't do the right thing, then I'll have to chalk it up to a learning experience I suppose.
Ran the numbers on a property in Grand Prairie, TX and it was showing a cash flow of $535 a month with about $17,000 out of pocket using hard money. Wholesaler was asking for a $2,500 non-refundable earnest money deposit to put the property under contract. Nothing out of the ordinary I thought, and I went to my lender to start getting everything in order.
That's when it started getting weird. The wholesaler was calling me daily, pressuring me to get a close date from the lender. In addition, he asked for an additional $5,000 in earnest money to "show we're serious and convince the seller to give him an extension on his wholesale contract" and "if we don't get your answer and the earnest money today then this deal will die".
I'm the kind of person that reacts negatively to sales pressure. In addition, the thought of giving $7,500 in earnest money without getting the chance to see the property really set my spidey sense off. So I told him thanks but no thanks and walked away.
My question is, is this type of sales pressure/jacking up earnest money normal? Was I right to walk away?