Tampa, FL · Member since 2014 · 18 posts · 3 votes
Today I set up a time to sign a contract with a guy for a property we had been negotiating since Wednesday. He kept pushing the meeting back and then finally put me on the phone with his uncle, a supposed "realtor" who told me to email the contract so he could pass it by his private money lender for approval. The deal was supposed to be done today. He never mentioned this lender before and has me speaking to third parties now. I'm ok with the hard money, but I'm not okay with him being sketchy about the situation. Do you think he is a legit buyer? Maybe he is just trying to buy time in the deal? Any reason I should be concerned about him not being legit?
Specialist · Houston, TX · Member since 2012 · 579 posts · 301 votes
12y
We just had a case where the bank had to approve the contract before our buyer would sign. It was supposed to be a simple wholesale deal; we had the property under contract and then found an end buyer BUT his bank insisted on a Title policy for the full purchase price not just the original sales price.
Note for new Wholesalers: if the sales price you have under contract is say $50k and then you Assign it to an end buyer for $60k, most Title companies will only give your end buyer a policy for the $50k. Some will simply ask the buyer to purchase and additional $10k coverage but some, like the one we were working with insisted on a double closing.
Long story, shorter version: We now have a double closing in the works, us buying the property from our seller at $160k, then same day simultaneously selling to our end buyer for $180k. Two contracts, two sets of earnest funds but the 2nd transaction pays for the first. 90% of Title companies will no longer do this but this Title company insisted on it!
You should be concerned if they are not using a Title company. Ask for non-refundable earnest money or option money; that shows they are serious. Make it enough to hurt them if they back out.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
Lenders don't approve contracts. Keep shopping, and don't wait or put anyone else off for these guys. When the story changes, you're usually being played.
Specialist · Houston, TX · Member since 2012 · 579 posts · 301 votes
12y
We just had a case where the bank had to approve the contract before our buyer would sign. It was supposed to be a simple wholesale deal; we had the property under contract and then found an end buyer BUT his bank insisted on a Title policy for the full purchase price not just the original sales price.
Note for new Wholesalers: if the sales price you have under contract is say $50k and then you Assign it to an end buyer for $60k, most Title companies will only give your end buyer a policy for the $50k. Some will simply ask the buyer to purchase and additional $10k coverage but some, like the one we were working with insisted on a double closing.
Long story, shorter version: We now have a double closing in the works, us buying the property from our seller at $160k, then same day simultaneously selling to our end buyer for $180k. Two contracts, two sets of earnest funds but the 2nd transaction pays for the first. 90% of Title companies will no longer do this but this Title company insisted on it!
You should be concerned if they are not using a Title company. Ask for non-refundable earnest money or option money; that shows they are serious. Make it enough to hurt them if they back out.