Non-refundable deposit to VIEW property?

Buying & Selling Real Estate
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Non-refundable deposit to VIEW property?

Stephen Adams
Knoxville, TN · Member since 2017 · 9 posts · 1 vote

I just spoke to a person claiming to be a wholesaler about a property that he's offering. He wanted a $1000 deposit to view the property. Half was non-refundable. He said this was to avoid bothering tenants with people who are not serious. Is this common/typical? 

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y

I've seen and done that with apts, but not a little house. I need at least a written LOI or offer that has a chance of moving forward prior to letting someone view all the units and bother my people. With that would be EM and some may be non-refundable.

I would not pay a fee to a wholesaler to view a house @Stephen Adams!   

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  • Kenneth Mooney
    Rental Property Investor · Augusta, GA · Member since 2016 · 348 posts · 171 votes
    9y
    This is crazy.
    0Reply
  • George Taylor
    Wholesaler · Myrtle Beach, SC · Member since 2017 · 276 posts · 80 votes
    9y

    That's a negative sir.. Ridiculous..

    0Reply
  • Stephen Adams
    OP
    Knoxville, TN · Member since 2017 · 9 posts · 1 vote
    9y

    OK. I thought it was a bit crazy too, but I'm still new and wasn't sure. Thanks @Kenneth Mooney and @George Taylor!

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    9y

    I've seen and done that with apts, but not a little house. I need at least a written LOI or offer that has a chance of moving forward prior to letting someone view all the units and bother my people. With that would be EM and some may be non-refundable.

    I would not pay a fee to a wholesaler to view a house @Stephen Adams!   

    3Reply
  • Sam Shueh
    Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    9y

    I have seen estates prohibited from viewing by other realtors on the MLS. Viewer must be qualified that they have the means.

    Many lawyers charge $100 for set up a consultation on mortgage problem. He is not interested in the $100. Rather he wants to make sure the clients are serious not looking for freebies.

    I do not even talk to these unlicensed people. I want to see his credentials first.

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  • Stephen Adams
    OP
    Knoxville, TN · Member since 2017 · 9 posts · 1 vote
    9y

    Hi @Steve Vaughan. Good point. It's actually a triplex that I found on Craigslist: https://knoxville.craigslist.org/reo/6051927198.ht...

    But I think you're still talking about bigger deals. On this one, there was one photo and he says the repairs are $25K. I wanted to get an idea if that was true but it's impossible without seeing inside. 

    I can see why you wouldn't want to bother good tenants. But for a small deal like this with an~$80K asking price, it seems like a pretty big turnoff for potential buyers. Especially when there's only one photo available and your only choice is to go view the property. 

    Would you ever buy a property without actually viewing it?

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    9y

    @Stephen Adams - in short, yes I would buy sight-unseen.  For lot value minus demo costs!  Other than that - I would not buy unseen of course.

    A 3-unit still isn't that much trouble.  I sold one in 2015.  I waited until I had 3 solid buyers and ran 'em through at the same time as to not over-bother the tenants.  Seems your wholesaler, if legit, could do the same.   Do you know anything about this wholesaler?  Asked around?

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  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    9y

    Wow. Maybe I should try the same trick while pretending I'm selling my accomplices' home!...

    0Reply
  • Account Closed
    Realtor · Detroit, MI · Member since 2015 · 211 posts · 104 votes
    9y
    Stephen Adams Ridiculous.
    1Reply
  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y
    Stephen Adams Ummmmm...if I could do that I'd keep all my properties on the market! Sounds crazy to me. Now, asking to see a pre-qual letter or proof-of-funds would be totally normal. Especially if the owner has had lowball offers, deals fall through when "investors" can't find money, issues with wholesalers, etc. Personally, I've just sent a screen-grab of my bank account or a list of the other properties that I own.
    0Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    9y
    Originally posted by @Account Closed:

    Stephen Adams Ridiculous.

    When I see the expletive "ridiculous", I hear Judge Judy's voice to go with it! Very apt here...

    1Reply
  • David Zheng
    Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    9y

    Definitely not a good thing.

    0Reply
  • Nick C.
    Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
    9y

    Sigh. It never ends with those guys does it. Be careful, next time he will charge you a non refundable fee to get the address and purchase price. 

    0Reply
  • Stephen Adams
    OP
    Knoxville, TN · Member since 2017 · 9 posts · 1 vote
    9y

    @Nick C. :) LOL. 

    0Reply
  • David D Painter
    Member since 2016 · 143 posts · 157 votes
    9y

    When I have to pay to view properties is the day I stop looking at properties.

    0Reply
  • Joseph DrutherPro Member
    Investor · Southern Pines, NC · Member since 2014 · 339 posts · 171 votes
    9y

    That's just laughable. The guy is a joke. Move on to the next one. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Steve Vaughan  I know you as an experienced landlord buyer and seller.

    many who think requiring a deposit out of hand is ridiculous its because they don't deal in bigger multi unit transactions... ( generally speaking)

    Now I basically would never deal with a wholesaler direct in the first place..  

    but when I am representing a seller or a buyer on a larger multi unit.. its absolutely common place to require a nice large EM deposit and proof of funds and financing prior to interior inspections.

    the number one thing a landlord has is their tenants..  an experienced landlord is not going to allow his or her tenants to be bothered by lookers ... 

    so you list the property buyer makes offer gets EM in POF and proof of financing.. then you set up limited property inspections and at that TIME buyer goes through units with the property inspection company.. and most of those are limited to looking at plumbing dry rot etc.. not a full home inspection like you would do on a SFR.

    at least thats how is done in high demand rental property areas that I have worked in.. and most of these transactions are 1 to 8 million each.. so your sophistication level of seller and buyer is much higher and not a wholesaler in sight... I would never deal with any one but a broker or seller in these deals.   

    Its just like the daisy chain of note brokers selling NPN of years past complete waste of time.

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  • Richard Wormwood
    Wholesaler · Grand Prairie, TX · Member since 2016 · 48 posts · 16 votes
    9y

    Sounds like a SCAM since it is very similar to the MASSIVE scams being run on Zillow right now.

    They find the property listing, duplicate it and then list their contact info. They will take your "fee" or "deposit" and then break all contact. Run the address through ALL real estate listing sites you can to find a duplicate listing. I bet you the prices and stipulations are different.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Richard Wormwood  I could see this.. just like the lender scams .

    the fake wholesaler  advertises a deal that is a smoking deal.. buyer not aware.. and sends in the 500 bucks to them perosnally .. never to hear from the wholesaler again.

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  • Richard Wormwood
    Wholesaler · Grand Prairie, TX · Member since 2016 · 48 posts · 16 votes
    9y

    Exactly. There are a copious amount of listing rolling through Zillow currently that are just that!

    The listings are "Rent to Own" copies of legitimate listings for pennies on the dollar. They have valid contact info and arrange a "showing" of a vacant property. Then get a few signatures on an application, secure a deposit and then vanish.

    Only after the money is gone do the potential buyer find out the person wasn't the real agent and the listing was fraudulent.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Richard Wormwood  the internet giveths and takeths away..  

    well one reason to always used a licensed agent.. unless the fraudster is now going to impersonate an agent.  I can see how this would make it tough on the wholesaling community

    Just like for me when I work with investors.. and I watch American Greed.. I wonder why anyone would make any investment with anyone.. :)

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  • Stephen Adams
    OP
    Knoxville, TN · Member since 2017 · 9 posts · 1 vote
    9y

    During our call, He asked me how I found the property and I told him Craigslist. He then spent the next hour adding identical listings on Craigslist sites in every major city around Knoxville. 

    Pretty pathetic if he really is a fraud. I'm sure it won't be the last time I run across a scam. One thing that I have really taken to heart from the BP podcast is that your character/integrity is everything in this business. This situation Reminds me of something I was taught as a kid...we have to be wise as serpents and innocent as doves. 

    Thanks everyone for your input. What a great community. 

    0Reply
  • Mark Gallagher
    Flipper/Rehabber · Allentown, PA · Member since 2011 · 1k+ posts · 701 votes
    9y

    @Stephen Adams

    Has the wholesaler provided interior photos? On the surface this doesn't even seem like a good deal AND wholesalers notoriously undervalue their repair amounts. I would say this doesn't even warrant your interior inspection and $500 no matter what. 

    0Reply
  • Stephen Adams
    OP
    Knoxville, TN · Member since 2017 · 9 posts · 1 vote
    9y

    @Mark Gallagher no. Nothing beyond just the one photo. I knew it wasn't a good deal at the price listed but like @Joshua D. @Brandon Turner say, there's a price that would make any property a deal (although it might be a negative number sometimes). My purpose in calling was just to get more photos and info. I hadn't even gotten to the point Of wanting to see the property. He just volunteered the bit about the nonrefundable deposit. And it seemed extremely sketchy. 

    1Reply
  • Mark Gallagher
    Flipper/Rehabber · Allentown, PA · Member since 2011 · 1k+ posts · 701 votes
    9y

    @Stephen Adams

    The only difference in this situation is you're unfortunately dealing with an intermediary. So you can only negotiate down so low before it's below the wholesalers contract point. In other words if they have it under contract for $75,000.. they can't/won't sell it below $75,001. Perhaps if you were dealing directly with the seller you could get it down to $65,000. 

    I don't believe it would be against the law for you to mail the owner directly, and let them know you're interested if they decide to sell (likely the same exact method the wholesaler got in touch with them). When this wholesaler can't perform, you could swoop in.

    1Reply
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