Florida Non refundable earnest money from wholesaler

11 Replies

Hi all-  I'm in contract on a property in Ocala FL from a wholesaler. I put down a earnest money deposit of $4,000.

After I put down the deposit I found out the home had a prior sinkhole and in talking with local brokers the ARV will be severely affected even though the problem was fixed with underpinning. The wholesaler has said they can't give me my deposit back unless they sell the home to someone else because they have $4,000 of their own earnest money that they will lose on the property of it's not sold. So far they've been unable to sell the property and have lowered the price $10,000. Is there anything I can do to try and get my deposit back or at least lodge a complaint for not disclosing the prior sinkhole before I sent in my deposit? The selling company is a licensed brokerage.

@Dustin Rose acting as a true wholesaler in FL is actually a felony believe it or not!  While FREC isn't going out of their way to prosecute the gajillion and one of the the wholesalers here that doesn't mean they won't act on something thrown in their lap.  

I wonder if that wholesaler would be as adamant if faced with you turning them in.

All you told us was you put up a deposit.....does your agreement allow for you to get it back due to some event that has occurred, or did you just change your mind?

The sinkhole changed my mind because it changed the numbers in the deal.I feel the deal was misrepresented because the prior sinkhole wasn't disclosed.

If the problem was repaired I am not sure you have a legit complaint. Take to the broker and see if they can/will do anything about it. My understanding is they have it under contract to assign, you agreed, then found out the ARV was off. Tough situation. What representations did they make in writing, if any?

Questions:

1. Was sinkhole disclosed? 

2. Did you sign off on the selelr disclosure? 

3. Where was the EMD money deposited? Title company? IF the wholesaler is holding it then I don't beileve it is legal.

4.  Does the wholesaler have real estate license to practice real estate?

5. Did the wholesaler sign seller disclosure? Do you have a copy of it? Was the sinkhole mentioned in it?

IF the sinkhole was disclosed to the wholesaler and if he did not disclose it then what he did was illegal. 

IF the sinkhole was not disclosed to wholesaler then what the seller did was illegal.

Clearly one of them is at fault

Originally posted by @Dave Foster :

@Dustin Rose acting as a true wholesaler in FL is actually a felony believe it or not!  While FREC isn't going out of their way to prosecute the gajillion and one of the the wholesalers here that doesn't mean they won't act on something thrown in their lap.  

I wonder if that wholesaler would be as adamant if faced with you turning them in.

Just to clarify you can legally wholesale in FL as long as you are licensed or own the property.

@Brian Garrett , Well sort of.  But then you're not wholesaling are you?  You're acting as a realtor or fsboing.

Many states have taken an overreact posture on this while not having the resources to actually deal with it - all bark and no bite- which is unfortunate.  

But what has soured the industry for all has been the unscrupulous practice of wholesaling where an individual agrees to buy a property they have no ability and no intention to purchase just so they can have it locked up and assign the contract.  That's wrong by any account.

I do work with a couple of large wholesaling firms and they do it right.  they purchase at "wholesale" and then sell at retail.  That is a great model and can be done by anyone.

@Dave Foster Yes you would still be wholesaling since you would be making the spread on the deal versus the standard 3% realtor commission but aside from that I agree with you.