Wholesale Deal Trouble

12 Replies

I have a wholesale deal I'm trying to close but the seller is asking for a 2% deposit to hold the home. I don't have the 2% to give him and I never knew that I had to give the seller that much of a deposit for him to sign the purchase and sell agreement. What can I tell him for him to sign the contact without any money down?

Probably nothing you can tell him to change his mind.  Apparently, he's no dummie, which is generally what you need to tie up the property with no decent EM.

Lekisha,

Is it written in your agreement that the Earnest Money Deposit is refundable if sale is void? 

Consider borrowing.

2% is very much a standard EMD. I wouldn't ever take less.

I know that there are people online who talk about things like $10 deposits.  Those are people who are dealing with ignorant or desperate sellers.

In your case, it sounds like you are dealing with a seller who knows a thing or two.  Which means you will probably NOT be able to convince him to accept anything less.

So you need to come up with the money somehow, or move on.

One last thing to consider.  This is a seller who knows his stuff.  And he is willing to sell at the amount you offered.  It is very possible that that is because the amount you offered is close to market value, and that no one will be interested in buying that contract at a higher price.  Do you have a seller in mind?  What do they think?

Originally posted by @Christopher Salazar :

The best case there is you present the potential deal to a buyer and convince them to put the earnest money down. If it's truly a good deal, a buyer would definitely do this. Always put the earnest money with your attorney. 

What if I don't have the property under contract yet. I don't want the buyer to make another offer and I loose out on the deal? What should I do?

Originally posted by @Tim Wilkinson :

Lekisha,

Is it written in your agreement that the Earnest Money Deposit is refundable if sale is void? 

Consider borrowing.

 No it is not, should I have that added?

Lekisha,

Here is a good simple, informative article. It can be refundable, but state laws apply. Sometimes, a small percentage is non-refundable. 

http://www.realtor.com/advice/understanding-the-earnest-money-deposit-2/

@Lekisha Cole

It will be smart to put in everyone of your contracts that the deal is "Contingent on inspection" and "contingent on financing". I have had people call me out on the "contingent on financing" due to the fact that I tell sellers I pay cash and close fast. To them I usually say that I deal with a lot of deals and put as much contingencies as possible to make sure I do not over extend myself. Then I follow up with.. "but if for any reason I can't close on this deal due to a better one coming up I will pass it off to another investor in my group." If you are up front with people they usually will work with you. I did lose a deal last month due to them not liking the fact I would potentially wholesale but you can't win them all. 

As far as your original question it seems like one of your only option is to pocket shop it to an investor you trust and see if their is any interest. If their is then you can ask them to put down the 2%

Originally posted by @Micah Copeland :

@Lekisha Cole

It will be smart to put in everyone of your contracts that the deal is "Contingent on inspection" and "contingent on financing". I have had people call me out on the "contingent on financing" due to the fact that I tell sellers I pay cash and close fast. To them I usually say that I deal with a lot of deals and put as much contingencies as possible to make sure I do not over extend myself. Then I follow up with.. "but if for any reason I can't close on this deal due to a better one coming up I will pass it off to another investor in my group." If you are up front with people they usually will work with you. I did lose a deal last month due to them not liking the fact I would potentially wholesale but you can't win them all. 

As far as your original question it seems like one of your only option is to pocket shop it to an investor you trust and see if their is any interest. If their is then you can ask them to put down the 2%

That makes sense. Will do Thanks a lot

Originally posted by @Micah Copeland :

@Lekisha Cole

It will be smart to put in everyone of your contracts that the deal is "Contingent on inspection" and "contingent on financing". I have had people call me out on the "contingent on financing" due to the fact that I tell sellers I pay cash and close fast. To them I usually say that I deal with a lot of deals and put as much contingencies as possible to make sure I do not over extend myself. Then I follow up with.. "but if for any reason I can't close on this deal due to a better one coming up I will pass it off to another investor in my group." If you are up front with people they usually will work with you. I did lose a deal last month due to them not liking the fact I would potentially wholesale but you can't win them all. 

As far as your original question it seems like one of your only option is to pocket shop it to an investor you trust and see if their is any interest. If their is then you can ask them to put down the 2%

 Do I have to draw up a contract for the buyer to sign on contingent on financing the 2% of the deal?

@Lekisha Cole

You would state it in the contract that the buyer is paying the 2% down. However, I would definitely get a lawyer to draw up the contract for you. You can also make the end buyer pay for this.

Probably nothing you can tell him to change his mind.  Apparently, he's no dummie, which is generally what you need to tie up the property with no decent EM.

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