Am I being scammed? (My first deal HELP!)

Wholesaling
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Am I being scammed? (My first deal HELP!)

Aaron Phillips
Rental Property Investor · Burlington, KY · Member since 2017 · 101 posts · 66 votes

I am currently trying to work with a guy who I think might be trying to pull a scam, but i'm not 100% certain. First I have been advertising all around my area attempting to gain leads, and I was contacted by this guy named Pat. Well I went to see his (Pat's) property, and it's ARV was around $70,000. I talked him down to $17,000. Well, I sent him the purchase agreement via Email.

This is where my suspicion began. I sent the contract from my business email and he claimed to have not received it. No big deal, could have been a delivery issue. So I resent him the email for the second time. The second time around he said he still hadn't received  it, and I asked him if it went to his spam folder, or click "all mail" in the event it was somewhere other than his primary inbox. Nope, nothing. So I told him (Pat) that I would be sending it from my other email, and apologized for him not receiving it. However, I was starting to get a little worried because he was out of town at that point and was not able to meet up for the contract signing. So I sent it from my other business email, and yet again he claimed to not have received it. So I told Pat that I would just hand deliver the contract agreement in person once he got back into town (Which at the time was supposed to be later that day) 

I went about 2 weeks with trying to get in touch with Pat with no success. Out of the blue he contacted me that he had received the contract in the mail, and needs to me to revise it. He said that he would like me to pay him first so that he can pay off what he has left owed on it. (Though the contract states that the buyer is not responsible for any taxes, mortgages, liens on the house) and I explained to Pat that I would need to get the contract signed, and he would be responsible for paying what is owed on it, and he said that would be fine. I asked when he would be available to sign, and no response.. 

A few days later I get another text from him saying "Can you add a few hundred dollars to the EMD? It shouldn't be that big of a deal anyway."

How should I go about handling this situation? 

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  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    9y
    Are you sure you're dealing with the owner? Tell him you'll add a few hundred to the non refundable earnest money but you want it as em (sent to title) and not option fee (paid to him) And it goes without saying (I hope) that not a single DIME is paid until you have an executed contract. I wouldn't let the lost email issues cause concerns though.
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  • Natasha Keck
    Investor · Mountain View, CA · Member since 2013 · 94 posts · 42 votes
    9y

    Yes, make sure you've got a reputable third party holding the money until your contract is executed.  There are scammers out there so tread carefully.

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  • Steve Peterson
    Residential Real Estate Broker · North Aurora, IL · Member since 2017 · 23 posts · 3 votes
    9y

    This is why they have RE attorney's.  Lawyer up and CYA lol.  Good luck

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

    Hopefully you're using a title agent to perform the closing, they should perform a lien search and find any outstanding mortgages, taxes, etc. They should take the money owed out of the seller's proceeds the day of closing. Giving the seller money before they closing is a no no. 

    This could be a scam, but it could also be that your seller is not tech savvy, and needs educated on how the closing process works. There's no need for him to pay anything off, the title company will take care of that. 

    As long as a 3rd party is holding the EMD, the amount doesn't really matter that much. At least he's right about that...

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  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y

    @Aaron Phillips Devil's advocate here but let's assume:1.) Pat is the property owner, 2.) Pat is actually Pat (not some random guy Jim acting as Pat), and 3.) Pat realizes that you're a wholesaler. I don't know how you market or brand yourself but Pat may have originally thought you were a "cash buyer." Maybe Pat now knows (or believes) you're a wholesaler and wants downside protection: a higher EMD. If I were in Pat's shoes I might do the same thing: Ask a wholesaler for a higher EMD as a form of "proof" that the wholesaler thinks they will actually get the property sold. After all, if I'm Pat I don't want my time wasted by someone signing a contract that then have nothing if they're unable to sell the property or close on the deal themselves.

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  • Alex Deacon
    Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
    9y

    @Aaron Phillips  If you have never met him then I would ask to have a call with the gentleman. Once you get him on the phone you will know right away whats up. Ask him some specific questions about the property and location etc.. You will catch him in an easy lie. If you feel he is legit then find a reputable closing attorney who will hold the money in escrow. Therefore your money will be held by a third party.

    @Aaron Phillipsundefined

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