Buying from a wholesaler - First Time

[Ray J.]

Yesterday, a wholesaler and I verbally agreed for me to buy a property from him.  I understand that since it's verbal, anything can happen until we sign a contract, which is supposed to happen this evening.  I understand the concepts and procedures of wholesaling on a higher level pretty well (assignment, double close, etc), but I'm not sure of the EXACT steps to take in the process.  I don't want to get this process wrong, be scammed, or lose out because I did something wrong.

After we talked, he texted me and said we can meet tomorrow (today) and get the contract signed and he needs $1500 earnest money deposit (EMD).  Although he didn't say it directly,  it seemed as if he was asking me to give HIM $1500 EMD.  I may have misinterpreted it, but I know buyers are not supposed to give earnest money deposit directly to a seller, so I asked what title company does he like to use so that I know where to drop the EMD off at (I have no preference, and he has more experience).  We then decided on a title company with no problem.   Am I being paranoid for no reason?

While talking to him, I asked what method of closing he wants to use (assignment, double close...) and he was unsure.  He definitely understands more than I do and knows the pros and cons of the methods, but just says he hadn't decided yet.  So I want to be prepared for either.

He said that he'd meet me with a contract so that we can sign it.  But normally when I buy a house, I make verbal offer, make a contract that reflects the offer, the seller and I sign it, I take it to a title company and deposit EMD and go from there.  I've never had a seller make a contract for me.  Is this normal or does it not matter?

I've also read that wholesalers should take a nonrefundable deposit to mitigate against end-buyers backing out. If he asks for this, how and when do I give it to him? Directly after signing the contract? After depositing EMD with Title Company? Is it not needed if I deposit EMD with Title Company? Do these serve the same purpose or two different unrelated things (EMD vs Nonrefundable deposit)?

Any help or explanation of how you personally do this would be appreciated. Thanks!

[Larry Turowski]

@Ray J. Often, legitimate wholesalers and buyers build a trusting relationship because they work together again and again.  Hopefully, you'll get to this point with this guy.  But in the meantime, and especially if they do not come recommended by investors you trust, you are wise to be a little cautious.   Even with a signed contract things sometimes fall apart, so maybe you could put the assignment fee in escrow with the title company to be paid to them once the deal closes or if you bail on it.