I need some clarity on an issue of wholesaling. When you purchase a property, are you trying to get it financed at all or do you just try to find a buyer? If you don’t find a buyer, you just get out of the property or what? What is a typical fee for not buying a property after signing the contract on it? Thanks.
Howdy Gusrock1414:
The first property I wholesaled I was trying to buy for myself but actually could not get the financing. I was trying to get private money and the investor offered me $3000 and I had figured only $10,000 net after rehab so I sold it. You can do it this way too.
I think most are just willing to walk away if they do not sell it however. The earnest money on the contract is the only real loss and a lot of times $100 is enough on a small property less that say $50,000. The higher the numbers the more earnest money expected up to thousands. I tied up my 31 units at $154,000 with $1000 that I borrowed from a friend. I put up some gold coins as collaterial.
If you do not find a buyer in the 30 to 60 to 90 days you may want to try to extend the agreement or just walk away. Try to save face the best you can. You do not want to be known as a buyer who can not close a deal. Word travels fast and you may be labeled a crook even.
Hope this helps with your questions.