When wanting to get a property under contract with a wholesaler who is already selling his/her property, are they obliged to ask for earnest money just for me to get the property under contract? I want to get a certain property under contract from another wholesaler who is selling. He sent me a version of his contract but is looking for $2000 earnest money, before I even have a buyer ready to purchase. I just want to get the property under contract with no money FIRST, before I shop it around to my buyers. Need help on this one.
Let’s look at it from the other wholesalers side and what may be you side in the future. First, your hijacking his deal and have no buyer, and no skin in the deal. Does he have the right to sell to a buyer that he finds first and your just out of the running or are you trying to lock him up with you and make it your deal? Your not too clear on that. In that case I would want some of your skin in the game to compensate me, but I personally wouldn’t do it this way myself even if you had a buyer. I would want some skin upfront from you and your buyer in case the deal went south. So with a newbie I do it one of two ways.
First way I step out of the deal completely by having the other wholesaler contract with the seller and pay me at the same time to release my contract. Or if the other guy doesn’t have the money, and that other wholesaler has a buyer, I need to have the other wholesaler assign his buyer to me after I qualify them and he gets paid when I do. Of course when we have dealt with each other and built a track
record I just say I want this much and you go for what you need and we are not so formal but when it is time we still put something in writing because you or I could get hit by a truck the next day.
Long story short, I came about this property and thought that the wholesaler of this property was the Owner/Seller, and didn’t find out he was another wholesaler until recently. He still wants to try to make a deal work, if anyone of my buyers is interested. No luck so far. There, we would sign a JV contract, split the amount between us.
I don’t like finding properties that other Wholesalers are attached to, but that’s what I’ve been finding lately. Looking to only work with motivated sellers.
But here is a new question. I am just starting out as a wholesaler with little to no money. When looking for a title company to work with for the closing, do I pay them their fees before or after I close? It would make sense to pay them after, that way I can collect my amount, and pay them as I close without having to worry about not having enough to pay them. Also, can I charge my own amount for earnest money once I find a buyer for other properties that I would have under contract?