For All Wholesalers..
When you assign your property to a buyer, do you typically have all the earnest monies/ down payment mailed to you or to an attorney trust account??
I was interested in this property which was being assigned to me, but the seller(wholesaler) requested a down payment of 5K to be mailed to him for the acceptance of the contract. I felt more secure of depositing the 5K in a trust account rather than just mailing it to the seller. Seller did not agree to this.
Hence I killed the Deal!
Did I do the right thing?
Absolutely. You never give earnest money to the owner. You give it to a title company or a real estate attorney. You did not kill the deal, you saved yourself from getting ripped off.
BRenda
Different wholesalers have different ways of accepting payments for assignments. Some wholesalers want their money right away, some are ok to hold in with third party until closing. One deal that we did, we negotiated that wholesaler will receive half upfront and half at closing. It basically comes down to your comfort level with the wholesaler and the deal.
Ok - what if I did negotiate with the seller and paid half of the assignment fee upfront. Now, during the buying process, I discover that there are some terms on the contract that I disagree with and the house has some additional liens and the seller is unwilling to reduce the purchase price. Then deal is in trouble. Not only that, I have a 5K with the seller who may claim it as his.
Sellers can always back out, house can be hit by a hurricane, etc. You never give any money to the seller or the wholesaler until the deal is closed. You may give some to escrow or trust, but not to a person.
Brenda
Thank You all for your replies! I feel more comfortable now.
That is why you have a side contract with a wholesaler, that if the sale does not go thru you get your deposit back.
And Brenda, Seller can not always backout of the deal. A contract is a contract.