Pre-qualify buyer when wholesaling property???
I intend on flipping properties to the investors on my buyers list. I will tie the property up under contract with the seller and set the closing date for 6 weeks later. After that, I will do my due diligence and find a buyer from my list or newspaper ad.
My question is: What if the buyer I have lined up isn't able to close (double close) on the planned date. This could be for any reason, but my main concern is inability to get financed. Are there precautions I can take to insure that my prospective buyer will be able to close?
If this does happen what can I do? I would still have a contract with the seller to close on that day. I would prefer not to have to use any of the escape clauses in my contract with the seller. I would also have a contingency that would allow me to extend the closing date for some amount of money. But I would also prefer not to do that.
Any Ideas???
Tonyt:
I would suggest that you make sure that your prospective buyer is prequalified by a lender or mortgage broker before contracting with you to purchase the house. Hope this helps.
Thaks for the reply jorge121.
I agree that getting a pre-qualification letter would help to assure me that my prospective buyer will be able to close. I will do that as my main method to pre-qualify.
But what if I end up in a situation where the buyer I'm working with can't get a pre-qualification letter from his lender? I know the best answer would be to find a better prospective buyer, but lets just say that time is ticking and this particular buyer (one w/out pre-qual letter) happens to be my only option. Any other precautionary measures I could take?
Do we, as REI, need a trust account if we did have a buyer that wanted to place earnest money for the purchase when they are pre-qualified to go forward witht he deal?
You should always get as much earnest money as you can from your prospective buyer. The earnest money you receive should be placed into escrow with whomever is handling your closing. They will hold the money until closing and will handle the disbursement of the earnest money if there is a breach of contract.
Thanks tonyt33 for the clear up!!!