Wholesaling FAQ For The Educated But ScaredPosted on August 1, 2015 by
If you’re like most people, you’ve been wondering all along when we were going to discuss all the awful things you’re imagining might happen to you as a wholesaler. And I have no desire to sugar-coat things for you, but the truth is most of the things you’re imagining are extremely rare, and easily overcome. Here are some of the most frequently asked questions about such fears:
What happens if I can’t find a buyer for a property I have under contract?
If you can’t find a buyer, one of three things has happened:
- You’ve made a bad deal, in which case your buyers have certainly made you aware of this or;
- you haven’t marketed the deal hard enough to get the right buyer or;
- you haven’t given yourself enough time to get your buyers into the property before your inspection or partner approval clause runs out.
As you’re probably already aware, any of these 3 failures is unlikely to harm YOU, if you exercised the recommended inspection clause. You’ll simply void the contract under that clause, or renegotiate for a lower price or more time, or in a worst case scenario, let the seller keep any earnest money as per the liquidated damages clause.
In the first case, you might try renegotiating the contract price or option price—you’ll know what to re-offer after you’ve shown the property to 4-5 people. In the other two cases, if you’re certain that you’ve created a good deal, you might consider paying the seller an additional, non-refundable option fee or deposit to extend the period of the contingency and closing. A third possibility is to buy the property yourself, although that is outside the scope of this course. Remember, as long as you have a liquidated damages clause, you’ll lose only your earnest money; if the property is controlled via an option to buy, you’ll only lose your option fee for not closing. But don’t make it a habit.
In any case, it’s important, as an ethical wholesaler, that you let the seller know as soon as possible that something has gone awry, and that you won’t be closing as promised.
What if the buyer backs out before closing?