Want to know when I’d walk away from a wholesale deal?
Well, of course, there are a few reasons why you’d walk away from a deal… can’t agree on price, you find weasel clauses in the buyer’s paperwork, too many repairs are needed making the deal simply not worth it, lack of motivation and on and on…
But today, I’m talking about one thing in particular: Not getting a deposit from your buyer.
Bad move, friends.
Hey Moguls, Andrew “The Maestro” Massaro here and let me tell you that one of the BIGGEST mistakes I see wholesalers make these days is demanding your buyer write the deposit check out to you, personally.
Let me be super crystal clear:
The deposit from your buyer is mandatory.
No check… no deal.
Plain as day. Super simple.
Why must we have a deposit?
It shows us that your buyer is serious. And, it insures that we make some money, if this guy flakes out and walks away.
Let’s read between the lines.
See, here’s the thing…
If a buyer says he wants the house but won’t give you a non-refundable deposit… this is really what he means: he doesn’t really want the property. Nope, sad to say, but he won’t be buying it.
See, what’s really going on here is that he’s most likely a fellow wholesaler, who is looking to shop your deal to real buyers. Not good.
Not good at all.
So, yes it’s true that years ago, having your buyer give you a deposit check made out directly to you was common. In fact, that’s how it was done.
But, things are different today.
Lots of guys are shopping deals that they don’t have under contract, and the game is a bit trickier. And this has made buyers a bit skeptical.
So, how do you solve this little challenge?
Luckily, the solution here is simple…
Just have your buyer write out the check to the title company.
As long as you state in your assignment or purchase contract with the buyer that his deposit is non-refundable, to be held in escrow by the title company and goes toward the overall purchase price at closing… it’s yours!
And, if he flakes out and fails to close, the title company scratches you a check equal to the deposit.
You put that cash in your bank account… and go look for another buyer. #winning #smartbusiness
So..
Please don’t make the HUGE mistake of demanding your buyer write out his earnest money deposit directly to you, especially if it’s the first time you’ve done business together.
Nothing will turn him off quicker… and kill the deal faster.
It’s your money, anyway. Just send it to the title company and get the deal done.
Talk to Me
What are your ‘rules’ with the EMD? Share below.
ALWAYS get a deposit check from your buyers.
Write into your assignment or purchase contract that the buyer’s deposit is non-refundable.
Make sure the buyer writes the deposit check to your title company.
Andrew Massaro
, also known as "The Maestro", is the founder of Wholesale Coaching, Inc. and is one of the most sought-after wholesale and REO coaches in the U.S. A University of Florida graduate, Andrewís house flipping career started in 2005, during one of the most dramatic and awe-inspiring real estate booms in recent memory.
After many years of success flipping houses in Tampa Bay, Andrew began also pursuing his passion and purpose: hands on, one-on-one coaching and mentoring other investors. Through Wholesale Coaching, students interact with and are coached by Andrew, personally. He has the unique ability to teach and guide his fellow investors to the results they desire. The one-on-one interaction and partnership is the key and what really sets him apart from others who offer coaching.
Andrew is also a loving husband, father to a beautiful little girl, Charlie Lynn, and an active board member of Current of Tampa Bay, a non-profit focusing on humanitarian efforts and showing love to underprivileged individuals.