An Update to “Lessons Learned From My Last Wholesale Deal”.

April 13, 2011 in Investing In Real Estate, Wholesaling

A few weeks ago I posted a story called “Lessons Learned From My Last Wholesale Deal”. This article was about a closing that I had recently on a house where there was a lot of junk and personal items at the property. And I do mean a lot.  The seller promised to have everything removed before closing.  He lived about an hour from the property, and to be quite honest, as the closing date grew closer he didn’t seem particularly motivated to get the job done. As you have probably guessed, that time came and went, and he never did clean out the property.

As I said, this was a wholesale deal and we were doing a double closing. We all decided rather than postpone the closing we would have $1500.00 held in escrow. This money was to pay for the rest of the cleanout if he didn’t get it done in the time allotted after closing.  My end buyers really didn’t want to have to clean out the house; not even for $1500.00.

My seller and I signed paperwork whereby he was in agreement with this arrangement. Even with that much money held out of his proceeds, he never came back to clean out the property. Looking back, I wonder if that was ever his intention. He never returned any of our calls including the ones from the closing attorney.

 

So what were the lessons learned here?

First of all, what none of us understood was that the seller had to agree to have the funds released from escrow. Had we understood this, I’m quite sure none of us would have agreed to this arrangement. The closing attorney finally had to send him a certified letter saying that if she didn’t hear from him within the two week specified time, the funds would be released.

I got the email today I had been waiting for; the one saying that the seller never got back to the closing attorney and she was ready to release the money. My buyers got the job done for less than $1500.00, but the aggravation of this whole process was more than any of us bargained for.

Secondly, $1500.00 was not nearly enough money to be held out if you really didn’t want to deal with cleaning out the house. My suggestion is to hold out at least double what you think the job will cost. Just call it a “pain in the butt fee”.

To check out the original post, just click on the link below.

http://bit.ly/LessonsLearnedOnMyLastWholesaleDeal