A Student called me and said that he had advertised a property for sale that he just got under contract the previous day. I had worked with him for a while to get the seller to agree to a longer inspection period and a smaller deposit.  The seller finally relented. This seller had purchased the mortgage on the property at a hugely discounted price and then foreclosed to get title.

The Student said he started getting calls on the property immediately after putting it out to his email list. The problem was that four other investors called to ask why he was "stealing their deal." It seemed each of them had a signed contract from the same seller for the same property! There seemed to be no mistake, the seller had signed four other contracts or possibly even more and had collected a deposit from each buyer. One other contract might be explainable, but four that we knew of, is way too many.

I remember a property I went to see where the homeowner made an appointment with me for a specific time. When we arrived we saw three other investors that we knew who were parked out front of the property. The homeowner and her "husband", who turned out to be her boyfriend, were inside taking deposits from anyone that would give them a contract and a cash deposit at the time.

The "deal" they were offering was so tempting that at least four investors each gave the seller a $2,500 cash Earnest Money Deposit (EMD). In the end, the sellers skipped town with the cash.  No one bought the house because the seller was not the wife of the owner on title and her boyfriend was not the husband as he has signed on the contract.

The lesson here is to allow an independent third party to hold your deposit and put the clause in your contract that you will get back your deposit automatically if the seller can't close timely. This clause can't be your typical, "If the Seller is unable to close the Buyer gets his EMD back"; no, it has to be definitive that "the Seller hereby authorizes the closing agent to release the EMD if the Seller can't close timely." We also use a similar clause all the time as sellers so we can get the buyer's EMD if he doesn't close timely. If you haven't used one previously, ask your closing agent what specific language he would want and use it while he holds your EMD.

In summary, with Earnest Money Deposits, you should never give money to a seller under any circumstances. The greed factor that makes these scams work is "The deal is too good to be true!" The harder and faster a seller pushes you to close, beware!  Time is your friend, not your enemy.

Licensed real estate agents and brokers have very limited liability in these cases because of disclaimer clauses in their State Realtors® Association Standard contracts. These clauses essentially indemnify the agent from the deal going bad and any liability on their part. However, they are almost always required by their brokers to carry an Errors and Omissions (E & O) Insurance Policy just in case.

As I always say, "A little kiss of common sense may keep you from ultimately kissing your money goodbye!"

change your life mentoring click button j 300x236 1

To your limitless success,
Dave Dinkel

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.

A Student called me and said that he had advertised a property for sale that he just got under contract the previous day. I had worked with him for a while to get the seller to agree to a longer inspection period and a smaller deposit.  The seller finally relented. This seller had purchased the mortgage on the property at a hugely discounted price and then foreclosed to get title.

The Student said he started getting calls on the property immediately after putting it out to his email list. The problem was that four other investors called to ask why he was "stealing their deal." It seemed each of them had a signed contract from the same seller for the same property! There seemed to be no mistake, the seller had signed four other contracts or possibly even more and had collected a deposit from each buyer. One other contract might be explainable, but four that we knew of, is way too many.

I remember a property I went to see where the homeowner made an appointment with me for a specific time. When we arrived we saw three other investors that we knew who were parked out front of the property. The homeowner and her "husband", who turned out to be her boyfriend, were inside taking deposits from anyone that would give them a contract and a cash deposit at the time.

The "deal" they were offering was so tempting that at least four investors each gave the seller a $2,500 cash Earnest Money Deposit (EMD). In the end, the sellers skipped town with the cash.  No one bought the house because the seller was not the wife of the owner on title and her boyfriend was not the husband as he has signed on the contract.

The lesson here is to allow an independent third party to hold your deposit and put the clause in your contract that you will get back your deposit automatically if the seller can't close timely. This clause can't be your typical, "If the Seller is unable to close the Buyer gets his EMD back"; no, it has to be definitive that "the Seller hereby authorizes the closing agent to release the EMD if the Seller can't close timely." We also use a similar clause all the time as sellers so we can get the buyer's EMD if he doesn't close timely. If you haven't used one previously, ask your closing agent what specific language he would want and use it while he holds your EMD.

In summary, with Earnest Money Deposits, you should never give money to a seller under any circumstances. The greed factor that makes these scams work is "The deal is too good to be true!" The harder and faster a seller pushes you to close, beware!  Time is your friend, not your enemy.

Licensed real estate agents and brokers have very limited liability in these cases because of disclaimer clauses in their State Realtors® Association Standard contracts. These clauses essentially indemnify the agent from the deal going bad and any liability on their part. However, they are almost always required by their brokers to carry an Errors and Omissions (E & O) Insurance Policy just in case.

As I always say, "A little kiss of common sense may keep you from ultimately kissing your money goodbye!"

change your life mentoring click button j 300x236 1

To your limitless success,
Dave Dinkel

Frequently Asked Questions

1. What Should I Do If a Seller Ghosts Me?

If you feel you have been ghosted, act decisively and quickly. If you have tried texting and calling, it's time to drive by the seller's location. I always take the recorded Notice of Interest or Memorandum of Contract to leave, so the seller knows it exists. Go by at a time when you know they will be there and don't be confrontational, just get the facts.

In our experience with new investors, the chances of losing a deal with no contract is likely over 85%. Verbal commitments do not apply in contract law; get everything in writing, especially contract changes.

Different 'gurus' have different opinions, but our experience is finding motivated sellers and then a buyer for your deal. Ideally, you should be finding motivated buyers from day one, so you are ready when you find a seller. Buyers are easier to find as you can see at https://davedinkel.com/products/

Prevention only comes about by thinking a Black Hat wholesaler will be coming after your deal. First, educate the seller that an unscrupulous investor may come by and illegally offer more money, have the seller sign your "Notice to Homeowner," stating that he understands he cannot accept another offer.

There is nothing illegal about changing their mind, it is called seller remorse and occurs about 25% of the time. However, if they have signed your contract, it can't be cancelled for any reason unless acceptable to the investor/buyer.

If price is an objection, you need to find out how important it is to sell fast and for cash. If the seller isn't under a time constraint, has a money issue, or has a personal dilemma, he may not agree to the price you need. Offer to help move and build it into your price before you make your offer. However, never give the seller money; only pay the moving company, and only after closing (escrow with a closing agent). If fear is the seller's issue, break it down into what the real problem is and answer their objections one at a time.

You can get to the root of motivation for a seller by asking a few questions. First, "Why are you selling?", "How soon can you close?", and Are you ready to sign an AGREEMENT today, if not, what do I have to do to make you comfortable?'. The answers to these questions will determine the truth about your seller's motivations.

The best times to involve your attorney in your deals are to have him review your contracting, review the signed contracts from the seller and end buyer, have him open escrow and start the title work, negotiate with city or counties for lien reductions or mortgage payoffs with lenders, and to close the transactions." Your attorney is not the adversary; it's the opposing party's attorney who is a deal killer, and having your attorney allows him to help overcome this obstacle.

The key to successful prospecting and bringing back deals that didn't close is to follow up until the property is transferred in the public record. Some of our deals have been where the seller came back to us months and years later because they felt comfortable with us and not the other "pushy" investors who contacted them.

Your contract's most important clauses are inspection period (as long as possible), when the EMD must be deposited if at all, your ability to access the property, any added clauses specific to the property that will protect you against seller claims later that were verbal only.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.