Avoid This Rookie Wholesaling Mistake with EMD!

What do you do when you're working with a buyer and you're wholesaling them a deal and at the last minute they flake on you? I have this experience with this other wholesaler that I'm working with that's new to the game, and he had a buyer that he was going to work with, and then at the last minute the buyer's kind of ghosting him. Now let me explain something really quick. Unfortunately, the wholesaler is new and he didn't assign his agreement and get the EMD from the buyer he's working with, and he was just hoping the buyer would close, or maybe he just didn't understand. This is what's going on in this situation, this call I'm having. The, the agent, he did get this deal from on market, and the agent is asking him for his $5,000 for earnest money when he thought his buyer was going to bring the earnest money. And again, the buyer is ghosting him. So this is a conversation, this is my advice to him. If you're new to wholesaling and you're like, hey, I don't have the earnest money, you can use the earnest money from the buyer, but if If you're going to do that, you need to assign your contract to them. They need to bring the money to escrow. Again, something that he did not do. So learn from this experience and learn what the options are to overcome this obstacle. Tyler, what's up, man? Sorry, I just got your text. So yeah, kind of give me an idea of what's going on.

No, so what I told you before, so I had the— I tried to pass off the EMD, you know, just have the buyer take care of it.

Of course, yeah.

But now we're in too deep because I already passed my first like closing, and the original buyer is supposed to put it down, but they weren't doing it. Okay, so, uh, now I got to come out this EMD out of my own pocket and then, uh, try to get one of these buyers that we're talking to now. Unless, like, I, I could make it like super quick and then just freaking literally just get out of the deal with $5,000. I mean, that's not bad, but the original buyers, they wanted $180,000 for it.

Mm-hmm.

But they were just, like I said, they were being like super flaky. They told me like they can have like the paycheck in the mail and like their, uh, well, the earnest money.

Oh, okay.

And the funds to be passed through, like, uh, you know.

But you haven't talked— you haven't talked to them since, have you?

Yeah, yeah, I had actually talked to you. I had talked to them like the last time.

Okay. And, uh, they haven't hit you up since? I have—

I haven't hit them up because I was kind of done with them.

Like I said, they were just Do you think they were wholesalers trying to find a buyer the whole time too, or do you know they're legit buyers?

No, they seem like legit buyers because there was 3 of them. They were all like partners. They said that they do the work themselves. They currently had 2 flips they were working on themselves.

Got it. Okay, well, so this is the situation. Like, I talked to Sarah, she texted me last night and she's like, hey, I thought you had this deal at $150,000. And I said, yeah, I'm sorry, I thought I did, but it was at $175,000. And she's like, like, I think $175,000 is too much. And I was like, okay, well, you're like, can you go and send your buyer and just at least tell us what they'll pay so we can make the right offer if we need to renegotiate? And, you know, I honestly just think that's what's going on, dude. I think just like people just— they're not interested at the price, even at $175,000, $180,000. Like, that's why those people have bailed. So if these guys are— if the agents are like pressing down on you to like commit I would just say you don't have it at the right price from just my experience and seeing how she's reacted and seeing what everyone else is doing. So I would just cancel the contract. And if you happen to find someone else in the meantime, like, then I can call and get under contract and wholesale it. But, you know, they're probably not going to work with you again just because of the burn— not that you burned the bridge on purpose, it's just your buyer was kind of flaky with you. But anyway, it's just not a deal, unfortunately, at $175,000 from what I can see. And you don't have the time to, uh waste, you know.

Yeah, yeah, for sure. Um, I don't even— because the guy just called me today, said he needs an EMD check.

And if I said it, of course he does. Yeah, and you, and you just got to say, hey man, the buyer that I'm working with, you know, he bailed on me. He was good the whole time, and, uh, you know, I'm gonna have to cancel the contract. Sorry.

Yeah, see, I don't know, because obviously, like, you know more than I do. And for him, he knows, like, whatever he's saying, that I'd be out $5,000 regardless if I were to back out or something.

Is he going to pull it out of your bank account? No, no, no, he's not. No. So, so let me understand this really quick. So the EMD, um, you, you were supposed to close yesterday, or your, your due diligence period was over yesterday?

I was supposed to close with the original buyer yesterday.

Supposed to close with the original buyer yesterday but never had any EMD the whole time? Because they didn't put the money down, correct?

Yeah, so we were supposed to close yesterday. We had figured out that the original closing date was gonna get pushed a little bit due to, like, we had the title lined up and then we just ran into a small issue. So it finally came up, so our original close date was supposed to be yesterday, but it was supposed to get pushed back.

Okay.

We were still pushing for EMD from these guys, And honestly, like I said, I almost feel like I might just call him back up and be like, yo, I can do 180 right now if you guys can just send all of the checks like tonight. Like, there's no more—

you can do that, dude. Like, I— but I'm just telling you, I think from my experience is just people are— they're flaky because they don't think they have a good deal. So if you lower the price, you could see. But if I were you, I'd just be like, hey, I'm out. Like, I can't even do this. And, um, Forget all you guys. That's what I would do because you're new, man. Like, obviously this is kind of the pains of trying to figure this stuff out, but like, you're supposed to cancel contracts after your due diligence period is over. You're supposed to get earnest money from your buyers, and if you don't, um, you know, it depends. Like, it's on you, um, if you want to just give them $5,000 and, and be like, hey, you know, I messed up. For me, I probably wouldn't have been in this situation, but it really depends on like how you want to navigate it. I would just say, hey, look, the guy that I assigned this to or was working with, he's bailed on me. I don't have $5,000. Sorry guys, I can still look for a buyer. What I'm— I would even relay the fact, it's like the reason why I haven't been able to find and sell this deal and the reason why it's been on the market for like 200 days is because it's overpriced. So, you know, I can for sure close on this thing, like if you give— if we negotiate it lower. But I would hate for you to lose $5K just because everyone was dragging their feet and you just, it's not a good deal.

Because I mean, I can go back to this guy and be like, yeah, bro, I'm out. But he already told me straight up that they're going to, they have the attorney and I signed the purchase and sale. So I'm out $5,000 regardless of what he's saying. I mean, you know.

Well, I mean, I've been in this game for a while. Unless you have the money in escrow, they can like file, they can like try and sue you for it. But like no one really ever does that because like a lot of times people back out of contracts even after due diligence. And like it's just such a hassle to, uh, to go get that money. So to be real, like, dude, I, I mean, you made a mistake, let's be real, because you didn't know. But like for me, I would just be like, look, the house— just like, a lot of things fell through and I was working with someone and, you know, I just don't have that money. Maybe I can pay you in maybe like 10 years or something, but I can't pay you now.

Yeah, exactly, exactly.

Because, because again, like, that's why you just got to make sure you're doing it the right steps, right? I don't know everything you've done this deal, but you could look at it like, hey, I told you, agent, that You know, my buyer bailed yesterday when we were supposed to close. You said you would extend it. I'm not trying to get, you know, locked in on this $5K when I've been pretty transparent the whole time of what I'm doing and what's going on. Um, and I wouldn't pay the $5K. I'd say, hey, good luck, get it out of my account. That's what I would do. Yeah, yeah. Well, let's call her. Let's, let's, let's call her right now. Let's call right now and see if she— what she's thinking. Let's just— let's see what she's got, okay?

Even if they just take it at the original price, maybe if they're like, I don't know. Yeah, they want to have like lower.

Yeah, let me call her. Let me see if I can help you out. So let me call her real quick. So what happens when you try to wholesale or get in the business, you don't have all the pieces, unfortunately. Now, and he's smart, he's a smart guy. I think his buyer just kind of screwed him over. So we're calling an agent that might have a buyer right now. She was very, very receptive yesterday, talkative. She's kind of gone MIA on us today. Why? So kind of what happens, they want a deal, they think it's a deal, they find out it's not, they kind of ghost you. Hey, so she didn't answer, and you know, who knows what she's up to. She's possibly busy. But again, just know as you keep doing this, when people are really responsive, it's usually a great deal or it's a good deal. When they start kind of being flaky and not responsive, that's where you know something's wrong. And you gotta call it out just as soon as you can. As soon as you start feeling there's, um, you know, some hesitation, call it out. Be like, hey, what's— you know, I've done a couple deals, you know, starting to kind of feel like, you know, it's hard to get a hold of you. Is everything all good? And as soon as you get that EMD, then that all that money, all that kind of goes away. Because really, when you get the EMD from the, uh, what's it called, the, um, the buyer, then it's like you can have it. But let me tell you one more thing about EMD. Can I tell you one more thing?

Yeah, do you think—

but I'm learning. So I, I got a buyer to commit about 2 years ago to buying a property right before the pandemic hit, right? So they put down $5,000 in non-refundable earnest money, they put it at the title company in escrow, and they bailed. So $5,000 there. And I said, fine, we'll find another buyer and we'll get $5,000. So we call the title company, we say, hey, can you release that $5,000 to us? And the title company says we can't release the money unless it's agreed upon by both parties. So I was like, are you kidding me? Like, so we can't get that money that's in escrow that is— it said the agree— in the agreement we signed that it was non-refundable. She's like, yeah, unfortunately, like, the way that the title companies are set up is they can't release money unless both parties are in it, because the title companies are normally like, they're like not on anyone's side, right? They're just like in the middle. So they're not like here to take the wholesaler side or the buyer side or whatever. They just hold the money. And they— so they had to get that agreement. So I waited 2 years for this lady finally to come back, and I just said, hey, there's the money, can you give it back to us? And she was like, nope. And I was like, well, how about we just split it then? You get $2,500 back and I'll get $25,000 because it's just going to sit there forever. And she's like, okay. Basically what I'm trying to tell you is like, even if you had your money at the title company, like in the scenario I am at, like they're not even allowed to take your money, like from the experience I had without, you know, your permission. So for them to like be like, oh, we're gonna get your money. It's like, all right, well, you can pry it out of my bank account, like if you want. And I don't know if I'm beating this with like a dead horse. I'm not trying to go too deep into this, but I'm just explaining to you how like earnest money works. And I'm not trying to tell you to be dishonest either. I want you to be honest. And, you know, if you knew full well, like, hey, I'm doing this deal and I know I'm going to lose $5K, but I believe I'm gonna, like, I'm gonna go forward and do it just because, you know, I believe I can do this, like, then I would say, hey dude, you ran the risk and you gambled. But kind of sounds like you were, you know, your buyer was going to do it the whole time. The one step that you forgot was the, okay bro, let's get that EMD today then. Let's get it done now.

Yeah, EMD and taking assignment.

Yeah, yeah, yeah.

Okay. So, and could you— I know you're saying like, hey, forget this guy, right? Like you don't want to talk to him anymore. But is it possible if you call him like and just be like, dude, you know, I'm in a really tough spot because of what we're at. Like, can we just get this thing done? Like, are you just never going to talk?

That's what I was saying earlier. I'm thinking that like maybe I'll just reach out to the guy today and just be like, hey, if you guys can do it, it's only going to be like, I'll still make money off of it. So it's not bad. It's just not where I wanted it. He was like, you know, we feel comfortable if we can do it at $180,000, but that's the highest we can go.

Oh, so he's already trying to renegotiate you down then, huh?

Yeah, he's been trying to do it. He's like, hey man, can you run back and talk to the guy and see if we can renegotiate? Because he's like, man, we'd really like it at like, you know, if you got it at like $160,000, you know, we could take it for $175,000.

Yeah, yeah, yeah. No, of course they're trying to beat you up. All right, dude, that's exactly— see, I thought they were just ghosting you completely and like that you couldn't even get a hold. Definitely, dude, reach out to them and be like, hey guys, I'm in a tough spot and we just need to get this thing done. And just get it done, dude. Like Sarah, I already talked to her and she's gonna go over there, but she's already kind of thinking about being around like $150,000, $160,000. So that means you have to get it for lower. So yeah, just go with these guys and yeah, let me know how it goes.

All right, brother, I appreciate you, man.

Yep, peace. You gotta do it the right way. Again, here in this situation that we just watched, this is what I would recommend doing. Now you have to be honest and transparent in all that you do. You don't want to lose sleep at night from not being straight, direct, and real and honest. So what you need to do if you're going to get into wholesaling is definitely disclose that you're not going to put down any earnest money until your due diligence is over. And tell your buyers that you're going to work with, hey, hey, I need you to put down the earnest money because, you know, I'm not going to bring it. Let them— let everyone know what's going on. So you're not stuck in a situation with an agent where they're like, hey, bring me the earnest money and you don't have any earnest money because you're brand new. So anyway, make sure you do it the right way. And I also recommend that you get a coach, whether it's me, whether it's— get a mentor, get someone that can help you so you're not stuck in situations like this. And follow me for more information. I'm here to help you on your journey. So hopefully this was helpful, and tune in for the next video.