I don’t know how much I have written about it, but we bought House #29 from a wholesaler. The deal was not stellar, about 70% on the dollar with 3% for repairs, but it came with a buyer that is paying about 95% on the dollar retail. The wholesaler did not have the money to float the escrow for 45-days from purchasing it, to waiting for a conventional loan to be approved.
So they basically offered us most of the profit as long as they got to collect commission on the purchase and on the sale. We agreed and moved forward, but from day 1, I was un-easy with this company.
They are a local firm, they have an office and I would estimate 5-6 employees.
Complaints I have
1. The escrow company they used is very slow
We wired money after Christmas to close our escrow, but the property did not get recorded into until Jan 15. So that basically delayed us 2.5 weeks.
2. Communication from the wholesaler
I think they used flash funding (sometimes called transactional funding), to close their escrow for 1-day. For some reason, they didn’t want to disclose why they needed all this extra paperwork and my money to sit. I wish they would have been upfront with me. Every time I would call with questions, I would speak to someone else. This made a relatively simple transaction difficult.
3. Weird Excuses
When I complained to the owner about the speed of the transaction, he basically said they are “We are a really big company and sometimes that makes transactions slower and more complex.” I still don’t understand if that comment is the owner trying to impress me or he truly believes that is why things happen so messy.
We will see if their buyer can perform. If they do, it will be worth the trouble. The funny thing is, all of my complaints would be very easy to fix. If you have a good team (escrow company) and decent communication I would be a happy customer.
The good news is, if the buyer does not perform, I can sell the house at 100% or 105% of market value and make a little bit of extra money (although my ROI would probably go down). So it is a good house that I got at a great price.