Buyer wants me to pay 10% down too him.

[Gary Dale McKee]

I have a duplex that I am trying to buy for $125,000.  I will be using traditional financing for the purchase.  The seller wants me to give him 10% down and sign a contract. This is the first time I have run into a deal like this.  Is this a common practice or should I run like crazy.

[Ben Zimmerman]

I would never sign a contract with having absolutely no outs unless the EM payment was of a trivial nature like $100.  But a 10% EM, giving the money directly to him, and no outs?!  Either he is crazy, or he thinks you're stupid.  It just leaves too many things that can go wrong.  Is this guy even the owner?  Is this guy the sole owner or does his entire family own it together and the rest don't want to sell.  Is it in a flood zone?  What happens when the inspector gets in there and sees the foundation is crumbling?  What if there are additional liens against the property that he didn't tell you about?  What if.....?

I would renegotiate the contract terms, if he doesn't want to budge on the EM, then I would soft pass on the deal.  Saying something along the lines of...

"Sir, as you know, buying a property takes much consideration, both from the buyer and from the seller.  While I like your property and the asking price seems reasonable, the specific terms of the contract do not allow me room to conduct sufficient due diligence on the property.  If you ever wish to renegotiate these specific items, me and my investment team will be willing to hear your terms.  In the meantime I wish you the best of luck."

If the property hasn't sold in a few months (it won't), then give him a follow up phone call.