Wholesale deal turned to be a mistake! (What would you do?)

[Saurin Pandya]

We (My wife and I) bought an off market property for flip from a wholesaler with 5k down (non refundable if we back out). 

4 days before closing, wholesaler called us to let us know that the seller doesn’t want to sell the property anymore; I quote ‘probably has dementia'. But they still wanted to proceed with the closing as they assume that seller ‘may come around’. As per the contract, they still have 14 more days from the settlement date in case of any issues. I assume they want to pressure the seller on selling as per the binding contract. However, at this point we want to back out now because:

1) The whole deal seems sketchy

2) The rehab quotes from GCs ended up being much higher than our estimates 10-15k higher

3) Utilities are not turned on so there is a BIG possibility of more unknown expenses coming our way.

4) This will be a case of double closing so we won’t really know if the seller actually closed with the wholesaler. We will need to wire the funds a day before closing and if the seller doesn't show up on closing then wholesaler would extend closing to a future date and our funds will be stuck...

The dilemma here is if should we wait for the seller to back out so we can get our 5k back or back out anyways and loose 5K because of all the above reason.. leaning towards later.

What would you do? TIA. 

[Jay Hinrichs]

I bet your 5k is long gone unless its in escrow with clear escrow instructions.  if you wire in the money to close its not stuck.. you can ask for it back. Earnest Money though is stuck without mutual release.  red flags all over the place on this one