2 Escrow Clauses that Made me $65,000 on a Wholesale Deal

[Jared K.]

I recently wrote about 2 Amendments to my Purchase and Sale Agreement that made me $65,000 on a recent Wholesale deal.  This post is about 2 Escrow Clauses that made me that same $65,000.  

FACTS: SFR, off market, FSBO in Los Angeles. Purchase Price was $860k. I sold it during escrow for $925k. I double escrowed the deal - 2 escrows.

Escrow #1: I was the buyer, buying the property for $860k.

Escrow #2: I was the seller, selling the property to an end buyer for $925k.

The two clauses I used in Escrow #2 (and got the my end buyer to sign off on) was as follows:

Clause #1: "Escrow #2 is contingent upon the successful concurrent close of Escrow #1."  The purpose for this clause is to protect me in the event that I don't successfully close on escrow #1.  What if something happened in escrow #1 - the deal where I was buying the property that prevented me from transferring clear title to my end buyer (escrow #2)?  My end buyer could seek specific performance and sue me to deliver title that I don't have.  This clause protects me in the event something happens and I cannot deliver title to my end buyer. 

Clause #2: "Seller (ME) may use the Buyer's funds to finance the acquisition of the property."   Yep, you read that correctly!  In Escrow #2, I'm the considered the seller and I used my end buyer's funds the ($925k) to purchase the property in Escrow #1 for $860k. What is the significance of this?  I didn't use ANY of my own funds to purchase this house - but instead used the funds of my end buyer!   We live in a beautiful country where something like this is legal! 

I hope you find this information and strategy useful!  Let me know how I can help you on any of these or any other type of deals.