Non Refundable Deposit Question

[Curt Davis]

We buy a lot of homes from wholesalers.  Whenever we agree to buy a home we always close on it very fast.  Recently one our new wholesalers brought me a deal to buy and this person is making about $5,000 assignment profit.  He is asking for $1,500 as a non refundable deposit.  

We normally never have to put down any money or if we do it always sits with the closing attorney until closed and funded.  I am curious if anyone else who buys from wholesalers is asked to put down non refundable money?  My concerns is that most wholesalers in general are a little sketchy so if the title comes back not clear or for some reason out of our control the deal dies, how are we guaranteed to get our deposit money back?

[Michael Hartman]

Hi Curt,

As a wholesaler I do ask for a non-refundable deposit but usually we have it sit with the title company or closing attorney until everything goes through.  The reason we do this is A) makes us more credible as it doesn't look like we're just taking your money and running and B) there are certain stipulations we set where it can be refunded (the title comes back not clear or the seller backs out, etc).  Usually the deposit for a wholesaler is to see if the buyer is serious about purchasing or not.  

My suggestion would be to have the wholesaler place it with the title company with those stipulations to protect yourself.  Honestly if you just paid a deposit and the deal fell through for some other reason not to your fault I wouldn't understand you not getting that back.

Just my two cents.

Michael