Wholesaleing title search costs. Who pays if deal falls through

Wholesaleing title search costs. Who pays if deal falls through

Investor · Winston-Salem, NC · Member since 2015 · 30 posts · 7 votes

Hey everyone,

So I know wholesaleing is supposed to be low money low risk, I believe for the most part if you're doing it right to be true. So hypothetically speaking I have a deal under contract, I send contract to attorney, he then opens ecrow and starts title search. 

Then for whatever reason the deal falls through, seller backs out, underestimated rehab, etc. (I know the goal is to always close but deals do fall through sometimes) 

So who then pays for the attorney for cost of doing Title search? What is the common practice amongst everyone? 

Some people who teach wholesaleing claim if you make an offer and you can't close for whatever reason the only thing you have risked is your earnest money, but aren't you still responsible for the cost of opening escrow/title search? Or do they just eat that cost? What is common practice amongst everyone?

Thanks

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  • Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
    9y

    If it's a lawyer you work with regularly, they may waive their legal fee, but the title search depends on the state. If it's a state where lawyers perform title searches (NC is) they may be able to give you some kind of discount to the extent hard money hasn't been spent yet on certain kinds of searches that actually come out of their pockets, instead of just their fees for doing the searches. In states that use title agents, you have to pay them regardless of whether you close. It's just another cost of doing business. 

  • Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
    9y

    I should add, though, the big bulk of the title costs are the issuance of the actual policy, so if you don't close, your fees will be significantly lower. 

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