When a committed buyer passes on day four, shop the contract or let the earnest money go

Question

Take a case run the right way round: a buyer gives a written box, a wholesaler finds a 1960s three bed on a corner lot that fits it, goes to contract at 141,000 with 2,500 earnest, a fourteen day inspection window, assignment permitted, and calls the buyer the same afternoon. On day four the buyer passes because a partner just committed the cash to something else. No retrade, no games, just gone. That leaves exactly the situation this model exists to avoid, with three real options. Calling other investors one at a time is slow and eats most of the inspection window but stays entirely private. Posting to a buyers group or public pages fills the window fast but is public marketing of a contract, and several states treat advertising the contract itself as unlicensed brokerage activity depending on how their statute reads, so that answer changes by jurisdiction and needs local confirmation rather than a general rule. Letting it die and losing the 2,500 is the cost of trusting a verbal commitment. A fourth path, double closing to a publicly sourced buyer, avoids advertising paper by selling a house instead, at the cost of a second set of closing fees plus transactional funding. Of the options, working the private buyer list first while the clock runs, and falling back to a double close only if that list comes up empty, tends to protect against the licensing exposure of public marketing without giving up the whole window.

hannah_west29 · Answer

Price the fourth option before you dismiss it. A double close on a 141,000 purchase with transactional funding is going to run somewhere in the low thousands all in once you count both settlement statements and the funding fee, and that is against a fee you were probably targeting at 8,000 to 12,000. So the question is whether the public route finds you a buyer at all, because if it does, paying 3,000 to keep 8,000 beats losing 2,500 and getting nothing. Deciding this by feel is the one thing to avoid. Write down the three outcomes with the earnest money as a sunk 2,500 in every one of them, because it is gone in the die scenario and recovered in the other two.

raj_mehta14 · Answer

Check whether the earnest money is actually gone if you cancel inside the inspection window. In most contracts that is the whole point of the window: terminate for any reason inside it and the deposit comes back. If yours reads that way, the die option costs you time and your standing with the seller and nothing else, which reorders everything above.

aliyah_b · Answer

@rajmehta14 that was my first thought too and it depends entirely on how the contract was written and what the escrow holder will release without both signatures. I have read that some states and some title companies will sit on disputed earnest money for months even when the buyer is clearly within their contingency. @carlosnunez, does yours say the deposit is refundable on written notice inside fourteen days, and has the seller signed anything about release?

Rena Expert · Answer

@rajmehta14's question is the first one to answer, and @aliyahb has it right that the contract language and the escrow holder's release practice control the outcome. Whether a deposit comes back on a timely inspection cancellation depends on the exact contingency wording and on state escrow rules, which differ, so read the paragraph and confirm the release process with the escrow holder in writing before you count that 2,500 as recoverable. On the marketing question, the mechanism is what matters. When you assign, the thing you are selling is your position in a contract, and several states, Illinois and Kentucky among the ones commonly cited, take the view that advertising that position to the public looks like brokering real estate you do not own. How that applies to a specific ad in a specific state is a legal question for a licensed attorney there, and it is not settled the same way everywhere. Calling investors you already know one at a time does not create the same public record, which is the structural reason this model is described as the safer one under current rules. A double close changes what you are selling, because you take title first and then sell a house you own. That removes the advertising problem and adds cost, a second closing plus funding, plus whatever transfer taxes your state charges on each leg. Some states charge them twice. What I would fix for next time is the commitment itself. A verbal yes from a buyer whose capital sits with a partner is a yes from the partner, and that is the assumption that broke here.

omar_haddad · Answer

Eleven calls in one day is not slow. I have made twenty in an afternoon when a job went sideways and I needed material money by Friday. You are treating the private route as if it costs you a week and it costs you a morning, particularly since you already know which four of the eleven buy corner lot sixties stock. Start with those four, and if none of them bite by day seven, then you have a real decision instead of a theoretical one.

When a committed buyer passes on day four, shop the contract or let the earnest money go

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