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Beware of Wholesalers!
Many wholesalers are not experienced investors and do not plan to actually purchase your property. Instead, they only want to get you into contract in order to sell the contract to someone else. The worse part is they often times don't tell you that's what they are doing. Below are some common questions about wholesalers. If you have any additional questions, feel free to reach out to us at any time. We are here to help!
Q. Who Is Buying Your House?
A: This may seem like a strange question, but it’s important to know who is behind the purchase of your home. In the real estate investing world, there are investors known as wholesalers who may not actually be the end buyers. Often, they lack the necessary funds for the transaction and are considered under financed. Wholesalers often tie up properties under contract with the intention of selling the contract to other investors for a profit, a practice called assignment of contract. While they may refer to these potential buyers as partners, they are essentially independent investors looking for houses to purchase. If wholesalers are unable to find a buyer, they may opt to back out of the deal or renegotiate a lower price with the seller, which may not be beneficial for the seller.
Hatch Home Buyers is different from wholesalers. We purchase your property directly from you. When you work with us, you can be confident that we are the actual buyers, not intermediaries. We specialize in acquiring properties in Idaho that meet our specific criteria, without relying on traditional bank financing. This ensures a smooth transaction process without concerns about financing falling through. After the purchase, we may choose to renovate the property and either resell it to a new homeowner or include it in our rental portfolio.
Q. What is Proof of Funds?
A: It is essential when dealing with Wholesalers who aim to sell contracts to investors that you ensure the buyer has the necessary funds to close the deal. Request a written proof of funds from a credible source to verify their financial capacity. Wholesalers can’t provide proof because they don’t know who is buying the contract or if anyone will buy the contract. If they do provide proof of funds often it is a generic form they find online and fill out themselves.
Hatch Home Buyers ensures transparency by always providing written proof of funds from our funding source. Additionally, we suggest contacting our funding source directly to verify our business relationship.
Q. What Is Earnest Money and Why Is It Important?
A: Earnest Money is a crucial aspect of a real estate contract as it signifies the buyer’s commitment to purchasing a property. It is a cash deposit held by the Title company to demonstrate the buyer’s seriousness in the transaction. While some wholesalers may try to submit minimal amounts like $100, serious buyers understand the significance of offering a substantial Earnest Money deposit. In a valid contract, the Earnest Money payment should be clearly defined, specifying when it is due (not just before closing), and committed buyers often make this deposit non-refundable to strengthen their offer. This ensures that the buyer is fully dedicated to the purchase, unlike wholesalers who may easily walk away from a deal with minimal financial consequences, especially if the funds were not placed in escrow.
At Hatch Home Buyers, we pride ourselves on being professional and reliable home buyers. We understand the importance of demonstrating our commitment to purchasing your home, which is why we promptly provide a reasonable Earnest Money deposit. This deposit is made within 1 business day, and once clear title has been confirmed, it becomes non-refundable.
Q. What Are The Contingencies In A Real Estate Contract?
A: Contingencies in real estate contracts serve to protect buyers by providing a Buyer opportunities to back out of agreement and recover their Earnest Money. In a traditional real estate contract, contingencies typically include inspections, appraisals, and loans. Similarly, wholesalers utilize an inspection contingency as part of their strategy. While they may claim to need an inspection, wholesalers often use this as an opportunity to showcase the property to potential investors (3rd party buyers). If they are unable to find a buyer, the wholesaler may opt to withdraw from the contract or renegotiate the terms with the seller.
At Hatch, we prioritize conducting property inspections during the initial appointment before presenting an offer for your home. Our unique approach eliminates the need for inspection, appraisal, and loan contingencies in our contracts, providing you with a smooth and efficient transaction process.
Q. Is Your Company Local?
A: Many Wholesalers operate virtually, from out of state, or even out of the country, they may request pictures/video from you or arrange for someone local to take photos of your property. Initially, they may present attractive offers over the phone. However, eventually, an inspection will be conducted. After the inspection it is common for Wholesalers to request a price reduction or back out of the contract, completely.
At Hatch Home Buyers, we take pride in being a local, family-owned business based in Idaho. Our team personally inspects each property before presenting an offer, ensuring transparency and accuracy. With over 24 years of expertise in real estate and investments, we are committed to providing top-notch service to our clients in Idaho.
Q. Don't Fall For Companies Who Make Offers Over the Phone Or Through Email Without First Seeing Your Home?
A: Many wholesalers skip inspecting the property before making an offer. They often rely on photos or videos to make offers over the phone, and leave an inspection contingency in the contract as an exit strategy. It’s crucial to remember that wholesalers are not looking to buy your home themselves; their goal is to secure a contract and potentially sell it to another investor.
Hatch Home Buyers understands the importance of making informed decisions when it comes to selling your property. We believe that conducting an in-person visit to your home is crucial in order to provide you with the most accurate and fair offer. During our visit, we will walk through the property with you to assess its condition thoroughly. By doing so, we can eliminate any uncertainties and provide you with a transparent offer without any hidden costs. Just like you wouldn’t buy a home without seeing it first, we also believe in the value of a personal inspection before making any commitments.
Q. What Is A Memorandum Of Contract?
A: A Memorandum of Contact, sometimes called a Memorandum of Agreement, or a Memorandum of Sales Contract, is a crucial document that Wholesalers file with the county to create a cloud on the title of your property, similar to a lien. This can have significant implications as it can hinder any potential sale of your property in the future unless you engage with the Wholesaler to eliminate the cloud on your title. The removal of this cloud typically comes with a hefty fee, often amounting to $10,000 or higher.
Hatch Home Buyers does not engage in this practice!
Q. Watch Out For Short Contracts?
A: Many wholesalers boast about the simplicity of their contracts, which are typically only a couple pages long. These contracts are often sourced online, obtained from real estate gurus, or prepared by the Wholesaler’s attorney. These contracts primarily safeguard the Wholesaler’s interests and do not offer adequate protections for the seller.
While longer in form, Hatch Contracts closely adhere to traditional real estate contracts commonly used in real estate transactions. These tried-and-true contracts are designed to provide comprehensive protection for you, the seller.
Q. Novation Clauses
A: Novation, similar to wholesaling or assigning, allows a wholesaler to replace the buyer in a contract. It also permits the inclusion of a Novation Clause, enabling the wholesaler to list the property with their real estate agent on the MLS. Why wouldn't you just list it with your own agent! Your are walking away from money in your pocket if you allow a Wholesaler to list it on the MLS.
In standard Hatch contracts, a Novation Clause is not included. While there may be specific situations where this could be beneficial, they are uncommon. Generally, if the seller has the luxury of time and is not under pressure to sell their property quickly, listing with your own real estate agent is the preferred option.
Q. What Is Subject To (Subto) And Why Is It Risky?
A: A "subject to" purchase (often called "subject to existing financing") is a real estate transaction in which a buyer acquires title to a property while the seller's existing mortage remains in place. Although not illegal, it operates in a legally sensitive area and can become unlawful if handled improperly. In practical terms:
The loan stays in the seller's name.
The buyer takes ownership of the property (Title transfers to buyer) and agrees to make the mortgage payments going forward.
The lender is not formally notified or asked to approve the transfer, and the loan is not assumed or refinanced.
If the buyer fails to make payments, the seller's credit is at risk.
The lender could enforce the due-on-sale clause.
If the seller has a FHA/VA loan it may disqualify you from getting future FHA/VA loans.
Because the original loan remains in your name, it will continue to appear on your credit and count against your debt-to-income ratio. This may limit or prevent your ability to qualify for future financed home purchases until the loan is paid off or refinanced.
Hatch Home Buyers does not participate in “subject to” transactions. In a subject-to purchase, the seller’s existing loan remains in their name after the property is sold. While this structure can work in certain investor scenarios, it exposes the seller to ongoing financial risk, including continued liability for the mortgage and potential limitations on qualifying for future financed purchases.
Our model is intentionally different. When Hatch Home Buyers purchases a property, we do so in a way that fully resolves the seller’s existing loan, either through payoff at closing or lender approved methods. This ensures the seller is released from future liability and can move forward without lingering debt or credit exposure tied to the property.
Our priority is providing sellers with certainty, transparency, and a clean exit, rather than creative financing strategies that may carry long-term consequences.
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