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BlogArrowReal Estate WholesalingArrow5 Ways to Lose Your Wholesale Deal (After Signing the Contract)
Real Estate Wholesaling

5 Ways to Lose Your Wholesale Deal (After Signing the Contract)

Marcus Maloney
Expertise: Personal Development, Real Estate Wholesaling, Real Estate Investing Basics
100 Articles Written
Dislike! Young dissatisfied businessman in green t-shirt sitting, working on laptop, looking at camera and showing thumbs down. business and freelancing concept. indoor shot near big window at daytime

I don’t want to rain on your parade, but once you have a signed contract, there are many ways the deal can still go south. Therefore, I decided to write on five ways you can lose your wholesale deal after having a signed contract.

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As I wrote this, it brought back painful memories of deals that were either lost or in litigation. Every deal is different. Every seller is different. As a wholesaler, you have to remain mindful of this. Some sellers get cold feet, and others are just slimy, only trying to score more money. I’ve run into both and want to let you know that once you have a signed contract, you need to still facilitate the deal to the end.

Here are some experiences I faced.

5 Ways to Lose Your Wholesale Deal (After Signing the Contract)

1. Not Verifying All Signers

Signer verification is important. Why, you ask? If you do not have the signature of all the owners of the property, the transaction will stall. I recently went through this horrible ordeal.

Since I virtually wholesale, I do not have access to all the legal documents as I do in my local market. Because of this, I have to operate with a slight level of trust with the owner(s).

I vet the owner(s) by asking them if there are any other individuals who have interest in the property or on the title/deed. This question normally identifies whether additional signers are needed, but sometimes sellers are not forthcoming.

This occurred on a recent deal. I submitted the contract and all supporting documents to the attorney. After the attorney did his due diligence, he noticed another signature was needed. The seller failed to mention this, and it killed the deal.

Learn from my experience: Get all signatures.

wholesaling-newbie`

Related: A 60-Day Action Guide to Wholesaling Your First Property

2. Tenants Denying Access

When wholesaling, you will run into many different situations—and not all are good.

It should be clearly written in your contract that you require access to the property during the inspection period. This is mandatory; however, the tenants may not be so liberal in allowing strangers in their property.

Sure, the landlord can give 48 hours' notice, but the tenant can still present many issues during the inspection period.

As common practice to ease any concerns with the tenants, I ask the landlord to provide their phone number, so I can speak with them directly. Once the initial viewing is conducted, rapport-building starts all over. I often build rapport with the tenant for ease of access by bringing a Starbucks gift card or something similar. Always bear gifts to minimize tension.

Still, this does not always work, and the tenant can still kill your deal.

3. Liens on the Property

I’m sure you’re aware your seller will have to produce a clear title before the transfer of real property. Always make sure a title search is conducted by an attorney (in judicial states) or the title company. Your seller may not do this intentionally, but occasionally they may try to transfer a property with liens.

I once had a seller with an IRS lien over $100k on a property. He accepted an offer well below the lien amount, and we could not close that transaction.

4. Poor Communication

I always tell investors to never assume and always be thorough. I am anal when it comes to this because communication can easily kill a deal. When possible, I try and walk the seller through the contract. This takes additional time, but it can eliminate so many problems on the back end of the deal.

I make sure I communicate the following:

  1. The Contract Process
  2. Purchase Price
  3. Earnest Money Deposit Procedure
  4. Inspection Period
  5. What “As-Is” Means
  6. Close of Escrow Process and Figures

5. The Seller Getting Cold Feet

This is something you definitely have no control over. I used to beat myself up about a seller wanting to back out of a deal. Then, I began to understand that most sellers like to prolong things and not take action. Selling a home is no different, especially if they are emotionally attached in some way.

Related: 5 Tried & True Ways to Land Deals as a Wholesaling Newbie

Sellers will want to change their mind. Before you become aggressive and let them know the legal action you can take against them, try and figure out the reason why.

This is why it’s important to actively listen when talking with the seller during the initial conversation. I introduced this in a previous post on how to navigate the seller conversation. In some cases, their situation may be something extremely simple and you can solve that problem for them.

For other sellers, you might have to become a bit more aggressive and let them know the legal recourse. Before I have the attorney contact them, we send a scare letter mailed certified with signature from the recipient needed. This will get the ball rolling on legal action, and normally this will resolve the issue.

Still, I’ll have my attorney contact them if they are not willing to comply.

Conclusion

Remember that these are only a few ways to lose out on your wholesale deal after having a signed contract. There are many other ways.

Your buyer could back out. The inspection could produce some concerns, or maybe you’re just not good at wholesaling and your intro to real estate investing should go in a different direction.

If you find you want to get out of wholesaling, consider this route.

What situations have halted your wholesaling deals?

Leave a comment below!

By Marcus Maloney
Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who ...
Read more
Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.
Read Less
9 Replies
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 3 years ago
    Yeah, you can lose any deal these ways – and so many more ways! The deal is not done until the cash is in the bank. 🙂
    Marcus Maloney Wholesaler from Queen Creek, AZ
    Replied about 3 years ago
    Karen, you are absolutely correct. I had to scale it down a little but a deal is never done until all closing docs are signed and deposit is made.

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    Eliseo Magallon Wholesaler from Atlanta, GA
    Replied almost 3 years ago
    Marcus, just killing the game with good articles!
    Marcus Maloney Wholesaler from Queen Creek, AZ
    Replied almost 3 years ago
    If you like what you’re reading you will really like the videos that are step by step. PM and Ill make sure you have access to those. There all on youtube

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    Patrick Coffey from Duluth, Georgia
    Replied almost 3 years ago
    Nifty article, Marcus! I appreciate you sharing your wisdom online. I’m an aspiring real estate investor so I appreciate all the wisdom I can acquire!
    Marcus Maloney Wholesaler from Queen Creek, AZ
    Replied almost 3 years ago
    Thanks for reading Patrick let me know if you have any questions

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    Allen Martinez
    Replied almost 3 years ago
    Hello, I’m helping a family find a cash buyer but, the owner is their dad and he pass away three years ago the house is still under his name, I know they can’t sell the property but, I want to know how a can help them or if they can still put the property under his son’s name? I also heard that they need go through a probate court first.

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    Dennis J Marsack from Port Huron, Michigan
    Replied almost 3 years ago
    Great info! Thanks Mr. Maloney for this article. Got me thinking about not counting my chickens before they hatch.. as grandma would say. I’m a newbie as well so all info derived from experience is gold to me!

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    Thomalisa Mickles
    Replied 12 months ago
    I've been studying and reading up on wholesale This was a very encouraging article This is what I needed to read. Now I just need to get out there and just to it. Thank you

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