I'm still learning how to wholesale and have not yet made any deals. Imagine this scenario, tell me if this has happened to you, and how you responded. You're bringing potential buyers through a seller's house to show the the condition, expected repairs, etc. The seller deduces that one of these people are someone you might sell their home to, and they begin to wonder why they couldn't have sold their home to one of these buyers at a higher price than they are selling it for to you. The seller gets angry, feels as if you've cheated them, and wants you to rip up the "option to purchase" contract you sign with them.... What should be done in this situation/what can be done to avoid it in the first place?
@John Thedford, sorry I've been gone awhile.
Guess I got tired of beating a dead horse but thought I'd check in to see what's new........no much it appears, LOL
Thanks for your comment, I just don't know where that thread is concerning types of fraud, but you pointed it out nicely.
Since Mr. Pratic P. (@Pratik P.) doesn't want to argue about his poor answer, (not beating that dead horse again) I'll describe "partner".....
So, the seller is to think you have a "partner" (ha, more deception)..... so what is the owner to think?
Is he your beer drinking partner, your hunting partner, fishing partner, your bowling partner, no because the way you used the term "partner" was in a business setting, like your money guy, a business partner. So now the owner believes he's working with a partner of a partnership.....logical conclusion and I'd bet any judge would agree.
So, now you have legally implied a business partnership to the owner!
Not knowing beans about partnership law and claiming to have a partner can be dangerous for you and your unaware "partner" but especially for you. You''l need to know about specific consent and implied consent, duties of an agent in an partnership or agency relationship......but most aren't aware of simple business law matters.
Claiming or even implying that you have a business partner when you do not is deceptive dealing, fraudulent dealing, you lied.
If the real potential buyer (your fairy tail partner) never consented to a partnership, formally by agreement or verbally to consent to your arrangement, eventually he can get out of your web of deceit, but in doing so he will spot light you as acting without his consent or knowledge and by saying no partnership ever existed.
That just puts liar fraud mud all over your face. :)
Need to understand that a partner can be liable for the contracts, acts or omissions of the other partner.
Don't ever say that you have a business "partner" when in fact you do not, you can claim those other partnership relationship as you please. Judges will not like that at all!
The truth won't hurt you.
Mr. Owner, I buy houses and sell them. We generally try to improve them, rehab them and put time and money into our homes, sometimes we sell them as they sit to other investors we work with.
We try to keep a list of potential buyers and we may show someone what we are trying to buy after we have a contract. This allows us to decide and plan on the types of improvements to make, just as a builder works with their client in building a new home. We are always working with buyers to give them the type of home they are wanting.
At the same time, I work with owners to give them a fair price and quick closings. So, Mr. Owner, if we can come to a fair and acceptable price is there any reason you can't sell to me? (heck no!)
If the home is vacant, we ask that after contracting we have access to the property for inspections and determinations by our clients. If it is occupied we will arrange entry by appointment only.
Now, I'm not telling anyone that in saying such a thing keeps you out of the issues of "showing a property to another potential buyer!" Because you're still showing a property you do not own legally.
However, if you learn how to close a deal in your name and then sell and you can show a pattern of buying and selling,I doubt any regulator would violently object if your buyers were asking that you add a deck, new cabinets and appliances while specifying colors.......but technically, you are not to advertise or show real estate that you do not have legal title to; exceptions, acting as a licensed agent, estate settlements by the administrator/executor or with a power of attorney under specific directions and not for profit.....states may vary.
Lastly, the OP's question; By giving sufficient consideration for the Option to Purchase, money binds the obligation under the contract.
BTW, wholesalers who don't have the intent or means to perform as agreed do not have a valid contract, so don't push it, if you're unable to perform and the seller wants out, smile and say next! :)
Close on the deal and then resell. A friend will be filing a counter suit against a fraud next week for doing exactly what you mention. One of their arguments is going to be FRAUD and another deceptive trade practices.
Close on the deal and then resell. A friend will be filing a counter suit against a fraud next week for doing exactly what you mention. One of their arguments is going to be FRAUD and another deceptive trade practices.
The problem is, the whole reason I'm wholesaling, as opposed to investing/rehabbing, is because I have no up-front capital. If I close with a seller, and can't find a buyer, then I now own a house that I can't afford
I understand. Find private money...flip....use hard money...flip. The point of my post is you CAN have legal issues for entering into contracts under fraudulent pretenses, etc. That seems like a roulette game, and probably not the best way to make money in real estate. Lots of people are drawn into the game you describe, and the fact is, most make any decent money and are on to new things within a few months. Get your license....this will open the door to more opportunities.
Be up front with sellers that you're partnering with other investors to fund the transaction. Be clear that they will need to see the property prior to close. If you're clear, they usually won't care where or who the money comes from as long as it's the amount you agreed upon.
In your situation, you have a legally binding contract, so urge your seller to follow through as planned. Secure your buyer and close. There's a chance the seller could simply not close which would be a breach of contract. But it wouldn't be worth it to pursue legal action.
Be up front with sellers that you're partnering with other investors to fund the transaction. Be clear that they will need to see the property prior to close. If you're clear, they usually won't care where or who the money comes from as long as it's the amount you agreed upon.
In your situation, you have a legally binding contract, so urge your seller to follow through as planned. Secure your buyer and close. There's a chance the seller could simply not close which would be a breach of contract. But it wouldn't be worth it to pursue legal action.
The unlicensed broker mentioned above has filed an action. Have they opened a huge can of worms? There is supposedly lots of evidence to prove they didn't take any action to close, took several people through the property under false pretenses, etc. See my post about FRAUD in the unlicensed brokering forums. There is also the deceptive trade practices act, not to mention FL statute 475.43 (of course--this only applies in FL). These are issues unlicensed brokers can get into when entering into contracts with no ability or intention of closing. @Bill Gulley wrote an excellent comment some time back about fraud that was spot on. BTW, taking potential buyers through a property under contract is SHOWING AND OFFERING real estate for sale in FL. This requires a license (sorry scammers--even you will have to follow the laws).
@John Thedford I'm not interested in arguing with you about anything. The guy asked a question and I answered. :]
@John Thedford, sorry I've been gone awhile.
Guess I got tired of beating a dead horse but thought I'd check in to see what's new........no much it appears, LOL
Thanks for your comment, I just don't know where that thread is concerning types of fraud, but you pointed it out nicely.
Since Mr. Pratic P. (@Pratik P.) doesn't want to argue about his poor answer, (not beating that dead horse again) I'll describe "partner".....
So, the seller is to think you have a "partner" (ha, more deception)..... so what is the owner to think?
Is he your beer drinking partner, your hunting partner, fishing partner, your bowling partner, no because the way you used the term "partner" was in a business setting, like your money guy, a business partner. So now the owner believes he's working with a partner of a partnership.....logical conclusion and I'd bet any judge would agree.
So, now you have legally implied a business partnership to the owner!
Not knowing beans about partnership law and claiming to have a partner can be dangerous for you and your unaware "partner" but especially for you. You''l need to know about specific consent and implied consent, duties of an agent in an partnership or agency relationship......but most aren't aware of simple business law matters.
Claiming or even implying that you have a business partner when you do not is deceptive dealing, fraudulent dealing, you lied.
If the real potential buyer (your fairy tail partner) never consented to a partnership, formally by agreement or verbally to consent to your arrangement, eventually he can get out of your web of deceit, but in doing so he will spot light you as acting without his consent or knowledge and by saying no partnership ever existed.
That just puts liar fraud mud all over your face. :)
Need to understand that a partner can be liable for the contracts, acts or omissions of the other partner.
Don't ever say that you have a business "partner" when in fact you do not, you can claim those other partnership relationship as you please. Judges will not like that at all!
The truth won't hurt you.
Mr. Owner, I buy houses and sell them. We generally try to improve them, rehab them and put time and money into our homes, sometimes we sell them as they sit to other investors we work with.
We try to keep a list of potential buyers and we may show someone what we are trying to buy after we have a contract. This allows us to decide and plan on the types of improvements to make, just as a builder works with their client in building a new home. We are always working with buyers to give them the type of home they are wanting.
At the same time, I work with owners to give them a fair price and quick closings. So, Mr. Owner, if we can come to a fair and acceptable price is there any reason you can't sell to me? (heck no!)
If the home is vacant, we ask that after contracting we have access to the property for inspections and determinations by our clients. If it is occupied we will arrange entry by appointment only.
Now, I'm not telling anyone that in saying such a thing keeps you out of the issues of "showing a property to another potential buyer!" Because you're still showing a property you do not own legally.
However, if you learn how to close a deal in your name and then sell and you can show a pattern of buying and selling,I doubt any regulator would violently object if your buyers were asking that you add a deck, new cabinets and appliances while specifying colors.......but technically, you are not to advertise or show real estate that you do not have legal title to; exceptions, acting as a licensed agent, estate settlements by the administrator/executor or with a power of attorney under specific directions and not for profit.....states may vary.
Lastly, the OP's question; By giving sufficient consideration for the Option to Purchase, money binds the obligation under the contract.
BTW, wholesalers who don't have the intent or means to perform as agreed do not have a valid contract, so don't push it, if you're unable to perform and the seller wants out, smile and say next! :)
https://www.biggerpockets.com/forums/93/topics/436...
The attorney sent his original to the defendant and myself to make sure his facts are correct. The unlicensed broker has NO IDEA what is headed his way. He has filed suit believing he can bully the owner into selling..but considering the fact that his actions were deceptive, illegal, etc I doubt he has a chance. The idiot already has one complaint against him where the stated decided "nolle pros". This idiot told the seller the state found he did nothing wrong:) Since when did "nolle pros" mean nothing wrong or illegal? Now, the owner of the house has filed a second complaint, and I just checked the status. The state has determined that his complaint is legally sufficient and they have forwarded it to their legal department. I am watching this case and expect to be called as a witness. If the owner wins, the counter suit is asking for damages and one of the first accusations by the defendant's attorney is "fraud by inducement". If the "buyer" wrote a contract for all cash and didn't have the cash to purchase it, that will be just another damning fact..and YES--the attorney IS asking for his banking records and lots of other information I believe he will NOT want to disclose. Too bad--one cannot invoke the 5th in any civil suit:)
@John Thedford LOL, good luck. :)
@Bill Gulley That is one awesome post, I love it.
@John Thedford I would love to see the outcome of the case you have been referring to. That is very interesting. Unless the guy has deep pockets I imagine he is just going to want this to go away.
Is there a way BP can create a database of the rules for each state? It sounds like FL has some pretty tough regulations in regards to wholesaling. I think it would benefit everyone who makes their way to BP to have that stationary set of rules for each state. It seems like there are so many knowledgeable people here at BP that something could be put together.
I appreciate your input on how to approach sellers and will consider it for my business.
I actually do have a few buyers that want to "partner" with me. I find the deal and get the contract at the right price, they'll come in with most of the money to close. At that point, we'll either rehab it or clean it up and put it back on the market. My "partner" will bring more cash than me because I already spent $$$ on marketing to find the off-market deal.
That's just one type of "partnership" I can form with my buyers which I've discussed with them, which they like. I don't think we need to get super technical about what it means to say "partner". I and my friend are looking to buy a multifamily property in the area and I told the agent that we're partners. No it doesn't mean we have an official legal partnership, it just means we're doing it together. No one is going to come asking us "let's see that partnership agreement".
Also, I do have the ability to close on it myself so I'm not lying about that either. I don't have 200k+ cash in my bank account, but I can come up with the down payment for an HML or team up with people I know.
Yes Bill--never ending army of these types...
Here you go:
https://www.biggerpockets.com/forums/93/topics/436...
What do you think of his entrance strategy? Fraud by inducement, deception, etc. No worries though, he refers to himself as a "professional"!
@Bill Gulley That is one awesome post, I love it.
@John Thedford I would love to see the outcome of the case you have been referring to. That is very interesting. Unless the guy has deep pockets I imagine he is just going to want this to go away.
Is there a way BP can create a database of the rules for each state? It sounds like FL has some pretty tough regulations in regards to wholesaling. I think it would benefit everyone who makes their way to BP to have that stationary set of rules for each state. It seems like there are so many knowledgeable people here at BP that something could be put together.
Knowing the rules, but operating by fraud and deceit are two different components. These guys need a financial lesson because apparently money is the only thing that matters to them:)
Real estate is different than selling shoes, do not tell any third party you have a "partner" when you don't have a formal partnership!
One or more individuals can go on title and not have any partnership agreement, but all must show up at settlement or be properly represented.
If you must explain the involvement of others, you can say my buddy and I work together, that doesn't imply a legal standing of a partnership.
You can do what ever you want together between you and your buddy, within the financial and settlement requirements at hand.
Not only do you need the ability to perform but also the intent. Your true intentions will be demonstrated after you do a few deals and never close in your name as contracted. Otherwise you have a voidable contract.
Good luck :)
As soon as the counter claim is filed I will post the info. I believe this case could be important if it can be proved the "buyer" induced the seller and had no intention nor ability to close. If the court sees it that way, I am sure the attorney could stay busy just representing other victims of these games. Send me a PM.