Should I allow buyers to amend name to foreign LLP? WIIFM?!

Question

Buyer (2 local individuals) & I have a purchase agreement.  Home inspection finished last week, presumably looking acceptable to buyer(s).  Termite inspection passed.

BUT... the buyer's agent has now sent an amendment to the contract. The ONLY change is the buyer's name will no longer be the two local individuals, but a foreign company from another state, "Something Properties LLP".

The original contract didn't mention reassigning the contract to another buyer's name, so I didn't think I was dealing with wholesalers, just a couple of guys that wanted to purchase some good cash flowing rental property.  But now I'm thinking they *are* wholesalers.

My ultimate question is... WIIFM?!  Or, "What's in it for me?!"

I am under no obligation to allow such a contract amendment.  So perhaps I could use it as leverage??  I'll only sign it for an additional $3,000 purchase price, for example??  Makes sense to me, no?

Greg Scott · Answer

If you are OK with losing the sale, then sure, you have some negotiation power.

I'm not sure I would ask for more on the price, as that would increase the likelihood they would walk away.  I might ask for higher earnest money and make it non-refundable.  If they are serious about buying, that is something they would readily agree to.  If they walk away from that, it is an indication they weren't serious anyway and you can all move on quickly.

Bill B. · Answer

What if their funding falls through all of a sudden? What if they decide some things in the inspection aren’t acceptable? Then sale falls through and you get nothing.

Even if it’s too late for any possible contingency (although financing is almost always valid.) then you still can’t force them to buy. You can try to keep their EMD if you’re sure you can find another buyer that will pay the same or more.

Not losing the sale is what’s in it for you. On the other hand, why wouldn’t you if you think they’re going through with the sale? Refuse to e-sign one page to prove you can be a jerk? Maybe they paid some stoopid guru who told them every property had to be in an LLC? Maybe their CPA suggested it? Maybe they’re being jerks, maybe they’re new

Personally I’d go with Scott’s answer. Make the EMD non-refundable and if it’s less than $5k make it $5k or more. Otherwise you might just find yourself fighting to get the emd and starting over.

Why do you care who’s name is on the contract. You’ll either get the agreed upon price or you’re starting over looking for a new buyer. Maybe getting less maybe just paying extra holding costs.

Tom Gimer · Answer

@Jason V. What you are proposing with a change in purchase price is a counter-offer. The buyer can say "no thanks" and walk.

Bill B. · Answer

But you have no prof they are wholesalers. Again, they could be doing it for liability or asset protection or to better share the property, or because some guru told them they needed an llc. If they are wholesalers you must have left a lot of meat on the bone in this market. They usually don’t do inspections and in a falling market time is money.

Again, as long as you’re happy just getting the emd and looking for a new buyer if they back out. Then there’s almost no cost to you being a jerk over clicking a mouse once. You aren’t going to be able to force them to buy it. You were given great advice by Scott and you decided to ignore it completely. I think you were given good advice by me and you don’t like it. What was the point of the post if not to get advice? We don’t have any skin in the game. Good luck. Did you prepare your realtor for the fact they might not be getting paid and will have to start over? Maybe you should change the mls listing to accepting backup offers before the value drops more.

Account Closed · Answer

Just ask who owns the LLP and why they are involved. Your wholesalers might be able to double close but you will save them the time and money if you assign. I don't have a pony in this race so:

If you want to charge $3,000 for a new amendment you wil probably get it. They will simply raise the price to the LLP. That's called capitalism. Fair enough.

However, if the market is moving well in your area, you now know your property is worth maybe $10,000 more than you thought. That's capitalism.

Then it's a question of time and convenience.

As a thinker, you are entitled to get more for your product. That's what capitalists do. They think and then they act. Sometimes, it backfires but often it works out just fine. If you take the imagined $10,000 extra in value and divide it by time\value of the carrying costs, you can see where your break even point is. If it costs you $1,000 a month to hold you can wait a few months and be ahead of the game.

A property is worth what a capable buyer is willing to pay for it when it crosses the price expectation of a willing selling. That's capitalism.

Jason V. · Answer

Well.... Buyers agent claims the purchase is still for same buyers just wanting liability. So it *appears* they haven't created the LLP yet.  I went ahead and signed without bothering to ask, "What's in it for me?".

As I said, either way, there's a lesson for them and their agent to learn.  Had they just added "or assigns" to the buyer, then I wouldn't have even started the thread. Guess that's a lesson for them to learn another day....

Jonathan R McLaughlin · Answer

@Jason V.

Jason, sword or shield man. Are you trying to protect yourself and your original objectives  or trying to make more money? Not the same goals.

My partner and I are not wholesalers, but use our LLC all the time. It’s “foreign” in the sense it’s based in MA and we often buy in NH. Yes we usually put “or assigned” in the offer but if we didn’t and the seller tried to—ahem—“negotiate” more money my response would not be polite. My asset protection and business practices are none of their business.

Jason V. · Answer

I believe this is 110% the correct answer.

Upon looking at the last names of the buyers, it appears that if you put those names together, it might actually form the same name as this foreign LLP, which I don't believe is related to these buyers.  All I know is this LLP doesn't exist in Mississippi as of today.  Could they create it as soon as I permit the buyer change??  Sure!

Guess I should just start with the advice in your first sentence for now and go from there.  If it turns out to truly be their own company, I'll let them slide for just $500 extra purchase price. :-D

Account Closed · Answer

The most they lose is any earnest money they put into the deal. Well, unless your local attorney general is very bored or if they sold it as a property and not a contact they are selling then the local real estate board might be interested.

Should I allow buyers to amend name to foreign LLP? WIIFM?!

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