Pulling my Hair out!! Wholesale stressing

10 Replies

Okay here's the story...

 A good friend at work asked me to help her sell her house.  She is the original owner of a little over 20 yrs but has been having issues with the bank and got a little behind on the payments.  With everything happening she is just looking to move as quickly as possible.

I get the property under contract and get interest from a local rehabber through an Ad on craigslist.  First issue is he makes an offer on the property DIRECTLY to the seller (putting her name on the contract).  I explain the the property is available, but only by assignment.  He asks to look at my contract, which I give him along with my assignment paperwork, disclosures, and an amendment I used to adjust the original price on the purchase contract.

After a day he gets back to me stating that his "attorney has advised that he make the offer to the seller and leave the name blank on the contract with his desired terms".  Additionally, he is looking to push the date.  Now I'm not sure what to do.  My contract will expire on the 16th, and it looks like his attorney is advising a double close (or for him to weasel me out of the deal), but there is not enough spread on the deal to make that realistic. 

Details:

It's a 21yo house in a suburban development outside of Syracuse.

4/3.5 1767SQFT

She owes 90,000

He offered 96,000

I amended to purchase at 93,000 (3,000 assignment fee)

He is unwilling to pay sellers closing costs.

Trouble is, she's my friend and she is seriously stressing about the whole thing. I want her to be able to get the house off her back ASAP, but this issue is really tying up the deal.

What should I do? How should I approach this? HELP!! SOMEBODY...ANYBODY!!!

@Markeilsha R.  

  this is the risk you run trying to sell RE without a license and do not have the ability to close on the transaction.. Any savvy investor is going to realize your just trying to make a middle man profit. they will wait until your contract expires go know on your sellers door and buy from them.. happens all the time.

If you want to play this game you need to be able to close on the deals then sell same day or next day to the investor so you don't get the end around..  In super hot markets ( which I doubt yours is) investors will just suck it up and let you make a few bucks but not in a market with a huge amount of distressed properties.. some may have different opinions.

I agree with @Jay Hinrichs  on this one.  I am not a fan of someone locking up a house that they are not capable of closing on.  That being said, what is the property worth?  Are you in a position to assume the mortgage, and then sell the property after closing? 

Keep on marketing like crazy. Go to all the REIA's, talk to property management companies, put a for sale sign in the front yard. Hopefully you can cut HIM out of the deal. If it's a smoking deal you might just pull it off.

Originally posted by @Markeilsha R.:

Trouble is, she's my friend and she is seriously stressing about the whole thing. I want her to be able to get the house off her back ASAP, but this issue is really tying up the deal.

What should I do? How should I approach this? HELP!! SOMEBODY...ANYBODY!!!

I'll tell you what I would do. If the above part is true, then I would help your friend sell the house however you can - even if it means losing out on your assignment fee. It sounds like you already have an acceptable offer that would solve your friend's problem and allow her to get out from under this house that is causing her so much stress. The only hangup that I can see is that you may lose out on your assignment fee. If you don't have the ability to close on it yourself, then don't tie up your friend's house and penalize her for it. Help her sell it and feel good about doing a favor for a friend who needs it. Maybe it'll pay dividends down the road after she tells other people who need to sell their home what a great job you did helping her out of this tough situation. 

Just my two cents. 

Who said I couldn't close? The problem isn't with me closing, which if I was making 5k+ I'd be ok with. The problem is that there's not enough spread for me to do that AND make a profit.  

There's tons of wholesalers on this site. While I respect you're opinion on it, going around another investor may seem savvy to some, but all actually it's just plain shady and not particularly smart if you live in a smaller market where others can mark and taint your reputation.

That said...I've already discussed this with the seller and my back up strategy is to assume the mortgage myself and partner with another local investor to do the rehab on a 40/60 split.  I do have another investor interested but his funds are not readily available for the timeline. The ISSUE that I was asking advice on was whether or not this is situation that can be WORKED on from a wholesale standpoint. Obviously, my initial plan was a quick in and out and I'm not getting rich off this deal.  

@Kyle J.  

Thanks, I am strongly considering that, it would ultimately mean a $500 loss to me for attorney's fees. :(

@Brant Richardson thank you for the advice. I think my biggest hang up was getting the job done as quietly as possible, but she is ready to move. My local REIA has a meeting Wednesday so I'll head out there. The property asking price is only a smidgen above 50% ARV (BPO) so it's worth a shot.

Have you presented the place to other possible buyers?  Do you have other ones to bring it to?  I'll guess you have not worked with this guy before but do you know anything about him, like if he can actually perform anyway?

Basically if he is trying to cut you out you can let it go or try to be a PITA...

Since you said the seller is a friend in distress, unless there is another alternative, I would suck it up and help make sure the transaction goes through.

As @Jay Hinrichs  points out this is a risk and something that can happen all the time.  I will diverge from what he said where he called the investor "Savvy" and I'll use the term "Scummy".  This guy isn't a savvy business person since it is very short sighted to try to screw over someone that brings them a good off market deal to them.

Inform this person that one of your main goals is to help your sellers get out of their distressful situation and that they will serve this purpose and you will do everything you can to help get the deal done.  Then also inform them that this is also your business and you need to make a profit and since they have shown that they are not trustworthy that you will not present them with any deals in the future and will advise all of your colleagues to do the same.

I'd also let your friend know the situation.  Mostly because if the guy is messing around with you now and trying to milk the deal I wouldn't really trust him.  She should know that he might try to squeeze some stuff out of her near the end with the threat of not closing.  Also she might realize you are getting screwed and give you something after the fact, but that is only a bonus do it for the good karma. 

Originally posted by @Markeilsha R.:

Who said I couldn't close? The problem isn't with me closing, which if I was making 5k+ I'd be ok with. The problem is that there's not enough spread for me to do that AND make a profit.  

There's tons of wholesalers on this site. While I respect you're opinion on it, going around another investor may seem savvy to some, but all actually it's just plain shady and not particularly smart if you live in a smaller market where others can mark and taint your reputation.

That said...I've already discussed this with the seller and my back up strategy is to assume the mortgage myself and partner with another local investor to do the rehab on a 40/60 split.  I do have another investor interested but his funds are not readily available for the timeline. The ISSUE that I was asking advice on was whether or not this is situation that can be WORKED on from a wholesale standpoint. Obviously, my initial plan was a quick in and out and I'm not getting rich off this deal.  

Oh okay you were writing this when I was responding.  

Great minds think alike.  :)

If you talked to the seller about the Sub2 route and you can get the deal done with another investor (or get someone to make a good clean offer once you bring it to the REIA like you mentioned in another post) then go for it. You will still help the seller, you can give a good deal to a legit investor, I assume you will stand to make a better profit if the rehab goes well and you can leave the other jackhole with his tail between his legs knowing he lost out on a good deal and killed the golden goose since you aren't going to ever bring him anything again. Looks like Wins all around (Except for the guy trying to squeeze you out, but he will learn a lesson which he SHOULD see as a win if he has the right attitude...).

@Shaun Reilly  that's  really great advice. If all fails I'll ask her how she feel about our next step and either make it happen or go through with this.  I won't let self interest screw over  my friend or anyone for that matter. Tomorrow's a new day, I'm hoping for the best!

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