Emotional Seller- backing out after signing purchase agreement!

Buying & Selling Real Estate
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Emotional Seller- backing out after signing purchase agreement!

Jon Spencer
Rental Property Investor · Atlanta · Member since 2018 · 13 posts · 1 vote

I am dealing with a "for sale by owner" situation that is getting frustrating...

Here's the Deal.  I found a house that I wanted to buy as a rental. Asking was $23k.  I found he had multiple homes for sale so we negotiated for me to buy 2 houses for $55k.  The other homes asking price was $40k.  When talking to the owner he wanted to close real fast... like me hand him the money, he hands me the title and we walk away.  I told him I don't work like that.  I would be crazy to do that.  So I kind of felt his personality and saw that he doesn't do business too often and doesn't know how selling a house works...  Every time I talk to him it's like I'm teaching him how to sell me his house.  I even had to talk to his lawyer to tell them how to write the purchase agreement...

Anyway, so since this wasn't going to be a 24hr sale I could tell he is trying his hardest to sell to someone else also and whomever comes up with the money first he will unload the houses.  By the way to sell the homes fast he says they are already rented out to tenants (I know this could be good or a nightmare!)

I went to go see the houses and found that one of the tenants keeps the house really messy and doesnt have furniture. Just a blow up matress and stuff everywhere.  The area was definitely C class but I see potential.

After seeing the houses I renegotiated the price to do both houses for $45k.  He quickly agrees because he had some other buyers come to buy the house and for some reason they didn't want it anymore.  I know it's probably because there were supposed to be renovations done in the house but you can tell no renovations were done really. I already saw the buyer bought the homes for $6k six months ago.  I expected at least $5-10k reno to be done but it looks like he just painted the exterior and interior.  And even though I would like to pick my own tenants they are paying $625 each.

Long story short... When I talk to him he whines about when can we close.  I told him I am going to do an inspection on both and check them out.  It took me a few days to get him to send the purchase contract and sign it.

Now that he and I have signed the purchase contract.... he stopped answering the phone... What can/should I do?...

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Dennis M.:
Originally posted by @Brandon L.:

@Dennis M. you may have the experience to handle this, but from what I see the original poster does not, and the seller does not. So in that scenario, the better option would be letting " 2 attorneys hash it out"? 

Will they be charging the lawyer rate per minute to "hash it out"? 

I suppose someone with a deep wallet could get away with this but another option is to hire an experienced Realtor who:

1. Has all the required purchase documents

2. Will not charge extra to draft these documents

3. Has experience overcoming all the objections and obstacles that are coming from this seller to keep the deal together and push it forward.

4. Services that are free to the buyer since the seller normally pays a buyer agent commission.

There are always multiple ways to get to closing but I want to do it in the least painful and expensive way possible. Just my Realtor 2 cents. 

I pay  my re lawyer less than 500$ to do this kind of thing And the lawyer knows more about the law then the real state agents  in my area

works in Attorney closing states but does not work in title and escrow states. attorney hashing it out at 350 an hour can be expesnive plus the seller probably wont hire one..   

big difference when you have attornies will set fees that close deals and when you have to engage them to negotiate contracts I Mean out our way this would be 2500 dollar retainer right off the bat.  

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  • David Miller
    Developer · Magnolia, DE · Member since 2017 · 75 posts · 28 votes
    7y

    @Jon Spencer sounds like a scammer and that he doesn’t own the house

    2Reply
  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @Jon Spencer:

    I am dealing with a "for sale by owner" situation that is getting frustrating...

    Here's the Deal.  I found a house that I wanted to buy as a rental. Asking was $23k.  I found he had multiple homes for sale so we negotiated for me to buy 2 houses for $55k.  The other homes asking price was $40k.  When talking to the owner he wanted to close real fast... like me hand him the money, he hands me the title and we walk away.  I told him I don't work like that.  I would be crazy to do that.  So I kind of felt his personality and saw that he doesn't do business too often and doesn't know how selling a house works...  Every time I talk to him it's like I'm teaching him how to sell me his house.  I even had to talk to his lawyer to tell them how to write the purchase agreement...

    Anyway, so since this wasn't going to be a 24hr sale I could tell he is trying his hardest to sell to someone else also and whomever comes up with the money first he will unload the houses.  By the way to sell the homes fast he says they are already rented out to tenants (I know this could be good or a nightmare!)

    I went to go see the houses and found that one of the tenants keeps the house really messy and doesnt have furniture. Just a blow up matress and stuff everywhere.  The area was definitely C class but I see potential.

    After seeing the houses I renegotiated the price to do both houses for $45k.  He quickly agrees because he had some other buyers come to buy the house and for some reason they didn't want it anymore.  I know it's probably because there were supposed to be renovations done in the house but you can tell no renovations were done really. I already saw the buyer bought the homes for $6k six months ago.  I expected at least $5-10k reno to be done but it looks like he just painted the exterior and interior.  And even though I would like to pick my own tenants they are paying $625 each.

    Long story short... When I talk to him he whines about when can we close.  I told him I am going to do an inspection on both and check them out.  It took me a few days to get him to send the purchase contract and sign it.

    Now that he and I have signed the purchase contract.... he stopped answering the phone... What can/should I do?...

     Is he the "real" owner? Do you have a title report? 

    1Reply
  • Jon Spencer
    OP
    Rental Property Investor · Atlanta · Member since 2018 · 13 posts · 1 vote
    7y

    @Mike M.  I do believe he is the real owner.  He and his brother have about 5-6 houses that I found by research they got for $4-8k each.  They say they have a "Construction company" but meeting him and seeing how he does business it looks like this is the first time he is doing business like this.  He doesn't know how things work.  To him a construction company seems to mean he got these houses and they paint the outside and inside and try to sell for the highest price he can...

    As I've been working with him I see on the website he has been decreasing the sales price everyday in an attempt to get someone else to buy it.  But he already accepted my offer and signed the purchase agreement.  My lender is ready to order title and appraisal.

    0Reply
  • Jon Spencer
    OP
    Rental Property Investor · Atlanta · Member since 2018 · 13 posts · 1 vote
    7y

    @David Miller It does somewhat.  To me it seems like he got these houses for cheap and saw an opportunity.  But never sold a house before and is nervous or intimidated.  I've caught him in a few lies already. Like the tenants.  I found they just moved in a few weeks ago. I told him I wanted them out if there is no lease... I believe he created a lease and back dated it for last month so I couldn't make them leave...

    Sometimes dealing with a headache gets you a good deal but I will walk away if this escalates further... I just still want it because its $1250 a month for a $45k investment.

    0Reply
  • Jason Burnham
    Member since 2019 · 3 posts · 1 vote
    7y

    I've just came out of a purchase with a hostile seller.  That is the best description I can paint it as.  Angry, wanted to back out of the purchase agreement, and lots of threats.

    If you have a purchase agreement and you are the buyer then do nothing that will allow the seller even an inch of maneuvering room to back out.  You keep to all your promises as spelled out in the contract.  Next talk to a Real Estate Attorney and should the threat of the seller backing out becomes real then have the Real Estate Attorney send a letter threatening to go to court to sue for Specific Performance.

    A Specific  Performance case would tie up the property for years.  You need to find out in your state if the seller would be on the hook for the attorney fees too.  Some states do and some states don't.  You would be looking at 18k in Attorney fees if you decide to proceed though (that is total) so you should be prepared for that eventuality.  Usually, the threat of having the properties tied up in court for years and the onset of legal fees would be enough to push the sale forward.

    You go this route though the seller is going to be more than pissed.  Trust me on that.

    Another option is to put a lis pendens on both properties that you have a purchase agreement on.  Once again you should talk to a Real Estate Attorney about the best way to go about this.

    Best advice I can give you is to go see a Real Estate Attorney immediately.  An hour session may cost you a $150.00 but the peace of mind and the clarity is more than worth it.  Plus if you need the lawyer to draw up a letter then you are already set.

    Really the only thing I had going for me was the seller knew I wasn't playing around and I was a fighter.  I wasn't going to drop it and I was going for the jugular.  Best thing you can do is not show any weakness and get the help you need to cover the areas you're not an expert in.

    I got my appraised value home of 165k for 112k (owner paid closing costs and because I did most of the leg work commission was 1.5k) and the owner tried to back out in the second and third week.  I ended up legally starting the paperwork for Specific Performance and the threat buckled him.  It wasn't like I didn't warn him either.  I told him that I recommended he get a real estate agent and that he should get an appraisal if he wanted to know what the value of the home was.  Arrogant SoB thought he knew it all and then became belligerent about it when he realized he had gotten smacked around.

    If a buyer is telling you that you might want to get a real estate agent then maybe you should.

    1Reply
  • James Ma
    Burnaby, BC · Member since 2017 · 282 posts · 268 votes
    7y

    How long has it been since you've signed the lease?

    If it's been longer than reasonable, I would try once more and leave a voicemail telling him to fulfill the agreement or you'll have to go to court, or go to his place to discuss...then engage a lawyer to enforce the contract as a last resort if you believe it is worth it

    0Reply
  • Brian Fee
    Lender · Bridgewater, NJ · Member since 2019 · 2 posts · 0 votes
    7y

    @David Miller was thinking Same thing

    0Reply
  • Brandon L.
    Real Estate Agent · Falls Church · Member since 2012 · 2k+ posts · 1k+ votes
    7y

    @Jon Spencer you made me laugh when you said that you were teaching him how to sell a house. What did you expect? Homeowners are not professionals. That is why they hire agents to sell property.

    If the guy doesn't want to sell and he has ghosted you move on. Never force a deal to work.

    2Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    At this level there is really No need for a realtor but the seller has to do atleast basic stuff to see this through on his end and he must be willing . No reason two attorneys cant hash this out and settle on an agreement in just a few emails or phone calls . I will say These properties would have me worried from the few details you mentioned and I fear your moving to quickly not conducting proper due diligence . You should already have contacted the recorder of deeds to see if it’s a clear title ,the city for code violations and a host of other things .

    0Reply
  • Brandon L.
    Real Estate Agent · Falls Church · Member since 2012 · 2k+ posts · 1k+ votes
    7y

    @Dennis M. you may have the experience to handle this, but from what I see the original poster does not, and the seller does not. So in that scenario, the better option would be letting " 2 attorneys hash it out"? 

    Will they be charging the lawyer rate per minute to "hash it out"? 

    I suppose someone with a deep wallet could get away with this but another option is to hire an experienced Realtor who:

    1. Has all the required purchase documents

    2. Will not charge extra to draft these documents

    3. Has experience overcoming all the objections and obstacles that are coming from this seller to keep the deal together and push it forward.

    4. Services that are free to the buyer since the seller normally pays a buyer agent commission.

    There are always multiple ways to get to closing but I want to do it in the least painful and expensive way possible. Just my Realtor 2 cents. 

    0Reply
  • Jon Spencer
    OP
    Rental Property Investor · Atlanta · Member since 2018 · 13 posts · 1 vote
    7y

    I actually do have the experience to handle this. Sometimes it's worth dealing with a headache if you will come out ahead in the end.  I always calculate my risks.  I don't need a realtor at this stage.  It is just up to me to decide if I just want to walk away and keep it moving or hold him to it to make him "pay" for not knowing what he's doing... I just wanted other opinions.  It isn't costing me anything and I do my due dilligence to see whether I want to deal with the tenant situation or not. I usually find a way to come out good in the end. Even if the tenant never pays and it takes 4 months to evict it's still a good deal in some cases.

    I'm moving on unless he comes back correct. Because after closing I don't have to babysit him anymore.

    0Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y
    Originally posted by @Brandon L.:

    @Dennis M. you may have the experience to handle this, but from what I see the original poster does not, and the seller does not. So in that scenario, the better option would be letting " 2 attorneys hash it out"? 

    Will they be charging the lawyer rate per minute to "hash it out"? 

    I suppose someone with a deep wallet could get away with this but another option is to hire an experienced Realtor who:

    1. Has all the required purchase documents

    2. Will not charge extra to draft these documents

    3. Has experience overcoming all the objections and obstacles that are coming from this seller to keep the deal together and push it forward.

    4. Services that are free to the buyer since the seller normally pays a buyer agent commission.

    There are always multiple ways to get to closing but I want to do it in the least painful and expensive way possible. Just my Realtor 2 cents. 

    I pay  my re lawyer less than 500$ to do this kind of thing And the lawyer knows more about the law then the real state agents  in my area

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Dennis M.:
    Originally posted by @Brandon L.:

    @Dennis M. you may have the experience to handle this, but from what I see the original poster does not, and the seller does not. So in that scenario, the better option would be letting " 2 attorneys hash it out"? 

    Will they be charging the lawyer rate per minute to "hash it out"? 

    I suppose someone with a deep wallet could get away with this but another option is to hire an experienced Realtor who:

    1. Has all the required purchase documents

    2. Will not charge extra to draft these documents

    3. Has experience overcoming all the objections and obstacles that are coming from this seller to keep the deal together and push it forward.

    4. Services that are free to the buyer since the seller normally pays a buyer agent commission.

    There are always multiple ways to get to closing but I want to do it in the least painful and expensive way possible. Just my Realtor 2 cents. 

    I pay  my re lawyer less than 500$ to do this kind of thing And the lawyer knows more about the law then the real state agents  in my area

    works in Attorney closing states but does not work in title and escrow states. attorney hashing it out at 350 an hour can be expesnive plus the seller probably wont hire one..   

    big difference when you have attornies will set fees that close deals and when you have to engage them to negotiate contracts I Mean out our way this would be 2500 dollar retainer right off the bat.  

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Dennis M.:
    Originally posted by @Brandon L.:

    @Dennis M. you may have the experience to handle this, but from what I see the original poster does not, and the seller does not. So in that scenario, the better option would be letting " 2 attorneys hash it out"? 

    Will they be charging the lawyer rate per minute to "hash it out"? 

    I suppose someone with a deep wallet could get away with this but another option is to hire an experienced Realtor who:

    1. Has all the required purchase documents

    2. Will not charge extra to draft these documents

    3. Has experience overcoming all the objections and obstacles that are coming from this seller to keep the deal together and push it forward.

    4. Services that are free to the buyer since the seller normally pays a buyer agent commission.

    There are always multiple ways to get to closing but I want to do it in the least painful and expensive way possible. Just my Realtor 2 cents. 

    I pay  my re lawyer less than 500$ to do this kind of thing And the lawyer knows more about the law then the real state agents  in my area

    works in Attorney closing states but does not work in title and escrow states. attorney hashing it out at 350 an hour can be expesnive plus the seller probably wont hire one..   

    big difference when you have attornies will set fees that close deals and when you have to engage them to negotiate contracts I Mean out our way this would be 2500 dollar retainer right off the bat.  

     Yikes . I guess pa isn’t so bad 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Dennis M.:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Dennis M.:
    Originally posted by @Brandon L.:

    @Dennis M. you may have the experience to handle this, but from what I see the original poster does not, and the seller does not. So in that scenario, the better option would be letting " 2 attorneys hash it out"? 

    Will they be charging the lawyer rate per minute to "hash it out"? 

    I suppose someone with a deep wallet could get away with this but another option is to hire an experienced Realtor who:

    1. Has all the required purchase documents

    2. Will not charge extra to draft these documents

    3. Has experience overcoming all the objections and obstacles that are coming from this seller to keep the deal together and push it forward.

    4. Services that are free to the buyer since the seller normally pays a buyer agent commission.

    There are always multiple ways to get to closing but I want to do it in the least painful and expensive way possible. Just my Realtor 2 cents. 

    I pay  my re lawyer less than 500$ to do this kind of thing And the lawyer knows more about the law then the real state agents  in my area

    works in Attorney closing states but does not work in title and escrow states. attorney hashing it out at 350 an hour can be expesnive plus the seller probably wont hire one..   

    big difference when you have attornies will set fees that close deals and when you have to engage them to negotiate contracts I Mean out our way this would be 2500 dollar retainer right off the bat.  

     Yikes . I guess pa isn’t so bad 

     yes Dennis when you have distinct difference is closing systems one size does not fit all.. the only time we talk with an attorney in a non attorney closing state is for higher level things NEVER for a vanilla closing.. the cost is just too high.

    your closing attornies have to compete.. there is a limit to what they can charge for the escrow function.. and its generally a flat fee.

    in some states I get this for 250 bucks other states as high as 750  but you never get a bill other than the flat fee.. 

    So when attornies are 300 to 600 an hour with retainers just makes no sense to engage for these types of transactions.

    I have in 40 years done one specific performance case that took just under 3 years and 20k..  but I had given over 50k in cash and the seller would not close.. and I had about 300k in forced appreciation sitting on the table in front of me. IE subdivide and build 3 600k houses.  so in this instance we went to the mat.

    to do that kind of legal work etc for 20 to 40k assets makes no sense.. I mean its not like you cant just drive down the next block and find two more of the same thing. there is no shortage of these and there is no real upside other than some small cash flow if you work them.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
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    0Reply
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