So heated right now (buyers really a clown)

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So heated right now (buyers really a clown)

Jimmy C.
Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes

So we wasted a few weeks in escrow with a Clown. We have a cheap 4 unit that he agrred to buy for 60k. At first he proposed his offer would be contingent on it being rehabbed and rented. Prior to agreeing we changed the contract to no contingencies. The day of closing (today) he arrives for the walk through late. He brings some other guy (a partner?)who is a total douchebag pointing out everything wrong he can find. They say now that THEY dont want the property on the day of closing.

Sure I know we get the 2k non refundable escrow, but we had plans for the other profits. So pissed off right now that I came to BP to vent so I want do something stupid. FML

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Michael Lauther
Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes
14y

Jimmy C. , you said you "smelled it coming".

As it turns out after looking back on almost every bad decision I have made in life, I knew it was a mistake going into the deal but did not listen to my instincts. Perhaps one day I will learn to trust that feeling and look closer before I take action.

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  • Jimmy C.
    OP
    Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes
    14y

    wow thats a lot of spelling errors. Sorry yall had to read this drivel

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  • Jeb Z.
    Real Estate Investor · Miami, FL · Member since 2012 · 18 posts · 3 votes
    14y

    You don't make a profit until the checks in the bank Jimmy. Never anticipate a profit until then. Learn to weed out buyer's like this so you don't waste time and always keep advertising for back-up offers. Good luck!

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    I have seen it all.

    Buyers ALWAYS say they have the money.I find only about 10 to 20% of the time this is the case.

    I quantify money CASH TO CLOSE as money from a bank statement in the last 30 days from your bank account in liquid funds.

    Options I don't want to hear:

    1.POF letter from hard money lender based on appraisal and other factors.

    2.Funding is coming from partner or syndicate which requires multiple approvals.

    3.Money is tied up into other closings or another property has to sell to get the funds to put down.

    4.Other owned real estate they have to see what appraisal comes back at.I have seen before where they have 50k on hand and need 150k.Wait 2 weeks on appraisal for REFI or LOC and appraisal comes in low and they are short 40k.

    5.Have to liquidate CD's,Stocks and have to time the market correctly to have enough money to close when they sell.

    6.Money is tied up into a 401k or IRA they need to convert to self-directed.

    The list goes on.

    I also get they want to do an inspection.What I do in this case is make them pay a few k upfront as non-refundable option money with a 48 hour inspection.

    This has them put skin in and perform in a short period of time.I make them wire in the funds to the closing attorney.

    Jimmy the 2k is alright but I would have given them a very small inspection window to perform or lose the money especially on a hot deal when others are itching to snatch it up.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    So sorry for your pain! I've been there. This took a long time for me get it right when selling to investors. I now get $5K min. on all EMs, even on low purchase prices. The buyers understand and agree and sign something that says it's non-refundable. I accept no loan or appraisal contingencies. I give people 5 days to get inspections done. I recently let one buyer deposit EM of $2500, but I knew his hard money lender and had already checked with him to be sure that he would fund. Sure enough right before close the buyer doesn't like the HML's "fee" of $950 and wants to find another lender. I told him the $2500 I was keeping was more than the fee he didn't like and that I was going to keep it if he didn't close. I gave him 3 more days and, amazingly, he found a different hard money lender who funded.

    I continue to be impressed and humbled by those of you that sell retail. Appraisals and inspections and contingencies and concessions. I'm not sure I have what it takes. I did a rehab in January and was so happy to sell to an investor buyer who had cash.

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  • Jimmy C.
    OP
    Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes
    14y

    Thanks guys. Ive calmed down a lot now, and I'm at peace with what happened. I smelled it coming when he had contingincies regarding condition. We always sell as is on a state approved as is contract. But he handwrote this junk in under special clauses.

    Back to finding a buyer tomorrow. I have some back UPS that maybe game. Heres to another learning experience!

    1Reply
  • James Vermillion
    Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
    14y

    I feel your pain Jimmy C. and I approve of your use of the word clown... unfortunately I find myself using it all too often.

    0Reply
  • Steve K
    Investor · Orlando, FL · Member since 2012 · 431 posts · 106 votes
    14y

    That's a shame. Unfortunately it wont be the last time it happens but higher EMD amounts make those situations much more palatable.

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  • Steve Luo
    Real Estate Investor · Austin, TX · Member since 2012 · 35 posts · 5 votes
    14y
    Originally posted by K. Marie Poe:
    I give people 5 days to get inspections done.

    I just had 12 days' inspection period and I barely made it. Maybe your area is very different. Taking out weekends, your 5 days might be only 3 days.

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  • Jimmy C.
    OP
    Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes
    14y

    I typically dont give any inspection period. This contract also didnt have one. I tell buyers to do all their due dilligence prior to contract and escrow.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y
    Originally posted by Steve Luo:
    Originally posted by K. Marie Poe:
    I give people 5 days to get inspections done.

    I just had 12 days' inspection period and I barely made it. Maybe your area is very different. Taking out weekends, your 5 days might be only 3 days.

    Yup, 5 days isn't enough time for inspections, so only serious as-is buyers sign something like that. The majority of experienced landlords and rehabbers I sell to don't do any inspections. They are their own contractors and have their own crews, and there's not much they haven't seen before. They see it when they make an offer, they use worst case scenarios for repair estimates and don't come back to the property until they own it. That being said, I did let a buyer go over into the following week because the termite guy couldn't get there that week. When I can see that it's happening, and everyone is on the same page trying to get to closing, it's not hard to make space for that.

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  • Jason GrotePro Member
    Developer · Austin, TX · Member since 2011 · 287 posts · 88 votes
    14y

    Shouldn't a seasoned investor be able to inspect at least 80% of the property himself? We have personally never hired an inspector to check out a property. We have however brought out a foundation repair company to shoot levels and the such. Aren't thorough inspections for retail buyers?

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  • Michael Lauther
    Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes
    14y

    Jimmy C. , you said you "smelled it coming".

    As it turns out after looking back on almost every bad decision I have made in life, I knew it was a mistake going into the deal but did not listen to my instincts. Perhaps one day I will learn to trust that feeling and look closer before I take action.

    2Reply
  • Jimmy C.
    OP
    Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes
    14y

    Its true Michael. I wanted him to be real. In my defense he did pof for over twice tbe purchase price. But his demeanor was always somewhat suspect.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    Jason Grote I do my own "inspection" for my purposes (to make an offer). Most of my buyers can do their own inspection too. However, there are so many new investors out there right now without any house sense or house experience. They are good with numbers, and negotiations and maybe even running a business. But they need a lot of help with inspections. And they know it. :)

    1Reply
  • Scott R.
    Real Estate Investor · Amarillo, TX · Member since 2008 · 547 posts · 214 votes
    14y

    In my area $2k em is unheard of IMO on lower income properties. Minus one HUD house, which required $500, most I've ever put down was $100 prior to that. Some people suggest $5k em, what kind of purchase price are you dealing with?

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  • Ed L.
    Residential Real Estate Agent · Hattiesburg, MS · Member since 2011 · 475 posts · 141 votes
    14y

    On the bright side you got some Ernest money!

    I had one property fall through five stinkin times before I finally closed the deal.

    My mos recent deal I had a guy back out after two days due to a dispute with the wife. Easiest grand ever. Signed a contract for 5k more the next week with a much better buyer. Sometime it just works that way.

    1Reply
  • Jimmy C.
    OP
    Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes
    14y

    Scott R.its a 4 unit for 60k.

    You must not buy very many bank owned properties. The banks have never let us put less than 1k em here on FL

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y
    Originally posted by Scott R.:
    In my area $2k em is unheard of IMO on lower income properties. Minus one HUD house, which required $500, most I've ever put down was $100 prior to that. Some people suggest $5k em, what kind of purchase price are you dealing with?

    The last three SFHs I sold and required $5K EM were for $38K, $95K and $36K. If they are really cash buyers, they have $5K, it's not an issue. That being said, I think the most I've ever put in for EM was $2K, and that was for an REO (that I didn't get). When working directly with sellers, I usually put in $500.

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  • Jimmy C.
    OP
    Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes
    14y

    Dudes going to want his emd back. This should get interesting.

    0Reply
  • Greg P.
    Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
    14y

    Just don't give it back, plain and simple.

    1Reply
  • Jeb Z.
    Real Estate Investor · Miami, FL · Member since 2012 · 18 posts · 3 votes
    14y

    We obviously aren't privy to the contract but if it's as you say "no contingencies" then they do not get their deposit back. They should know better and if not then let them take you to court. They'll end up paying your attorney fee's too!

    0Reply
  • Scott R.
    Real Estate Investor · Amarillo, TX · Member since 2008 · 547 posts · 214 votes
    14y
    Originally posted by Jimmy C.:
    Scott R.its a 4 unit for 60k.

    You must not buy very many bank owned properties. The banks have never let us put less than 1k em here on FL

    They let you out $500 down if te property is under $50,000 (I think that's the magic number) otherwise anything over would require $1000, and that's fine, but your selling this, your not a bank. You got double what a bank would of gotten, I just think the people who talkb about requiring $5000 is unheard of esp on the $30k properties mentioned above.

    0Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    Scott R. Curious why you say 5K EM is unheard of. Do you mean you've never seen it? You could never be privy to the terms of the contract of most deals. With serious cash buyers you can get all the cash into escrow within a day and no EM. In my experience with re-sales to investors, the buyers that bulk at $5K aren't really cash buyers and stand a good chance of having other issues before closing. On the buying side, I would never write a contract that had me putting that much in. But I do it when the buyer (or buyer's lawyer) requires it.

    0Reply
  • Scott R.
    Real Estate Investor · Amarillo, TX · Member since 2008 · 547 posts · 214 votes
    14y

    @KMarie,
    First off, this guy doesn't appear to be a cash buyer, as his partner didn't approve the purchase it sounds, yet i doubt a partner was ever mentioned or on contract,
    Second, even as a cash buyer, of a sub 40k property $5000 is just outrageous to me, unless it's an unheard of deal, I don't think most investors would put $5000 down. Requiring $5000 em would greatly reduce your potential buyers.

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  • Jimmy C.
    OP
    Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes
    14y

    We pretty much always ask for 2k. The guy wrote a cash offer. But he should have told us he needed.partner approval. They waited to do their due dilligence on the day of closing. Fool me once I guess...

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