The $6000 text message. Be patient or close the deal? What would you do?

Question

Be patient or close the deal when you can?

Here is the situation:

I put a property under contract for 40k. ARV 70-75k and needed 5k in cosmetic repairs. I got a deal! no question.

I shopped it around to my buyers at $47.5k using the "text book" formula ARV x 70% - repairs and gave exclusive look to a buyer that I worked with in the past. Everything text book so far. After back and forth negotiations, to my surprise, the buyer offered me $41,500 (40k +$1500 assignment fee), final offer, sticking to his number. This is Friday

I thought that I can do better than that and shopped it around to everyone on my list. Another serious buyer saw the property and seems to be interested. He just told me that he has to submit it to his buyer in CA so he will have a response for me on Monday.

Monday arrives and I have no offer on the table. I follow up with the potential buyer multiple times on Monday and Tuesday morning and he tells me that he haven't heard from his CA buyer.

The only offer on the table at this point is the 41,500 and I know that the buyer will close the deal since we just closed on another deal a week prior. The guy is for real. On the other hand, I haven't done any deal with the other CA buyer but I heard from other wholesaler that he is serious.

Tuesday afternoon, I am focused to make a deal and to make more than $1500 in assignment fee. I contact the seller and tell him that I have a very strong buyer and if he can do 38k instead of 40k we close in two weeks or less. The seller agrees.

I go back to my buyer and tell him that I agree to 41,500 (38k + $3500 in assignment fee). He agrees, we have a deal and sign all the paper work on Tuesday afternoon.

A day later on Wed. the other buyer text me and offer me my full asking price of $47,500, $6000 profit that I left on the table had I waited one extra day.

What would you do? Discuss...

Aaron Mazzrillo · Answer

I'm a man of my word so I'd keep it. My word that is, not the house. Although, I probably would have tried to keep the house had I had the deal. It'll pay off much better in the long run than a highly taxed, short term profit today.

Call your first buyer up and tell him you have a higher offer. If he wants the house it is his at his price, if he'll let you sell it to the other guy, you'll split the upside with him and he can make a quick $3,000 by not buying the house. That way, your old wholesale buyer makes an easy $3K, your new high priced buyer becomes a new customer for you, you get $6,500 instead of $3,500, and you keep your integrity which is more important than any of the checks involved in this deal.

Joe Delia · Answer

Quickly find the second buyer a house now and make money off both.

Larry Roberts · Answer

I would go with the buyer that had cash first as the other guy drug the deal out. Next time when he gives you a time or day he will follow through. You lost a little profit but he lost a deal by not keeping his word.

Bottom Line keep your valued customers happy it will make you more in the long run. People that drag out deals could cost you money in the long run.

Deborah Burian · Answer

You gave your word.

Ramon Jenkins · Answer

@Haim Mamane Palman congrats

I'm a firm believe in this point also

-> I'm a man of my word so I'd keep it <-

Haim Mamane Palman · Answer

@Amy Davidson. I agree completely. I would take this approach only if I know the higher/2nd bidder is serious and had bought properties from me in the past

Amy Davidson · Answer

I completely agree. With a small house like this the potential buyer has probably invested very little money in appraisals and/or time. I would be quite pleased indeed to be offered money not to buy a house that I hadn't put much time into.

However, a text message is far from a signed contract, so you'd have to be very careful not to promise your first buyer a nice payment not to buy, when you are dealing with an unknown entity.

Looking at this from my perspective as a buyer, I'm sure if you're honest with the first buyer throughout, and start the conversation by saying you'll honor the original deal if it's a property that he's especially keen on, then I'm sure no matter the result, you will have strengthened the relationship with him.

Haim Mamane Palman · Answer

Great point @Aaron Mazzrillo. I will do that the next time I have a similar situation. I gave my word and did the deal with the first buyer. We just closed last Monday. My profit was $3500 instead of $9500 but it will pay off in the long run. I hope.

The $6000 text message. Be patient or close the deal? What would you do?

The $6000 text message. Be patient or close the deal? What would you do?

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