seller was a no show on wholesale deal. I have a question.

31 Replies

This past saturday I had an appointment to meet a seller at the home they wanted to sell. The appointment was set for 12 noon. 23 minutes past 12 the seller called me on the phone saying that they changed their mind and decided not to sell. Total waste of time.

Here's the background. The previous week I received a call from a seller who wanted to sell a house about 50 minutes away from me. While on the phone I looked the property up online and told him "it's not a property that the investors would be interested in." (That might have been a mistake not just saying that "I wouldn't be interested in buying it") After all I would've been doing a contract with him not the end buyer. He told me that he and his brothers inherited it after the passing of their older brother. He then brought up another property that belonged to the deceased brother as well. This property was a lot better than the first. After some research, it turns out their asking price for that one was about 48% of the ARV. So naturally I thought I had a deal on my hands. A few days later I called him back and made arrangements to see the house in person, which brought me to the no show from one of the brothers on saturday.

My question is, being a wholesaler and fully intending to assign a purchase contract to an end buyer, should I let the seller know that's what I intend to do?

Sounds like they found another buyer at the same time that was prepared to pay cash. 

I would tell them exactly what you are doing as you dont want to mislead the sellers.

A few days later?  Don't put off meeting with "hot" leads.  Stop what your doing and get it under contract. 

Full disclosure is always good. You should also be covered on your contract with the seller as well "And or Assigns"

Thanks for that advise @Curt Davis  The crazy thing is a few minutes later he called me right back and said that I could go on and look at the house. At that point I was already done with that property and no longer wanted to see it. I told him no thank you. A few minutes after that, the original brother called and said that I could still go look at the house. I basically told him no thanks as well.

Thanks @Rocky V.  I work a full time job during the day so by time I talked to him was at night. I do have and/or assigns in my contract, but I just felt better letting him know out the gate my position in the whole deal.

Well, that sort of says it all.  Two different brothers call you and ask you to look at their property.....and you say no thanks.

Guess I made lots of rookie mistakes. 

@Wayne Brooks  at that point I felt that they needed to know that I wanted the property but didn't need the property. Other houses out there right?

In terms of disclosing your intentions with a property you put under contract... You don't need to say anything about flipping the contract and/or wholesaling the property when negotiating with the seller. You should, however, make it clear to him that youre a real estate investor. That's all the seller NEEDS to know. 

Now in regards to how your deal fell through. Its not an uncommon issue with inherited properties (in this case) that have multiple owners. The brothers might not have been on the same page as far as what they wanted to do with the property. Anytime you're doing negotiations with two owners on the same property you need to make sure both of them are at the property during the negotiations and/or signing of the contract. That way they are both on the same page. 

At the end of the day you live and learn. There are other deals out there. You just got to sift through the dirt to find the gold. 

Originally posted by @Chris Purvis:

@Wayne Brooks  at that point I felt that they needed to know that I wanted the property but didn't need the property. Other houses out there right?

 Why did they need to know that?  This isn't about one-upsmanship or physchological games.  If the house would have worked for you and they wanted you to look at it, why not look at it.

I am glad to see people encouraging honesty with the seller.

Originally posted by @Brandon Kargol:

In terms of disclosing your intentions with a property you put under contract... You don't need to say anything about flipping the contract and/or wholesaling the property when negotiating with the seller. You should, however, make it clear to him that youre a real estate investor. That's all the seller NEEDS to know. 

 The seller NEEDS to know whether he has a legitimate sale in queue, or whether he has effectively just signed an exclusive listing contract with an unlicensed broker.

Unless you are going to close yourself if you don't find a buyer, you should be up front about your intention to assign.

@Chris Purvis "So naturally I thought I had a deal on my hands. A few days later I called him back and made arrangements to see the house in person, which brought me to the no show from one of the brothers on saturday." Can't steal a deal in slow motion! As others have already said above.

"Guess I made lots of rookie mistakes." Just don't make the same ones again;-) NEXT!

I have our guys in the Wholesaling/Flipping subgroup write out a 3 column. Top of the page: WID What I did. WH What happened. WIWIHD What I wish I had done. If you hand write it out, somehow it gets remembered.

PS Sometimes even if you do everything right it won't go. SW3 - Some Will, Some Won't, So What, Next!

Your qualifying process needs work.

You either need to be generous with your time or learn to vet (screen) your sellers better. 

There's a lot more to the sales process than most think. For starters, yoU ought to work with a pre-printed intake form that helps you with the process along with assuring that certain aspects have been covered. 

Pilots use checklists. Why don't you?

Originally posted by @Richard C.:
Originally posted by @Brandon Kargol:

In terms of disclosing your intentions with a property you put under contract... You don't need to say anything about flipping the contract and/or wholesaling the property when negotiating with the seller. You should, however, make it clear to him that youre a real estate investor. That's all the seller NEEDS to know. 

 The seller NEEDS to know whether he has a legitimate sale in queue, or whether he has effectively just signed an exclusive listing contract with an unlicensed broker.

Unless you are going to close yourself if you don't find a buyer, you should be up front about your intention to assign.

Richard I hear where you are coming from, however, most sellers don't care or won't even ask what your intentions are with the house once you tell them you are an investor. Simplying disclosing the fact that you are a real estate investor already strongly implies that you have no intentions of making the property a primary residence. Yes you most certainly should tell them you are an investor, but telling them exactly what your intentions are with the property should only be disclosed if the seller asks. If you tell the seller "Mr Seller I am going to put your property under contract and sell that contract to someone for a higher price." The seller is then going to think you don't care for his house. All you care is that he signs the contract and you make a few bucks off of it. A lot of sellers you'll find as a wholesaler are people who've lived in there homes and have come across tough times and when you're building rapport with the seller you provide comfort to him knowing that he is selling the house to a good person. But telling him that you're going to wholesale his property will create a reluctancy or second thoughts. This isnt always but a lot of the time that's the case. You're better leaving out the wholesaling part UNLESS the seller specifically asks. Don't be dishonest, just say only what needs to be said.

That is dishonest.  Unless you have the willingness and ability to close if you cannot assign the contract.

Do what you feel you have to, but don't kid yourself.  If you are letting the homeowner think he has sold his house, when in fact you are HOPING to sell his house, you are lying to him.  For your own benefit, and to his detriment.  Period.

I have been fortunate, I suppose, to never have been forced by poverty or circumstances into compromising my ethics in such a manner.  

Originally posted by @Chris Purvis:

Guess I made lots of rookie mistakes. 

 Yes some rookie mistakes Chris. Even if you get mixed messages from the seller(s). Once they sign the contract, they are all officially on the same page and in your corner.

Regarding your other question, we tell the seller that we buy and fix up properties for ourselves (which we do since we wholesale and rehab) and we find properties for other investors. And that's only when they ask (which usually goes something like "what exactly do you guys do"? - despite the name of our company....go figure). Trying to explain the wholesale process to them will only confuse them. Trust me. Just make sure you have a bonafide deal and a bonafide buyer in place and close the deal.

Originally posted by @Richard C.:

That is dishonest.  Unless you have the willingness and ability to close if you cannot assign the contract.

Do what you feel you have to, but don't kid yourself.  If you are letting the homeowner think he has sold his house, when in fact you are HOPING to sell his house, you are lying to him.  For your own benefit, and to his detriment.  Period.

I have been fortunate, I suppose, to never have been forced by poverty or circumstances into compromising my ethics in such a manner.  

I don't see it as being dishonest. When i meet a seller I'm there to negotiate the deal and get a contract for the property and that is it. How I structure the deal is the last thing I should be discussing with the seller in my opinion. That's not what I'm there for. If its a good deal then its a good deal, and if the seller wants to ask questions about my plans with the property then I will give an honest answer. Otherwise I see no need to bring the topic up

That's fine. So take advantage of those not sophisticated enough to ask good questions, or demand a real EMD, or change your contract to remove the contingencies.

But I am not going to applaud it, and yeah, it is dishonest.  You are deliberately misleading someone. He thinks his house is sold, and he can give notice at work, or put down a deposit on another house or apartment, and he has no need to list his house to get it sold.

Only none of those things is true, is it?  Because you haven't "bought" jack.  You are just hoping you can find a true buyer and not wreck the seller's life.  But if you can't, hey well it ain't hurting you, so who cares, right?

This sort of attitude is how we end up with onerous regulations.  Because letting the state RE board fine people for unlicensed brokering is better than allowing this.

Thanks for all the input and insight. This is why I'm glad I found BP. Different points of view from different people is much appreciated. 

I do feel it would be better to let the seller know what I'm doing. In this case the seller contacted me from an online ad. My screening process, which was my google voice message to the seller when they call, was not set up correctly when he called. All I could go on was a missed and I called him back to speak with him personally. Being that I just started started my education process about wholesaling on july 24th, my knowledge and confidence was shaky at 1st. None the less I called him and began the process, because I wanted to take action regardless of knowing what I was doing or not. 

Looking back on saturday and after all the informational comments I received in this thread, I wish I had handled it differently. I guess I was more upset that I drove all that way just for the guy to call me 23 minutes past our appointment time, to tell me they changed their mind about selling. I felt they wasted my time and I really lost interest in seeing the house at that point. I have learned from this experience and from you all here. Thanks again all your input. Now I just need some deals!

Hi Chris,

This may not be much consolation but in any sort of sales role, which is what a wholesaler really is, you are going to have last-minute cancellations, missed appointments and other issues. In fact, it's expected that the vast majority of people you contact are going to be a waste of time one way or another. Either they're not truly motivated or they are going to change their minds at the last moment or something else will happen.

Having been in many situations like yours I would just thank my lucky stars that they bothered to call you back at all.

As a buddy of mine regularly says, "either we make money on this transaction or we learn something new. Either way, I win."

Thanks for that @Patrick Britton  that's a good way to view a situation like this

Richard, 

  I see where you are coming from. There are a lot of wholesalers out there that don't know how to properly market a property and can't sell the property after they have a contract with the seller. Either they had a failed marketing campaign to sell the property or they never had a good deal in the first place. Most homeowners in pre-forclosure do not have the time to market their property themselves or even list it with an agent before the house goes to auction. As a wholesaler purchasing pre foreclosures you are literally the sellers last option. But that's the nature of the business. That's the hard truth. 

"Either they had a failed marketing campaign to sell the property or they never had a good deal in the first place."

Neither of those is the seller's fault, but he is going to be the one paying the price if you have mislead him about what you are doing.

"As a wholesaler purchasing pre foreclosures you are literally the sellers last option. But that's the nature of the business. That's the hard truth."

Of course many wholesalers are not purchasing pre-foreclosures.  And if, in fact, you are the seller's last option, than there is no downside in telling him the truth, is there?  After all, he has no other options.

Myself, I would have some qualms about lying to desperate people for my own benefit.

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