Sticky Situation with Wholesaler on My Property

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Sticky Situation with Wholesaler on My Property

Ana G.
Wholesaler · Miami, FL · Member since 2015 · 202 posts · 149 votes
This is a bit of a sticky situation that I need help with. Sorry for the long post: On April 6, I got a property under contract. A couple of hours later, I sold the contract to an "investor" (who I lowered my sale price by 10k for) in the form of a double contract. Contracts are sent to closing attorney the same day. It was my first property so I thought nothing of the $500 deposit he stated in his contract. A week later, he says his "lending partner" needs to see the property. I agree thinking it was a HML. I call my buyer to see what the results were. No response. I call the attorney who says he hadn't spoken to him in 2 days. I call his "lending partner" who says YES I WANT IT BUT I WANT IT AT $2,500 LESS. Meanwhile, I'm sending my "cash buyer" emails and texts saying "Do you want the property for sure? Have you made an ultimate decision on the closing date? When are we closing?" No response. Finally it's 14 days later, no deposit from my cash buyer has been sent in to attorney, no closing date has been specifically other than the contract expiration of April 30. So I call his "lending partner" and say 'listen, I haven't gotten any response from my buyer and he hasn't sent in a deposit. Let's sign a contract'. So we sign a new p&s contract and I send my then unresponsive " cash buyer" an email stating the cancellation of my contract. He emails back immediately saying "why? You can't do that. We signed a contract." (He still hasn't sent in deposit of $500 or set a closing date) So I say fine I'll cancel the second contract and ours is still intact. Now 5 days later, he sends the deposit and the attorney BEGINS TITLE SEARCH?! (apparently no title search has been going on for like 3 weeks since we sent him all the contracts) WTF??!! Now it's TWO MORE WEEKS to close at a MINIMUM if he even has the cash he claims (I mean it took that long for a small $500 deposit. Imagine over 100k home price) So I google the property because I'm paranoid and it's being sold online by other people at $35k more than our contract price and I realize this "cash buyer" of mine is wholesaling my property! What can I do? What are my choices? What should I do?? And he's even a mentor/coach in my city. I can't believe he would tie up my property like that!! I need help :((.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y

Sounds like he's just doing the same thing to you, that you're doing to the owner. WHat's the problem?

8Reply
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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    Sounds like he's just doing the same thing to you, that you're doing to the owner. WHat's the problem?

    8Reply
  • Ana G.
    OP
    Wholesaler · Miami, FL · Member since 2015 · 202 posts · 149 votes
    11y
    Wayne Brooks Listen, I'm all for everyone making their money. I mean we all gotta eat, right? However, posing as a cash buyer (not even approaching me as a fellow wholesaler that we BOTH could have agreed to cowholesale) but POSING as a cash buyer and screwing the entire deal up for me AND my seller by holding it up and wasting everyone's time is ridiculous. I feel like the contract is null & void at this point. Can I cancel it? I have other people whose are ready to close and have the cash. Do I have any other options??
    0Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    11y

    You got took. It's time to protect your neck by adjusting your contracts. 

    1. NO DEPOSIT, NO DEAL Your contract needs to be structured to require that. 

    2. CONTRACT IS NOT ASSIGNABLE to the end buyer, stops wholesalers

    There's more but for now focus on that change to your assignment contract to buyers. 

    Okay, do you have buyers? How is your contract with this wholesaler structured? Do you have the right to cancel? Do you have alternative options to sell this deal if you do cancel? How much time do you have left at this point? 

    3Reply
  • Ana G.
    OP
    Wholesaler · Miami, FL · Member since 2015 · 202 posts · 149 votes
    11y
    Tim G. I have adjusted my contracts and now require a $5k deposit to make my contracts legally binding. My new buyer is in shadows waiting until Apr 30. If the contract does not go through, he is ready willing and able to close. Btw, he even told me that my buyer is wholesaling the property. I guess I just want this contract to end NOW. I can't stand knowing I'm doing business with a liar. I DONT do business with bull**ters. I don't want that to rub off on me. Should've known to trust my gut.
    0Reply
  • Ana G.
    OP
    Wholesaler · Miami, FL · Member since 2015 · 202 posts · 149 votes
    11y
    Lol "you got took."
    0Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    11y

    So you're contract has you stuck until the 30th? There's no way out? 

     I will send you positive vibes. 

    0Reply
  • Ana G.
    OP
    Wholesaler · Miami, FL · Member since 2015 · 202 posts · 149 votes
    11y
    Tim G. Correct. We're stuck until the 30th. The first time I tried to cancel the contract, he flipped. Multiple exclamation points and everything. I'll let everyone know how it turns out. Note to other wholesalers: -DONT lower your price if you know for a FACT it's priced well. -POF required before they even get a peek inside. -HUGE deposit required to tie property down. No deposit, No deal. Thanks Tim G. For the response.
    1Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    11y

    can you send me the contract I kinda wanna review it. Maybe there is a way out. 

    0Reply
  • Randy E.
    Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    11y
    Originally posted by @Ana G.:

    Note to other wholesalers:
    --POF required ...
    -HUGE deposit required to tie property down. No deposit, No deal.

    I think those are two rules that all homeowners should use when dealing with any prospective buyer and/or wholesaler. Anyone who wants to tie up my property better have POF and needs to pay a deposit. Otherwise, don't bother.

    0Reply
  • Ana G.
    OP
    Wholesaler · Miami, FL · Member since 2015 · 202 posts · 149 votes
    11y
    Tim G. Sent! Thanks Tim!
    0Reply
  • Helen Kirk
    Rental Property Investor · Auburn, AL · Member since 2015 · 227 posts · 80 votes
    11y

    I'd like to see how this turns out....

    0Reply
  • Steve M.
    Chicago, IL · Member since 2015 · 1 post · 0 votes
    11y

    i also would like to see  please keep us posted 

    0Reply
  • Christopher Rodriguez
    New York, NY · Member since 2015 · 173 posts · 33 votes
    11y

     I as well....  Ana please tag me once this is complete.....

    It is shady wholesalers like you mentioned that gives us a bad name....

    Also I will tell you Ana DO NOT ACCEPT A TRANSACTIONAL FUNDING COMPANY as proof of funds 

    Require a bank check or a wire to your attorneys account 

    @Ana G.

    0Reply
  • Matt Weaver
    Investor · Richmond, VA · Member since 2015 · 52 posts · 105 votes
    11y

    in my experience there is almost always a way out of a contract, have you consulted a real estate attorney?

    0Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    @Ana G.

    A good deal is only good when it's reduced to writing. 

    It sounds like you are unsure about the obligations and rights of the contracted parties and therefore you're susceptible to the whims of the alleged purchaser.  When you have a solid contract, you won't need to worry about someone flipping out...you simply follow the rights afforded you in the contract and move forward.  

    1Reply
  • Nikki Robinson
    Investor · Valdosta, GA · Member since 2015 · 187 posts · 112 votes
    11y

    *clicks Follow Topic*

    0Reply
  • Randy E.
    Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    11y

    As someone who has never been a wholesaler, an idea came to mind that may or may not be feasible.

    You, Buyer #1 signed a contract to buy a property from Owner.  You then signed a contract that gave your right to buy the property to Buyer #2.  You now want to remove Buyer #2 from the equation, which seems reasonable because he is not moving forward on the deal and is preventing the Owner from selling her property in a timely fashion.

    Is it possible/legal for you to mutually agree with the Owner to terminate your contract to buy her property, which would then nullify Buyer #2's contract with you?  

    That would help the Owner sell the property quicker (possibly to your other buyer.)  It would also keep you in good standing with the Owner, who might be so impressed with your sacrifice that she recommends you to other owners in the future.

    Just a thought.

    1Reply
  • Lupe Rucker
    Homeowner · Denver, CO · Member since 2015 · 3 posts · 1 vote
    11y

    @Ana G.

    Sorry that you are going through this experience but I'm glad you posted this. This helps all new wholesalers on what to watch out for and to make sure the POF are shown by buyer. Keep me posted on how it turns out.

    Good Luck

    0Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    11y

    @Ana G. So in the first place, how many dollars did YOU give the owner as your deposit? How much skin did you originally sacrifice to the game?...

    1Reply
  • Michael Meeks
    Developer · Saraland, AL · Member since 2013 · 93 posts · 52 votes
    11y

    Going back to the initial post. If your contract with buyer 2 required a deposit, and it wasn't funded, the contract wasn't fully executed. You should have sent a written cancellation based on his failure to execute. When he called you flipping out, you instead should have sternly defended the fact he failed to execute and you have proof, that you exhausted efforts to reach him.

    3Reply
  • Mike Osterman
    Specialist · Novato, CA · Member since 2012 · 190 posts · 57 votes
    11y

    @RickHarmon I'm so glad I met you. 

    You're right. We all look at the horse from the front. 

    What a mess, move on. 

    Want to know a secret? Your going to have to find another deal after this one. So get to it. If this one falls off the turnip truck so be it. The next one is about to arrive. 

    2Reply
  • Ana G.
    OP
    Wholesaler · Miami, FL · Member since 2015 · 202 posts · 149 votes
    11y
    Mike Osterman I agree. I treat all things in life as an experiment and to make myself not beat myself up over the "lost profit", I began to consider profits as a gauge on whether or not I'm winning in this GAME. If I lost the profit on this one, oh well. Simply learn to beat the game on the next one. Randy E. I JUST thought of that idea today. It freaked me out when I thought that they were probably even giving SHOWINGS to the property without me there so I thought of simply telling the seller "look I see you haven't found a new place yet (she hasn't) so why don't we cancel this contract and make a new one to give you a few more weeks to find a place." Genius idea, Mr. Randy E. **UPDATE** Today, When pressing for a specific closing hour on the date of April 30, my "buyer" admitted he's using his funds from his "other 5 houses that close this week" to close my transaction so obviously he doesn't know that he's even going to have the cash to close by then. He even said I was "making a big deal" because I was asking specifically what hour and quoting the exact words of the contract. Im going to see my seller on Monday to cancel the original contract. I'll post updates.
    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    11y

    From her post:
    -DONT lower your price if you know for a FACT it's priced well.
    -POF required before they even get a peek inside.
    -HUGE deposit required to tie property down. No deposit, No deal.

    This is what homeowners need to demand to keep THEIR property from being tied up by people with no intention of buying it! As Wayne Brooks said: it sounds like they did the same thing to her she is doing to others!  If that is not the case, correct me.

    2Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    11y
    Originally posted by @Ana G.:

    This is a bit of a sticky situation that I need help with. Sorry for the long post:

    On April 6, I got a property under contract. A couple of hours later, I sold the contract to an "investor" (who I lowered my sale price by 10k for) in the form of a double contract.

    Contracts are sent to closing attorney the same day. It was my first property so I thought nothing of the $500 deposit he stated in his contract.

    A week later, he says his "lending partner" needs to see the property. I agree thinking it was a HML. I call my buyer to see what the results were. No response. I call the attorney who says he hadn't spoken to him in 2 days. I call his "lending partner" who says YES I WANT IT BUT I WANT IT AT $2,500 LESS.

    Meanwhile, I'm sending my "cash buyer" emails and texts saying "Do you want the property for sure? Have you made an ultimate decision on the closing date? When are we closing?" No response.

    Finally it's 14 days later, no deposit from my cash buyer has been sent in to attorney, no closing date has been specifically other than the contract expiration of April 30.

    So I call his "lending partner" and say 'listen, I haven't gotten any response from my buyer and he hasn't sent in a deposit. Let's sign a contract'. So we sign a new p&s contract and I send my then unresponsive " cash buyer" an email stating the cancellation of my contract. He emails back immediately saying "why? You can't do that. We signed a contract." (He still hasn't sent in deposit of $500 or set a closing date) So I say fine I'll cancel the second contract and ours is still intact.

    Now 5 days later, he sends the deposit and the attorney BEGINS TITLE SEARCH?! (apparently no title search has been going on for like 3 weeks since we sent him all the contracts) WTF??!! Now it's TWO MORE WEEKS to close at a MINIMUM if he even has the cash he claims (I mean it took that long for a small $500 deposit. Imagine over 100k home price)

    So I google the property because I'm paranoid and it's being sold online by other people at $35k more than our contract price and I realize this "cash buyer" of mine is wholesaling my property!

    What can I do? What are my choices? What should I do?? And he's even a mentor/coach in my city. I can't believe he would tie up my property like that!! I need help :((.

    Do you have any intention of buying the property if you cannot assign the contract? Did you lead the seller to believe you WOULD buy the property? Did you disclose that if you cannot assign the contract you would walk away? If you are misleading sellers, how do you reconcile that with dealing honestly and fairly? Did you get an "inspection period" as many other "wholesalers" use to dupe the seller into signing? Is that your "out"? One last question: your post states a wholesaler on "your" property? Until you have title, how can you claim it as "your" property?

    4Reply
  • Tom V.
    San Francisco, CA · Member since 2014 · 345 posts · 281 votes
    11y

    Is it possible that you are acting as an unlicensed real estate broker and you have no idea what you are doing? Should you go get some proper training and start to think about your seller?

    1Reply
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