Negotiating after the contract is signed.

Negotiating after the contract is signed.

Real Estate Investor · Baltimore, MD · Member since 2008 · 619 posts · 75 votes

Ok, so i have my contract assigned, and my end buyer has now stated that she was unaware that she had to pay all closing costs, which she was, however I assumed she knew. She said she is not paying more than half of the transfer taxes and always splits them with the seller. and she does have a way to get out of the contract.

My question is should I offer to pay half to make sure the deal goes through, tell her no and see what she says/does. I had several other people that are interested and am only into day 3 of my 45 business day contract with the sellers, should I just market to them?

How are your deals normally structured, do the end buyers always pay all of closing costs or do you sometimes structure it differently.

If i pay half the transfer taxes I am probably looking at about 1700-2000 dollars.....

I also don't want to have no buyers, and end up with no assignment fees.

The only thing I have been able to come up with is that if I give up 1800k in transfer taxes, I should have her renegotiate the assignment contract so that I get a 2k deposit (thus voiding the 1k deposit she already gave) and have her sign an new assignment contract with no financing clauses. My only question if I did this is how do I void the old assignment contract that I forwarded to the title company.

What would you all do?

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  • Real Estate Investor · Katy, TX · Member since 2008 · 430 posts · 22 votes
    18y

    95% of my wholesales the end buyer pays all closing costs associated. Obviously taxes and insurance is prorated.

    What was on your original contract with the seller? 100% paid by buyer? If so then your buyer should have known. If they back out, just keep the deposit and market it to buyers that understand they are paying 100% of the closing costs.

    This buyer may be trying to feel you out to see if you will budge, but maybe not. Most buyers that deal with wholesalers understand that they will be paying the closing costs. There are certain circumstances that this is not the case, but the majority of the time it is.

    I wouldnt budge if I were you. If it's in the original contract that the "buyer" will be paying 100% of the closing costs, then they should have known better.

    If you dont mind me asking, why does your end buyer have an out?

  • Real Estate Investor · Baltimore, MD · Member since 2008 · 619 posts · 75 votes
    18y

    My end buyer has an out because i effed up and wrote one in.

    It was partially my fault because I did not disclose to her all the details. I assumed she was willing to pay all closing costs. Anyway I made her resign a new assignment contract with no outs, and offered to pay half of the transfer taxes. So my gross will go from fourteen to twelve thousand. Still a good margin for my first deal IMO.

    I offered to pay since I did not disclose this to her previously, and I want to preserve my name and reputation. I could have tried to be a bully, but then I would have to spend more time and energy marketing if she backed out. I decided that this buyer is capable and willing to close this deal, and arguing really just wasn't worth it. She also is connected with alot of other investors, so I didn't want to get a bad wrap for not disclosing info etc. Next time I will just know to make sure I disclose everything before moving forward.

  • Flipper/Rehabber · Tampa, FL · Member since 2008 · 403 posts · 109 votes
    18y

    How much is your assignment? What are the closing costs? If you calculate these and the deal is still favorable, you may just want to eat it this time, assuming you have no other buyer waiting in the wings. If you have other buyers ready to pull the trigger, cancel this buyer and go with one of them.

    In the future, add some wording about the buyer paying all closing costs. Put it in the notes section of yourd contract, if you have one. Just make sure it's there. Like so many things in this business, it's a learning experience. Learn from it and benefit in the future.

  • Real Estate Investor · Baltimore, MD · Member since 2008 · 619 posts · 75 votes
    18y

    My gross fee is 18k. It was originally 15k, but I inflated it because my end buyer wanted to wrap the birddog fees into it. After the transfer taxes and all my expenses above I should walk with 12k. At least I can write all my these expenses off.

  • Real Estate Investor · Katy, TX · Member since 2008 · 430 posts · 22 votes
    18y

    Good stuff. I do think you are doing the right thing after the explanation.

    12k for your first deal? That's awesome.

    Good job!

  • Real Estate Investor · Reading, PA · Member since 2008 · 227 posts · 7 votes
    18y

    Lesson well learned. I believe that you did the right thing. Your name and reputation means everything in this business. It certainly could have been more costly. Not too shabby for your first deal!!

    Robin

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