Wholesaling to a Retired Broker... Dead End (?)
Over the last few days, I've been vetting my first potentially solid SFH-For Sale By Owner Wholesale deal.
The seller was an older gentlemen.
From our first phone conversation we hit it off 100%.
I expressed some interest in the property and after a few hours of thinking it over and running some numbers, I finally swung by to meet him and see the place.
THE PROBLEM:
Then I met her... The seller's wife. (aka- the "rulemaker", as expected.)
But the one little twist that I DIDN'T see coming... was that she's also an ex-broker.
So right off the bat (from the moment I walked in and met her) I knew I was doomed.
Long story short:
The male seller and myself had a great conversation. He showed me the whole house, told me all the updates he had been making to sell it.
We got to the kitchen, and I began speaking with his wife; listing to their intricate and incredible story of being landlords, traveling, and enjoying the good life.
Everything was going beautifully.
THE WHOLESALE PITCH:
Then came the "alright, so here's what I'd like to do..." conversation.
My proposition was to tie up the property under contract for 30 days with an agreed price that they were asking, market the property to find a buyer that would pay a little more, assign my interest to that buyer, and everyone would walk away happy.
(of course, I stated this much more eloquently... but you get the idea.)
The male seller was happy to hear it!
His wife (ex-broker) hated it. And said she would need to review the contract in-depth, think it over, etc, etc.
Respectable answer.
I told them I'd come back tomorrow with my contract and we could review it.
(footnote: they don't believe in email. so it wasn't an option.)
THE SOLUTION:
After spending the evening thinking it over, I figured I could offer a less "daunting" offer by presenting an "Option to Purchase" contract instead of a blatant "Purchase and Sale agreement with assignment clause", which would leave them locked in with me for 30 days.
The difference in these two contracts (from my understanding), is that an "Option to purchase" contract would allow the seller to still sell the property to whomever they wanted, while I would also simultaneously be able to market the home at 0 cost to them for 30 days.
If a buyer approached them with an offer that was higher than the one in my option contract, they would give me the opportunity to "match the offer", or I could simply walk away from the deal and they could go with the higher price.
THE FAIL:
As I was fighting traffic demons to get to their property by 3PM, I gave them a call to let the seller know I'll be there soon. But this time, the wife picked up.
I mentioned that when I got there we could review the contract and that my intention is no longer to offer a Purchase and Sale agreement, but rather an "Option to Purchase", which would represent my equitable interest in the home for 30 days, but wouldn't stop them from taking any offers.
She told me, "No, we won't do that."
I politely stated, "I absolutely respect that decision. No hard feelings. Just out of curiosity... why won't you consider that as an option? Just for my own clarification."
She told me that "we just want to go with a real estate agent that we are friends with instead and are happy to sell it that way for the next 6 months."
I was |-----| <---- THAT CLOSE! to locking in my first deal.
And then a HARD NO.
SUMMARY OF WHAT I LEARNED:
This was NOT a motivated seller.
So "options" or "sales contracts" were out of the question
I think that was it in a nutshell.
What I still can't understand is:
Was the wife being an ex-broker a factor in this equation?
Because from the moment I walked in, I could tell she had already written me off.
It wasn't until I built rapport with her that I actually thought there would be a deal.
QUESTIONS:
- Was the "Option contract" a good move on my part?
- Anyone have tips on how I could've better positioned the idea of an option agreement to the seller's wife?
In closing... I'm still learning how to justify these "no" answers after putting so much thought and time into a deal.
So please, BiggerPockets, UNLEASH YOUR WRATH OF BRUTAL FEEDBACK!