My properties are under assignment contract and no earnest money

11 Replies

I recently put 5 properties under contract with 1 seller using a P&S agreement. Linked up with an out of state buyer that said he wanted all of them. He never saw inside and didnt seem too interested with numbers. He claimed to also have access to transactional funding and he was going to use his transactional funding co to close the deal.

Oddly, he asked if I would help him find buyers after he purchased. (First red flag). He is my C buyer. WTH. I sent over the assignment contracts with each one having a $1000 nonrefundable deposit. He signed them all. However, its been 10 days and he's making excuses and has yet to put up any cash. The title co lawyer is saying since I did not put a contingency or clause on the date I needed to receive the deposit, the date would revert back to the original P&S contract with the seller. This means Im locked in contract with this sleezebag for 17 more days as the original P&S contract goes until Feb 15.

He claims he changed his mind and wants to purchase in a land trust and is waiting on his attorney.  Its been 10 days since he signed the original contract and he is dragging his feet and has not submitted any deposit and is no longer prompt with returning calls or clear with information.  I told him he could just move forward as and individual purchase and stop holding this process up and figure out the land trust on his own.  Is there any way I can null and void this contract as I have buyers with real cash in hand that arent here just to lock my contracts up to find their own end buyer? How can I get out of this?

Since you said you have an attorney I would defer to them. You may be stuck with the buyer  until they cannot close. It you have contingency offers I would work hard to have them lined up to go as soon as the original offers expire. AND going forward, make sure you specify deposits must be in escrow within 24 hours of contracts being signed or the they become void.  Or some other similar legalese...

Hi @Edward Mitchell

Sorry to hear about your issue. Sounds like you are between a rock and a hard place. It might not help much now, but always get a POF (Proof of Funds). Before you take someone in a place or write a contract (especially before writing a contract), find out where the money is. In the case of 5 units at once they really need to have cash and show it to you (bank statement). I know someone will say "portfolio loan" or a host of creative solutions like "land contract" but the first time you deal with someone on a 5 unit purchase, make it a cash deal. FHA/VA/USDA etc will not write on 5 units so any of those pre-approval letters are junk in your situation.

Lastly there is nothing wrong with getting EMD in certified funds if it feels wrong. Blind buyer, out of state, no concern for the numbers..... Postal money order before you present is a business appropriate solution.

Best of luck and I hope it works out for you!

Congrats on your future purchase of these parcels! I certainly hope you are not, as you stated about the other buyer, a "sleazebag" that would dare back out on YOUR commitment!

I'm guessing you can't recognize another wholesaler.  Hint: transactional funding is not for a long term purchase, no EM means they have no money.

Looks to me like you wholesaled your contract to another wholesaler, lol.  I'm betting the actual owner of the properties is having this same conversation about you right now.

Originally posted by @Paul Bowers :

Looks to me like you wholesaled your contract to another wholesaler, lol.  I'm betting the actual owner of the properties is having this same conversation about you right now.

 I come to BP to learn and share, and every now and then I go to the comics section and get a laugh:)
Really I think they should rename it the "how not to succeed in RE" forum

@Edward Mitchell please update the post if/when everything comes to fruition. I say this because so many of these posts start out asking questions and getting advice and then the post is ever updated. I think the outcome in situations like these is VERY IMPORTANT as it shows all the new investors that being a wholesaler is not as easy as assign deals, with none of your own money. Sounds like a wholesaler is getting wholesaled... the other guy is no different than you were, he is simply wholesaling a deal to his buyers, as you were doing. Not sure why you would think he is being sleezy??