Rental Property Investor · Charlotte, NC · Member since 2015 · 134 posts · 78 votes
7y
*Not an attorney here* but depending on the state, you can usually back out of the contact as the buyer (or wholesaler) up until the closing date HOWEVER, this is very highly frowned upon (just put yourself in the seller's shoes and you'll understand why).
If the problem is finding a buyer, you probably do not have a deal, unfortunately!
I would find a buyer or 2 that you trust where you can talk to them about a property that you are interested in and they will usually be able to tell you if it is worth pursuing, so they above situation can be avoided. I did this on a few of my first deals and it worked out great. Just be sure that you trust the buyer and that they don't go behind your back - however, this is quite unlikely if you have met them in person and the seem trustworthy...
Flipper / Buyer · Tacoma, WA · Member since 2013 · 160 posts · 80 votes
7y
You could be sued. You could be fined big money if its a distressed homeowner, IF they prove you never intended to actually buy. This probably wouldn't happen but its possible. IMO Just don't put a property under contract that you wouldn't buy yourself. If you can't find a buyer buy it yourself.
If you put the property under contract for a truly low price it shouldn't really matter as people will buy it if its a deal.
IF you put a property under contract and never actually intended to buy it's illegal in just about every state if not every state. This is considered brokering without a license or at a minimum intentionally skirting the brokering without a license rules and regs. I'm not a lawyer so definitely double check me but this type of stuff is what forces the government to put in new regulations to protect people. I have yet to read any states rules that say its flat out ok to do this. It is a great option to use but it shouldn't be your first exit plan.
I know your just asking a question so my response isn't meant be directed at you. When I say "you" its literally anyone.
The ability to assign a contract is a great tool. But if it's abused (and its getting abused a lot these days) they will crack down.
Here's an example of what I mean. Joe buyer decides to market to a person in preforeclosure. This person agrees to sell to Joe and Joe has no intention of buying. They are literally desperate and counting on Joe to close (a realtor offered to list it but Joe said he was a cash buyer and no fees and fast closing). 30 days later Joe is asking for an extension and a price drop but there isn't room. Seller's house gets foreclosed on.
Someone might say well you can put the necessary distressed seller notifications in the contract. blah blah then also tell the seller upfront what they are doing in an effort to be upfront and honest that I am going to sell my contract. Well at that point you are telling the seller you are brokering without a license.
Not trying to freak anyone out. There are ways to do these deals but in general don't contract a house unless you feel like you can buy it.