Posted 15 days ago Should You Panic If You Lose a Buyer? If you lose a buyer, there are multiple ways to pivot and keep the deal going. Don’t sweat it! We get this question all the time: “What happens if I lose my buyer?!” Well, first of all—don’t panic! Sometimes you will lose a buyer due to unforeseen circumstances, and that’s okay. We build safeguards into our process to mitigate the damage that happens to you and your seller if a buyer leaves for whatever reason. In some cases, a buyer leaving could actually net you more profit than if they were to stay! Remember, Payday #1 is a non-refundable deposit. If your buyer leaves in the middle of the term, you keep that deposit—and then you’ll get another one from your next buyer. In this post, we’re going to look at a deal that had a number of hiccups and nuances—including a buyer leaving—which were expertly navigated by our Associate. Oh, and did we mention that this was his first real estate deal ever? Deciding on an A/O for the seller The source of this property was an expired listing that our Associate originally contacted via a Sly Broadcast over a year prior to this deal. It just goes to show that patience is key! The seller had listed his house with a realtor and they weren’t able to sell it for over a year. He called our Associate back and was interested in whatever options he had to get rid of the house. This seller was a banker and he was, as you could imagine, very financially savvy. He wanted to net the most possible on his property, so we presented some options to him. He was most interested in an A/O (Assign Out) deal as that would net him the most profit in the end. An A/O is basically a rent to own deal where we find the tenant buyer and then sign everything over to the seller once the buyer moves in. Normally, we would manage the deal (and the tenant buyer) until the end of the term—in this case, the seller manages all of that. Our job is to simply help find a qualified tenant buyer. This is a great option for sellers who want to get the most money possible out of their home. They’re able to capture all the money that we would normally get for Paydays #2 and #3. But the caveat is they also have to put in much more effort and take on more risk (which is what we normally handle, and why we get paid what we do). On an A/O deal, we get paid by taking a portion of the down payment (Payday #1). It’s a quick and easy deal that can be profitable without all the work involved on a longer deal, like a sandwich lease. In the end, we were happy to go with an A/O deal to help the seller out. Our job is to solve the seller’s problem, and that was clearly the best way to solve it. Communication is key! The first pivot on this deal occurred when our Associate was unable to find a buyer during the 90-day contingency period. When we start an agreement with a seller we basically say, “If we don’t procure a tenant buyer in the house within 90 days, you can choose to continue with us or not.” Normally, we have no problems finding a tenant buyer within those 90 days. This time, it didn’t happen. But there was one key thing our Associate did here. He had established very good rapport with the seller from the beginning and communicated everything to him as it happened. He was checking in with the seller every week and showing him what he was doing to market the property. When 90 days came around, he asked the seller if he wanted to continue listing the house or go in another direction. The seller said he was happy to continue listing the house since he had seen the effort our Associate had put in. That never would’ve happened without the communication and rapport our Associate had built up. The first buyer, the second buyer, and renegotiations Our Associate and the seller had previously agreed to a purchase price of $720,000 and a sale price of $765,000. About a month after the 90 days were up, they found a buyer. To make a long story short, the buyer was looking to cut costs wherever he could. He wanted to negotiate the price down and he ended up dragging out the deal for far too long. They did have a buyer’s meeting and they were almost ready to wrap up the deal, but it became extremely difficult to work with him. At a certain point, it was evident that he would not be a great buyer to deal with. So our Associate—in conjunction with the seller—made the difficult decision to ditch this initial buyer and look for someone better. They also realized they would need to bring down the price to find the right buyer. After some negotiating, they settled on a purchase price of $640,000 and a sale price of $740,000. With the new pricing settled, our Associate was able to quickly find a new buyer that was a much better fit. This new buyer was self-employed (meaning it was difficult for them to get a traditional mortgage) and owned a family construction business. They liked the home and the area, plus they were already thinking about how they would upgrade it. It was the perfect buyer! Payday #1™ Once the buyer agreed to the terms with the seller and signed the agreement, our Associate’s job was done. As mentioned previously, we only get one Payday with an A/O deal. In this case, the down payment for the deal was $100,000. Our Associate got $45,000 out of that and the seller got the remaining $55,000. (These ratios can be different depending on the deal and how you negotiate with the seller.) Our Associate also secured the first month’s rent, which is something we put into virtually all of our agreements. That’s an extra $2,950 in his pocket, making the total come out to $47,950. All that just for finding a tenant buyer! Even when you take into account all the renegotiating and how long it took to find two buyers, this deal was still well worth our Associate’s time. That’s a year’s salary for some people—acquired in just a few months! Have you ever lost a buyer? How’d you handle it? And did the deal go through in the end?