All Forum Posts by: Liam D.
Liam D. has started 1 posts and replied 5 times.
Originally posted by @Will Barnard:
Originally posted by @Liam D.:
Originally posted by @Will Barnard:
No offense but I feel bad for the original seller more than you. You contracted there home to purchase it without the willingness or ability to close on it and then you tried selling your contract to a party who also did not have the ways or means to fund it (or is very savvy, saw you are not and delayed on purpose to cut you out of your wholesale commission). If the later is the case, unless your contract with that buyer had specific performance language in it, there is nothing you can do.
As to the advice above about potentially clouding title, you are now entering the legal realm and you should NOT be taking legal advice from anyone other than your attorney as clouding title in THIS case can swing back at you from the original sellers for not performing and claiming damages against you.
If you intend to wholesale, you need to do it legally and ethically and in many states, that requires either a license, closing on it with your funds or borrowed funds, then marketing for resale once you have title, or having your buyer upfront, forming a legal entity with both you and buyer as owners. On top of that, full disclosure to the seller is likely required and anything short of that can land you in a pile of trouble.
Will,
Not sure where your getting the idea that I do not have the funds to close? I was ready to take the deal myself but had an irresistible offer and chose to wholesale as my exit strategy. Im not sure why you feel bad for the sellers as we paid for them to get out of foreclosure as they had no idea what to do and were going to let the bank take over the property. In North Carolina, you can assign a contract to another buyer without needing to double close...
Liam, I inferred that because you stated in your post you were afraid this buyer of yours was going around you. If you had the money to close, there would be no worry of that, you would simply close on it yourself then. If you have the money, great, then close and you have no problems. Your irresistible offer appears to not have turned out so well either by your own add is dion and my advice is to help you and others reading this about the importance of knowing how and what to have in your contracts, how to properly vet buyers BEFORE you bring them a deal, etc. your situation is a great learning lesson for others and for yourself if you are willing to learn from your own mistakes.
As to the assignment being legal or not, I am not 100% knowledgable on NC laws, however, I have had several experienced investors tell me North C has similar laws regarding this process as does CA, FL, etc. If you negotiate price on a home, market that home or contract publicly, locate a buyer, sell to that new buyer and make a fee for it, that constitutes brokering without a license. I recommend you check with an authoritative party to verify if you can or can not execute your wholesale deal in the manner you described legally. Your real estate attorney or the department of real estate is a good place to start.
Yes, I agree and am willing to learn from my mistakes. I will be meeting with my attorney to draft up a drop dead / non performance clause to include in my contract. In the future, I will also be scanning my buyers much more in depth to make sure this does not happen again and that they are legitimate cash buyers, not just someone jumping on a good deal. I had not closed after my buyer had failed to close because he had put down a significant amount to get the property out of foreclosure and had told me he planned to close with his initial lender. This is a great learning lesson and I will be much more prepared/ educated to ensure this does not happen again.
Originally posted by @Will Barnard:
No offense but I feel bad for the original seller more than you. You contracted there home to purchase it without the willingness or ability to close on it and then you tried selling your contract to a party who also did not have the ways or means to fund it (or is very savvy, saw you are not and delayed on purpose to cut you out of your wholesale commission). If the later is the case, unless your contract with that buyer had specific performance language in it, there is nothing you can do.
As to the advice above about potentially clouding title, you are now entering the legal realm and you should NOT be taking legal advice from anyone other than your attorney as clouding title in THIS case can swing back at you from the original sellers for not performing and claiming damages against you.
If you intend to wholesale, you need to do it legally and ethically and in many states, that requires either a license, closing on it with your funds or borrowed funds, then marketing for resale once you have title, or having your buyer upfront, forming a legal entity with both you and buyer as owners. On top of that, full disclosure to the seller is likely required and anything short of that can land you in a pile of trouble.
Will,
Not sure where your getting the idea that I do not have the funds to close? I was ready to take the deal myself but had an irresistible offer and chose to wholesale as my exit strategy. Im not sure why you feel bad for the sellers as we paid for them to get out of foreclosure as they had no idea what to do and were going to let the bank take over the property. In North Carolina, you can assign a contract to another buyer without needing to double close...
@Joel Owens Great insight, I appreciate it. I will definitely screen my buyers more in depth in the future to prevent this from reoccuring. regarding the continued marketing clause, I came up with this to include in my contract.
"If buyer fails to perform on or before the given date, the agreement will be terminated and Assignor may continue to market the contract."
Let me know what you think and thank you again!
@Greg Dickerson I had collected $1000 non-refundable EMD. I will be sure to include a drop dead date in my contract from here on! Thanks for the response
Had a pre foreclosure property under contract and had assigned rights to buyer for an assignment fee. The buyer originally intended to use a hard money lender that could not get their third party appraisal done in time to close.
Time was a factor as the bank was set to take the property back and we had pushed the closing back one day before it became REO. The buyer then decided to use a private lender that had also failed to get him the funds to close on time. One day before foreclosure with angry sellers and a buyer without funds...
The buyer then decided to make the payment on the property out of his own pockets to get it out from foreclosure and ensure more time. At this point, our first closing agreed upon in the purchase and sale had came and past.
After he had made the payment to get the property out of foreclosure I had thought he was going to use his original preferred lender to close although took his time and waited. He is now in a lease option agreement with the original sellers and is stating I will get my assignment fee when the property is finished rehabbed and sold (likely months away).
I had several other investors lined up interested in this deal... Could I have assigned it to a different buyer once the original buyer had broke the terms of our agreement? Contract does not mention requirement for mutual release.
All responses are greatly appreciated!