In contract on duplex but just separated w partner - Need Advice

[Benjamin Sherwyn]

Hi All,

This is a strange one that I could use some advice on. My ex girlfriend and I worked very hard to make a deal on a FSBO duplex in Michigan's Upper Penninsula that had great zoning for STR and income potential. We are still very close friends, but I think the pressure of buying a house together (and the path towards marriage after, etc) made us question our relationship and we decided to separate.

She has the purchase contract and financing completely in her name.  The owners weren't willing to work a deal to end the lease early on the existing student tenants who had rented from them until the end of the school year, so we negotiated a 6-month purchase contract which would be finalized after the tenant lease was up (since she had a 30-day move in requirement connected to the financing).  In order to hold it for 6 mos in a competitive market, the current owners required a large ($8000) earnest money deposit.  

It was me who did most of the footwork on learning about real estate (largely thanks to Bigger Pockets and recommended books from BP). We analyzed hundreds of properties, made offers on a few and got completely knocked around by cash offers for two years before finally getting this FSBO, partially because of some family connections to the current owners. I've worked as a finish carpenter and woodshop teacher so was planning to lead many of the rennovations to convert it into short term rentals which all changed after we separated.

We paid an agent a cash rate to help us navigate some of the technicalities of the purchase.  It's funny because originally the agent thought it wasn't a good purchase, but even our most conservative numbers were very clear to us that it was, so we nudged her to proceed for us anyway.  

My ex called the realtor to say that she wants to find a way to back out of the deal now and the realtor told her that the market has increased and she could probably make good money on a quick flip or transfer, and that she even knows some investors that might be interested in working with her on it.  It seems like everyone who hears about it is interested in it.  The trouble is, she doesn't want to move there anymore by herself and would like to maybe buy a single family in Milwaukee instead and wants to free up her financing to make a move on something locally this year.

I don't have any skin in the game on this anymore, except knowing that we put so much effort and time and creativity into finding this deal (and it is by far the best one we'd ever analyzed).  She's ready to just throw up her hands in retreat and back out of it because it just seems too complicated to figure out on her own now.  We're still very good friends and I'd love to see her benefit in some way from her position here.

Does anyone have any recommendations on ways that this could go well for her?  Are there creative ways to "wholesale" to someone else and transfer the contract we'd negotiated to another buyer and make some money?  Any other ideas for this situation that would let her walk away with her earnest money and still get compensated well enough for the effort? 

Thanks for your advice,

Ben S.

[Jonathan Greene]

If there is an assignment clause in your contract then she can just assign the contract to a third party and pocket the difference with the help of the agent who may have buyers. Who wrote the contract? Is it standard or something you cooked up?  If the assignment of the contract is not expressly forbidden via the contract, based on what the agents said, she should be in good shape to move it.