The Dark Side of dealing with Motivated Sellers - My UNsuccess story

[Steven Stokes]

So, I guess this isn't a success story but hopefully it will give new investors some reality about trying to wholesale properties.

I could call this post - How to NOT make $12,000 on a flip.

So the story begins easy enough. I have a friend who I talk to who said he knew I lady who was in the middle of a divorce and wanted to sell her property fast.

I said I would talk to her and see if I could help.

WEEK ONE

I called her on a Monday morning. I realize that she was most likely at work and I left her a voicemail that my friend mentioned to me that she may be interested in getting from under a property that she has.

No call on Monday.

No call on Tuesday

No call on Wednesday

No call on Thursday

No call on Friday

I call her back Saturday morning because most people are home during this time. I leave a message and she calls me back a few minutes later.

We have a really good conversation and she seems to be motivated to sell. So I tell her that I need to research her property and I'll call her back to see if we can meet at the property sometime soon.

I research the property and call her back later that night.

WEEK TWO

No call on Sunday

No call on Monday

I call her back on Tuesday and leave a message.

No call on Wednesday

No call on Thursday

She calls me back on Friday

We make arrangements to meet at a coffee shop first to talk about her property. I actually prefer this when working with single women who are property owners because it's a safe location and you can meet each other first and gain some rapport. But it's not necessary, just my preference.

Saturday

We go over some numbers and talk about her property and what she NEEDS to have to move on. She's very flexible with down payment but needs some money to move into an apartment and pay off some bills.

This gave me some options if I wanted to Lease Option the property or if I wanted to flip the property.

I needed some options because wholesaling the property may have been a little difficult because her mortgage was a little high to look attractive to a wholesale investor.

We made arrangements for me to see the property the next day.

WEEK THREE

Sunday

She calls 20 minutes before I'm about to head over to her place to cancel and ask if we can reschedule for tomorrow. I say, sure. I doesn't bother me when people reschedule because I understand things happen.

Monday

I call her Monday morning and leave her a message, asking her when would be a good time to come over and look at the property?

No call back on Monday

No call back on Tuesday

She calls me on Wednesday. She apologizes for things being so hectic and asked if we can meet on Saturday. I agree.

Saturday

I go see the property and it needs LOTS of work. But there is still a deal possible.

I go over the numbers again with her and guess-I-mate repairs and tell her this is a ball park offer we're looking at. I explain to her how I came up with the numbers and even tell her how much I'm likely to make and what an investor most likely is going to want out of the deal.

She agrees and we sign a one page letter of intent ( I always do this and I can explain why later) covering the basic items we have agreed on.

WEEK FOUR

Sunday morning I shop the deal around to some investors to see what kind of interest there is in the property and what some people were thinking about doing with the property (i.e. buy and hold, retail as is or flip).

On Monday a friend of mine offered to partner in the deal with me to do a retail flip of the property. This seemed to be the most profitable deal for me, my friend and the homeowner so I went with that one.

I call her on Tuesday to go over the offer.

No call on Wednesday

No call on Thursday

No call on Friday

No call on Saturday

WEEK FIVE

I call her on Sunday and she answers the phone. She says she is OK with the deal and would like to move forward. So I suggest we meet that night to sign contracts.

She said she can't tonight but she will meet me Monday even at her place.

On Monday I arrive at her place with the contracts and she signs and is very happy that I helped her and was honest and open about the deal.

On Tuesday we open escrow.

On Wednesday my friend calls me to make arrangements to have some contractors look at the property.

I call her and leave her a message about when would be the best time to have this done.

I call her back on Thursday. Since we now have a contract time is money so I call her everyday if I have too.

She agrees to be there on Sunday.

WEEK SIX

Sunday she calls to reschedule.

I make arrangements to have it done on Monday.

On Wednesday she calls and says she wants more money for her house. I tell her we already have an agreement and there are a lot of people who have worked that price into their budgets and this is a good deal for her to sell this fast for the amount she's getting.

She calms down and agrees it's still a good deal.

On Saturday, she calls saying she wants out of the deal because her uncle wants to buy the house for more money. Once again I explain why her uncle who has never bought a home before, doesn't have a mortgage lined up and because she didn't know if he could even afford the house wasn't a good reason to scrap the deal she has already made.

I received eight more calls complaining about everything from how long the inspection took to why did she have to taxes on her capital gain?

The deal sank after we found a judgment against the property that we could not find the original judgment holder to negotiate the payment and there were some easement issues that were kind of complicated.

By the time the deal sank I was ready for it to be over but the truth is this IS NOT UNCOMMON. When dealing with homeowners who are a difficult situations they can often be irrational, unpredictable and unresponsive.

That is the dark side of dealing with motivated Sellers. I hope this gives everyone a picture of what could happen and what does happen in the market.

Sorry this was so long but I seemed important to discuss.