Feedback on E-mail I am considering writing buyer/investor

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Feedback on E-mail I am considering writing buyer/investor

Chris Swindle
Wholesaler · Beaufort, NC · Member since 2016 · 12 posts · 2 votes

Hi all,

I'm brand new to BP but was hoping to get some feedback on an e-mail I am considering writing to an investor/buyer team who I have an agreement with to assign a contract to. 

The facts are pretty much as follows. The property is a lot and I got it under contract way back in September for $50,000. There was a lot of interest on the lot and I accepted an offer from these investors for $62,000 the week I got it under contract. I have a December 15th closing date. The investors were cash buyers and willingly to close immediately on the lot, which, of course,I was pleased with. However, before being able to proceed with the closing, it came to our attention that the seller had some title problems (obviously, 100% not the fault of buyers/investors). 

This obviously slowed things down. There was a lot of back and forth between me and the seller and he was very reluctant to fix these problems at first ($). However, I worked with him and eventually convinced him to do so. I found a lawyer for him and set up all the meetings. All told, it took almost two months to get this done. Finally, at the beginning of last week, the title issues were cleared up and the property was ready to close. I have been using the lawyer that the seller used to get the title fixed. The buyers/investors have their own lawyer. I had let them know we were ready to close by this past Friday. The lawyer I was using had pretty much everything set up to close, just needed the buyers' information. They wanted their lawyer to do an independent title search. I have no problems with that, but they didn't really tell me to last minute, so it delayed closing. They wanted to push it back to yesterday, and again, I was fine with that. 

Turns out, on Friday, their lawyer did the title search of the wrong property. They said they would have to do another one for yesterday. I ask them if we can still close on Monday afternoon (changed from Friday - and we've been ready to close since Tuesday/Wednesday of this week). They don't even respond to my e-mail asking about still closing on Monday, which kind of ticks me off, but I understand that they want their lawyer to do an independent title search. Finally, I get a text from them yesterday saying that the title checked out but now they think they want to close this Friday (a week after we originally agreed on closing). During this time, my seller is calling me every day (basically since Monday of last week) trying to see when we are going to close, I told him last Friday (original date) and now he is starting to get ticked. I finally let him know by end of this week. Anyway, long story short, I am considering writing an e-mail to the buyers/investor and would like some feedback on it. Below is the e-mail. The buyers/investors are Chris and Tom. The attorney (the one who fixed title issues) I have been using is Bill. Mike is their attorney. Also, I forgot to mention, I dropped off a new assignment agreement at their office last Wednesday (Nov. 30) which they were supposed to get back to me ASAP for the Friday Dec. 2 closing. They still haven't gotten it to me. Also, what I say about me closing the lot is true. I am ready, willing, able to do so. Please thoughts on e-mail would be helpful. Thanks!

______________________________________________________________________________________

Chris/Tim

I still haven’t gotten the assignment of contract agreement that I left with you all on Wednesday (November 30th). Our agreement depends on me and Bill getting that document. Since I have not received it yet, I am of the opinion that we do not have an agreement at this moment. I am still willing to assign my rights in the contract over to you guys, but time is of the essence as I have made a commitment to Mr. Sanders to close the deal by the end of this week. In order to close with Mr. Sanders by the end of this week, you guys will need to close by Thursday at the latest, so, if something falls through, I can go ahead and close on Friday.

In order to be able to close on Thursday, here are how things need to play out. Bill will be handling the closing and the HUD statement. Mike is welcome to work with Bob and to review the final HUD document to ensure that the necessary items are included from your end. Please have Mike coordinate with Bill so Bill can have enough time to complete this document. Bill also needs a copy of the assignment agreement between me and you in order to proceed. As our agreement is dependent on Bill getting that document, if he does not, our agreement ceases to exist. It is important that he gets the assignment agreement as soon as possible, but please send it to him by Wednesday morning at the latest. Bill also needs the money for the purchase price + his fee for the closing to hold in escrow by Wednesday afternoon.

Time is of the essence in these matters, as I need to be able to complete the closing in the event that you decide not to continue with this deal. As such, it is very important that each step be completed by its deadline, otherwise our agreement is no longer in effect. Additionally, if you guys would like to proceed subject to the above-mentioned terms, Bill and I need confirmation of this by 9 AM Wednesday morning, otherwise I will go ahead and close Wednesday afternoon. Thank you for your timely attention in this matter.

Chris

_________________________________________________________________________________________

Thoughts?

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    9y

    If this was an income producing property, I'd say to just close on it yourself then tack on any extra transaction costs to your indecisive/incompetent/scammy  buyer if they ever do come through.

    Because it's just a piece of ground, I'd be more hesitant to buy it, but your buyer sounds shady, Chris. Have they given you a deposit or anything in writing yet?

    Buy it or find a new buyer I'd say.  Send the email for a paper trail I guess but don't expect too much. To cma I would better outline  all that's happened like you did in your post. Good luck!

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  • Chris Swindle
    OP
    Wholesaler · Beaufort, NC · Member since 2016 · 12 posts · 2 votes
    9y

    Hey Steve,

    Thanks for the response. Being that the property is a lot and that I don't have any experience dong spec builds complicates things. Nonetheless, I am of the mind to go ahead and buy it, but I wanted to give these investors at least one last chance if they wanted to do buy it (maybe I am being too nice???). 

    The situation stands as follows: although I have no experience doing SPEC builds, I know for a fact that new construction in this area will sell for $275K (basically full rehabs new construction are selling at a minimum $220/ square feet - and I'll use conservative numbers for argument's sake). Homes in this area are between 1100-1400 SQFt. So, I see the situation as follows:

    I have gotten a quote from a reputable builder (award-winning) for $125-$130/ square feet. This is all in costs (permits, everything, he does all the work, etc.). I have seen his work and it is very good quality. I would shoot for a 3 BR/ 2 BA (standard for the area) of roughly 1,300 square feet. At the high end, that is looking at all-in construction costs of $169,000 + the lot of $50,000. Again, without a doubt the house would sell for $275,000 (being conservative). And could probably fetch near $300K. The construction costs are obviously a high estimate and if I shopped harder/negotiated with builder I could probably get cheaper. But, I'll use that for arguments sake.

    Basically, it stands as follows:

    $169,000 all in construction costs 

    $50,000 lot

    I have access to money to buy the lot and attractive interest, I would need money for construction (most likely hard money), with a 6-month holding time (builder can do it in 4 months, but 2 months to sell). Let's say $15,000 for hard money. That brings total all-in cost to $234,000. Say I sell for $280,000 - $8,400 in commission @ 3% (limited service). I would say that worst case scenario I am looking at a $37,600 profit. 

    Again, all numbers I used (except for lot and commission) are real conservative, and I have it on good authority that some investors in this area make $75,000-$80,000 per house. So, again, I am of half a mind to just buy it and either build my self or put it on MLS. I realize I would be burning my bridge with these investors if I did that, but I don't care at this point, because I would not work with them in the future anyway.

    Still, should I give them one more chance to buy or not? Thoughts?

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  • Chris Swindle
    OP
    Wholesaler · Beaufort, NC · Member since 2016 · 12 posts · 2 votes
    9y

    Hey Steve,

    They had given me a due diligence check when we first came into agreement ($500). I decided not to cash it because of the title issues that came up, and since it would have not been their fault if seller couldn't sell because of those. Those have since been fixed but they have never given me anything else. We were supposed to sign a new assignment agreement last week (Wed.). I signed it and dropped it off for them but they have not gotten it back to me. 

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  • Chris Swindle
    OP
    Wholesaler · Beaufort, NC · Member since 2016 · 12 posts · 2 votes
    9y

    Just to give an idea, the last rehabbed new construction properties that sold in the area are as follows

    Nov. 14th, = 1,302 sqft. $300K

    Sept. 16th, = 1,194 sqft. $298K 

    Aug. 31st, = 1,270 sqft. $290K

    Aug. 24th, = 1,136 sqft. $262K

    Aug. 12th = 1,400 sqft. $296K

    All these properties are walkable (5 blocks at most) from where my lot is. That's a $229/sqft. avg. so my price of $220 is quite conservative, especially since only one property sold for less than $220/ sqft. and that sale was the least recent. 

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