I have a situation to see how to handle it:

Buying & Selling Real Estate
9yFollow

I have a situation to see how to handle it:

Mark Mitchell
Investor · Hattiesburg, MS · Member since 2015 · 8 posts · 1 vote

I found a motivated seller who resides in California and owns a property that was deeded to her by her parents in Little Rock, Arkansas. The price started at $24,000 and we negotiated to $14,500. I went to look at the property again to make sure the price was a good deal and noticed a squatter in the house and a little damage. I informed her of that and she wanted me to expedite the contact to her. Oh, I forgot to mention this would of been my first deal. I had a few contracts I got from online, but i wanted to make sure it was legit, so i called a title company and they gratefully sent me one. Before I could finish filling it out, she text me last night and this morning waiting on it to sign.

I sent her the contract today and he is her response, then mine;
Hers:
Hello,
There's a few things that you need to correct before I sign it.
1. it's a cash purchase and there should be bank to bank information in the contract.
2. We don't need to wait until next year to close, unless you don't have the money.
3. Obviously I can't take a $20.00 deposit to hold a house until next year.
(Instead it should read closing will take place immediately, as soon as the contract is signed, and received a bank to bank transfer will take place the same day of received contract or contract is null and void)
Mine:
1. It is a cash purchase, I use first national title and they will call you and get your bank information and transfer you the funds.
2. We will close immediately, but I put that date so I can HAVE an inspection done and no surprises.
3. It's not a deposit to you it's to the title company, I do have the funds it's just to protect you and I, that's why I completed the document in that manner.
Hers:
1. this is a cash purchase, and you will have to put up at least $1,500.00 deposit to protect me and my time and interest in case you or your "partner" change your mind. the deposit should go directly to me, if closing doesn't take place the same day.
2. if closing will take place immediately, then we don't need to wait until next year.(the contract reads one way but what you are telling me is another) in the contract you wrote that yo don't need an inspection. you need to change the closing date to take place no later then Dec 19th, 2016.
any helpful suggestions would be greatly appreciated before i respond back.

0Reply
34 views

Most Popular Reply

Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
9y

While you Could close in one day, you wouldn't have time to get a title search and and title insurance.  She is just clueless, or trying to pull something, insisting on closing the same day as signing the contract.

1Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    9y

    While you Could close in one day, you wouldn't have time to get a title search and and title insurance.  She is just clueless, or trying to pull something, insisting on closing the same day as signing the contract.

    1Reply
  • Eric Metz
    Real Estate Investor · Little Rock, AR · Member since 2013 · 126 posts · 65 votes
    9y

    Don't ever get pushed into a deal. You have to control all elements at all times which admittedly can be difficult at times.

    Nothing I say should be substituted for legal advice from your attorney. 

    One of the hardest things in this game is finding a happy medium of trying to help and make the seller feel comfortable but also sticking to your guns on certain things.

    Absolutely under no circumstance would I write a check to a seller. I am sure that you know this. The hidden motivation here is that this seller most likely is wanting some cash now. "Mrs. Seller I will provide the EM to the title company and they will hold it until closing. I am not going to pay someone cash outside of a closing because a clean title can't be proven and that would be a horrible business practice on my end." Write the check and tell the Title Company to hold the check and do not do anything with it until closing. I have 2 title companies here that are happy to do that for me. If they give you issue regarding it, then I would really just flat out say " Mrs. Seller, that just doesn't make any sense to me nor do i know any other investor that would take such a risk. If we don't get this done and started now, what else are you going to do with the house and the squatter that is now living in the house?"

    In regards to #2 - "Mrs. Seller, you are trying to sell a house at the end of the year and a week away from holidays. The title companies are getting swamped with closings from banks and other institutions for the end of the year. The will need to check on the title for liens, or judgments against the house or you and any back taxes. They will need process all the necessary paperwork, send it all to you and get it signed in front of a notary, and then have it sent back.I am simply at the mercy of the title company and the longer we wait to get it started the longer it will take as the end of the year approaches. If we don't get this started right now and get it done, what else are you going to do?"

    I also would probe a little bit. If they were asking about the Earnest Money because they need the cash now then I would push things a little different. I might say "Mrs Seller... I have never been asked to pay EM directly to a seller... I can't help buy be curious... are you needing the cash or something for Christmas?" If they said yes I would totally restructure the deal. "well let me call my guy down at title and see what he can do. If I can get you the $1,500 as quickly as I can which should be 7-10 days could you give me 4-6 months to pay off the rest?" I have negotiated deals like this successfully and given myself a 0% interest loan on the house to rehab and sell it because the seller needed a little cash now. Obviously use your best judgement as to if that is worth pursuing. 

    We Buy Houses. We don't have them sold to us. Tell her that is how you do business and if it doesn't work then move on... but follow up a week later ;)

    1Reply
  • Josh Eason
    Little Rock, AR · Member since 2016 · 3 posts · 3 votes
    9y

    I agree with @Eric Metz above. This seems like the buyer is either 1) in need of quick cash flow 2) clues about the process or 3) trying to pull something. 

    I would want to see the title work as soon as possible. Something seems a bit fishy to me. As stated above, you can give any earnest money to the title company. I would not want to give any money directly to the seller. I would approach it as stated above. If she isn't understanding of how this works and your concerns, you may just want to move on to the next deal. 

    1Reply
  • Brett Goldsmith
    Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes
    9y

    Sounds very ignorant to the proper closing process of real property. You need to get title insurance to protect yourself. I'm sure she could relate to not having insurance for a car or medical. If she needs money for Christmas, tell her once title gives you the OK that nothing strange is on there that you are open to an early release of EMD.

    1Reply
  • Eric Metz
    Real Estate Investor · Little Rock, AR · Member since 2013 · 126 posts · 65 votes
    9y

    @Brett Goldsmith - I really like that association with medical or car insurance. I will definitely have to incorporate that when I need to educate sellers. Thank you. 

    I'd still be cautious about releasing EM. Only $1500 and if there is a large risk:reward ratio okay. However, I have closed a number of houses where after the initial title check something popped up right at closing from different resources. Make a decision best on what your current risk tolerance is and what you can handle financially. Just my 2 cents.

    1Reply
  • Mark Mitchell
    OP
    Investor · Hattiesburg, MS · Member since 2015 · 8 posts · 1 vote
    9y
    Originally posted by @Wayne Brooks:

    While you Could close in one day, you wouldn't have time to get a title search and and title insurance.  She is just clueless, or trying to pull something, insisting on closing the same day as signing the contract.

    0Reply
  • Mark Mitchell
    OP
    Investor · Hattiesburg, MS · Member since 2015 · 8 posts · 1 vote
    9y

    thanks

    0Reply
  • Mark Mitchell
    OP
    Investor · Hattiesburg, MS · Member since 2015 · 8 posts · 1 vote
    9y

    Thanks all for the advice.

    0Reply
  • Eric Pinter
    Investor, Attorney, Broker · Little Rock, AR · Member since 2016 · 67 posts · 41 votes
    9y

    I have done multiple deals where I gave $ directly to the seller, and I have been on the receiving end of $ paid directly to me as seller.  It's not that uncommon. When you are dealing with an out of state seller who is seeming pushy to get the $, it might raise some red flags.  Depends on your risk tolerance and the potential gain.  In some cases, doing what the seller wants might make the difference between you getting the deal and not getting the deal.  If you don't already know, learn how to do some title checking on your own.  Then again, some people just do not transact in RE often enough to understand that there is a common procedure (close at title co, buyer gives $ to title co, title co sends $ to seller or seller's title co, etc etc).  In that case, educate them if you feel like spending the time.  If your spidey sense are telling you to walk away, then walk away.  Some of my best deals are the ones I walked away from. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free