Buyer went behind my back

[Joe Gee]

I had a contract with the seller.  Put it out there and found a willing buyer that I've never worked with.  We signed an assignment contract and I gave him a copy of the contract.  I always feel funny about giving a new buyer I don't know the actual contract, but they need it because it is the contract they are taking over so I guess I have no choice (unless someone can give a tip how to handle this for the future.)  

The buyer then told me that he wanted to get a conventional loan for the property.  I told him since im wholesaling it, I only deal in cash.  He tried to see if he could get the money together but was unsuccessful.  So after a couple days, me and the buyer cancelled the contract. 

Couple days later, I get a text from the seller.  He wanted to get out of the contract cause of tax purposes and plus his wife just got a promotion at work so now they are able to afford to keep it.  My inspection was about to run out and I still haven't found a back up buyer, so I thought Ok i'll cancel the contract and move on.  

Well lo and behold, a few months later I check the assessors office and find the buyers name I was dealing with as the new owner's name.   

I technically do not have any legal recourse since I cancelled the contracts, but its a down right shady move.  I've had this happen only one other time in almost 5 years of wholesaling and it was when I first started out.  

Should I start whiting out the seller's information on the contract before I give it to the end buyer?  

I guess this is what I get for being nice...

[James Masotti]

@Joe Gee - A lot of the wholesalers I know require 10% down at the time of executing the contract for this exact reason. You probably have some sort of escrow with the seller and this 10% from the buyer should more than cover that. This way if both contracts cancel you have deposit from your buyer and you pay the ernest money you gave to the seller. Then you still make money and who cares if your deal fell through, you just got paid for doing nothing. 

Sounds to me like you just need to spend a bit of time sharpening your pencil and updating your systems and expectations. 

To address your other point...yes that's shady of the sell. I recently paid a wholesaler and didn't even have a contract. I'd say it was all done on a handshake but we never even met in person. He just fed me the led, I closed it, and then wrote him a check and said thank you, please come again. This benefits both of us, but not everyone will see business relationships that way.