Deal that fell through, then came back around a year later??

Question

Hey BP, I'm trying to figure out what to do.

Over a year ago another rehabber contacted me about a deal that they had under contract and were considering selling, and told me that if I found them a buyer, they would partner and split any assignment fee. I ended up finding a buyer, got contract signed and deposit....and then the transaction fell apart somehow (it may have been a short sale) on the seller's end. I'm not sure what happened because when I followed up with them for the last time before the buyer cancelled their contract the investor who had the contract on it didn't respond.

So a realtor just alerted me about a deal that came on the market, and low and behold it was that same house, and came on as an REO. The agent said there are multiple offers but wanted to let me know since it's one of my areas I focus on, if I wanted to get an offer in ASAP.

I'm wondering how I should handle this with the original investor who had it under contract??

Joel Owens · Answer

Hi Terry,

I am not......... : )

90 plus percent of wholesalers do not have a nickel to their names. There are a few legit ones out there.

I like vanilla buyers with no exotic type transaction structures. I learned long ago the more steps and intricate something is the more of a chance to fall apart and not happen.

Terry Royce · Answer

@Joel Owens - You're alluding to the fact that I implied that I could "assign" the contract. Im well aware you cannot (99% of the time) assign REOS.

My plan is to either A) Sell via LLC membership transfer/ or double close B) rehab and renovate.

The listing agent did ask questions and I provided them with everything needed ....proof of funds ... in my name., $2,000 non refundable EMD, no contingences etc.

I feel like you are hating on wholesaling, what gives ? :)

Joel Owens · Answer

Hi Terry,

"First if it's an REO with multiple offers you can forget the wholesaling stuff."

This is what I said. Never did I say a wholesalers offer will not be accepted in a normal multiple offer situation.

All the bank owned properties I know of do not allow wholesaling and reselling. You actually need to close on the property with your own cash or a loan etc.

Any listing broker/agent worth their salt should ask questions. If the buyer is being defensive then usually they have something to hide or are not presenting the whole picture. REO broker/agent should strive for all cash and quick close with high non-refundable EM.

Wholesalers trying to sell to a unknown end buyer with little EM down is asking for disaster for a seller. The wholesaler doesn't perform after the end buyer falls through and the seller gets nothing ( I know a couple hundred bucks EM from wholesaler for months lost .. whoop -de-doo ). Many of the buyers might have moved on to other properties and the seller is materially damaged.

Brent Coombs · Answer

@Terry Royce "that deals are not wholesaleable/flip able" may not be because there have been multiple offers, but rather, because the Banks specifically forbid it (in their Contract). There are always people around, including certain Licenced Realtors, who because they can sniff a profit, will find loopholes in the Banks intention to find the Buyer who ACTUALLY wants the property, but that sort of double-closing REO activity should not be attempted by the uninitiated, or by those who subscribe to what has been called "Kumbaya ethics" ie. those who want to honour the Banks intention!  Cheers...

Joel Owens · Answer

First if it's an REO with multiple offers you can forget the wholesaling stuff.

If you have cash to buy it and want to buy it either to close and then resell later or hold as a rental after rehab then you can throw your hat in the ring with an offer.

Throw the numbers from a year ago out the window. You need to see what the value is today. The person involved in the short sale before has nothing to do with this REO transaction.