Seller Upset With Me - Am I Doing Business Unethically/Wrong?

[Allan Smith]

I have a BRRR under contract to buy. Somewhat distressed Landlord. Here's the timeline, and I'd love to hear feedback on whether or not I should change some of the things about how I do business. Quick skim will give you the gist.

Seller calls from a town outside of Nashville, TN, I send contract via email (60 day close, 30 days due diligence), and her husband is out of town on business but he signs quickly to keep us on schedule for the appt for me to see the house. I tell Wife that I'm pretty much good to go, I'll buy it. A few days later, she asks who mows the lawn as she's never sold a house, but bought several. I reminder her she still owns the house.

I immediately promote the deal to potential buyers, including posting on Craigslist.

A little later, I take a GC in, she meets us to unlock the house. She refers me to another GC. I make another appointment with that GC and another GC (without realizing it was Good Friday), and ask Wife for access to house for contractors. I didn't tell her a third person would be there as a potential buyer. Everyone leaves, Wife and I chat for a bit. Decent rapport.

Few days later, I ask about getting access for another contractor (i forget who it was), and she calls and proceeds to tell me that my way of buying houses is unusual and they would never do it that way. They look at a house once, estimate repairs, and buy it a month or so later. I explain that I need to hammer out the rehab budget, need competitive bids from GCs to hit the ground running when I buy, blah blah. (My contract even says seller will allow showings for buyer representatives.) She doesn't get it, but I tell her I will do what I can to not need access until closing. I apologize for not communicating better on the front end. I personally think they are crazy for flying blind and buying houses like that, but I certainly don't say that.

A little later, a friend tells her her house is for sale on craigslist. I explain that sometimes I flip houses so I throw that up on CL, but I intend on buying it (truth). Ruffled feathers. I apologize.

Yesterday, about 3 weeks into the deal, I text wife that I'm surprised they don't have electricity or plumbing on. Not good for house if sump pump isn't running with all this rain.  I explain they still own the house up until closing, God forbid I don't buy it. Turns out, she was coming out of the hospital and was upset by my text.

Husband calls today and says he'll still honor the agreement but he didn't read it very thoroughly and thinks 60 days is a long time and that basically my due diligence period is sketchy. I apologize for not communicating better on the front end. Needless to say, my rapport and trust with the seller is on thin ice. 

Did I do something wrong? What could I have done better?

[Eric F.]

You did a lot wrong. 

1) You can't keep going to the house with a bunch of people if it in any way bothers or inconveniences the seller. If it is vacant get a key, or else do it all in one shot. 

2) You have no right to tell them to keep utilities on. If you want them on so you can sneak buyers in disguised as contractors then pay for it yourself.

3) Your trust should be on thin ice. You were dishonest and got caught. You did not tell them you might flip it before the close until you got caught. Your contract can say whatever it wants, but put yourself in the seller's shoes. You have given all indication you are going to fix it up yourself, even making them drive there THREE TIMES to let contractors in, then they see it on craigslist listed as is. You lied and wasted their time.

4) You tell the wife "you're good to go, and ready to buy it" then have multiple contractors come out, sellers come out, and put it on craigslist. You don't sound good to go to me.

It is all small stuff but it adds up. The main problem is inconveniencing the seller so much and telling a bunch of little lies. 

In the future:

If it is vacant see if you can get a key or put a lockbox on it. Note: Until you own it do not give the code out to anyone unless you have done a lot of business with them and would trust them in your own house.

If the seller is involved in any way when you need to get in the house (they have to let you in, they live there, whatever) go there as few times as possible and certainly do not parade people in and out.

Stop wasting GC's time. You have had 3 contractors drive to this house and you do not even intend on buying it yourself. That is disrespectful to them.

Be prepared to pay for utilities before you close. Should you have to? No. Should you? If they are off when you sign the deal, yes.

Be more honest in general. I have a feeling you told a lot of "little lies." There are quit a few in your summary.

You say your contract says "seller can show to buyers" but "she doesn't get it." I will tell you what she gets. She gets that you said you were good to go yet you have had 3 GCs out there (causing her to drive there each time), are posting it on craigslist clearly trying to sell it before buying it, are waiting 60 days to close after you are "good to go." And now you are giving her a hard time because she is not giving you a 2 month freeroll on utilities in a vacant house! What do you expect the seller to think at this point? And on top of all of that, you even say "god forbid I don't buy it!" You said you were good to go! 

Get a few serious buyers and advertise to them directly. Forget craigslist unless you own it.

The bottom line is who cares what your contract says, who still owns the house, etc. When you build trust with the seller, tell them you are going to buy the house, etc. in their minds it is already sold. If that means you pay for the utilities then so be it.