For Sale by Owner Frustration

[Jon Graves]

Hi All, 

Came to vent a bit but also to get your opinions. 

I came across a good flip opportunity in Ferndale (close to work so I can keep an eye on it). 

Quick Math:

109k Purchase price, 40k rehab, ~20k holding costs (6month worst case hold) and an APR of 210k. Looking at a profit of close to 40k if I take my time over 6 months, though any good contractor should be able to get it done in 2.

I had a contractor come in and give me the rough rehab estimate, and had a real estate buddy pull comps in the area so I know my numbers are in the ballpark.  I get through my first face to face negotiation with the owner and felt like we both came away happy so I drafted a purchase agreement and gave it to the seller last Friday who said he would look it over. He called last Sunday and tells me he is in the hospital with the flu; I happily give him a week (health comes first). Finally, I get back in touch after about a week (today) and he tells me that he's going to sell to a real estate company for 7k more. 

What did I do wrong here? Should I always come away from a negotiation with a signed purchase agreement or is this guy just slimy? I do plan to get back in touch tomorrow morning, I can still make the profit I want and would consider matching the offer from the real estate company, though I want to avoid bidding on emotions. 
 

Feeling a bit discouraged as I've been looking for opportunities to get into a flip for the past few months, I plan to keep grinding. 

Any advice is welcome.