Is this legal?

[Amanda Long]

I’m the property owner and wanting to see if what I’m dealing with is “legal” or illegal (just plain unethical) We called a “we buy houses for cash” company out of Colorado. They gave us an offer we was content with being it was a “quick cash sale”.  They asked why we was looking into this route for selling. I explained we was on a very short timeline to purchase another property. That owner agreed to give us some time to sell. Also said I work remotely and can’t have realtors telling us when we can’t be home cause I work here. Also have 5 dogs, can’t pack them up very easily. Company said title search would take approximately 2 weeks then we pick our closing date. No showings, no cleanings, no fees. I questioned the assignment of contract. Company says oh that’s “only” so we can sell your purchase agreement to an investor in our network, no big deal! You may have an investor swing buy once in a while just to merely see the property is all. You won’t have to do anything, leave the house or none of that stuff. 5 minutes they will be gone. 

We, very stupidly signed contract and nothing is done as they said, and lead us to believe!!! 

Realtor hired, realtor showings, any time of the day can’t refuse or we (sellers) breech contract. If I got to work oh well according to them 🤷‍♀️, 26 days left till the closing date and no buyers. Even if they do get offers loan offers are off the table the closing date is 26 days away. Mortgages don’t finalize that quickly. 

The contract was written with the closing date 90 days later. Which I questioned because it was supposed to be a “quick cash sale” they said that allows time to fix any hiccups in paperwork on either end.

We knew they would make a profit, I said once you own them you can make however much money you can, I don’t care. He said well yeah we can’t sell a property we don’t own. But they knew they could with that assignment clause. 

How can they legally lie up front, during. Explaining those cover there *** clauses to save there scamming hides! 

How should they make a $50,000 profit on a property they don’t own, and mis lead us into signing there contract. 

We are 26 days out from the closing date escrow of course is not opened that’s for end buyer to do. And I have asked multiple times about closing, it’s getting close we should be discussing the final date. They will not respond back an answer at all!!! 

How is this even LEGAL???? 

[Don Konipol]

Quote from @Amanda Long:

I’m going to call another lawyer on Monday and get another opinion. 
I know we signed the said contract but I don’t see how they can just make any and all things legal with lying! 

They were able to obtain a free 90 day option from you at a fast close all cash discounted price by leading  you to believe that they themselves were going to be the buyer in a no hassle close, and the language of the contract was explained away as required for showing to one of their imaginary all cash investor-buyers.  This is very similar to how sales USED to be done in many industries (but ISN’T anymore) like used cars, door to door bible sales, and roofing done by Gypsys in caravans.  Since we are no longer used to and therefore are no longer wary of salespeople outright  lying  and deceiving us, we as a people are easier prey for the unethical and immoral.  

I wouldn’t condemn the whole industry, thou.  I know wholesalers who spend $10,000 monthly on advertising, and ALWAYS deliver what they promise because when spending $120k annually on your reputation, you don’t want to undo all that goodwill.  They’ll follow through with a promised purchase even if it’s at a loss.  A friend of mine has been a full time wholesaler since 1978 - I financed his first 2 deals and he made enough money to be able to operate on a cash basis since then.  If he couldn’t “wholesale” the property (flip the contract) he’d double close; if he couldn’t double close he’d finalize the purchase using his own cash and place it back on the market for fix n flippers, if he couldn’t sell it like that he’d fix it himself and sell to homeowners.  And in 40 plus years he NEVER let a contract expire unfulfilled.  His purchases would have 5-10 day option periods for inspections, where of the property had more “issues” than had been revealed he could exercise his option to terminate. But beyond that he always closed, not contingent on finding a buyer at a higher price.

To me there are but two ways to operate as a wholesaler ethically, honestly and legally (one way may require licensure depending on the state the property is located in).  First, is to tell the seller that you are only going to complete the transaction IF you find someone to pay more for the property than you are paying the seller.  Using a straight short term option purchased for a small fee tends to bring the whole transaction into clarity and everyone understands the parameters.  The second way is to plan on proceeding with the purchase whether or not you are able to “flip” for a profit.

The key point is that many, maybe most wholesalers use various “weasel clauses” to back out of a contract that isn’t immediately profitable for them, leaving the seller who thinks he has a “real” sale holding the bag.  Sorry you got caught in this unethical practice.