Wholesaling Advice Needed: Navigating Buyer Recommendations

[Jevani P. Barron]

Hi BP community,

I’m relatively new to wholesaling and currently have two properties under contract with the owner. Both properties are located on the east side of Houston and present solid investment opportunities. I’ve already found some potential buyers interested in the deals.

However, one buyer has recommended that I terminate my contracts with the owner and instead work directly with them. They’ve offered to pay me a fee if I go this route. While the offer sounds tempting, I want to ensure I capitalize on these contracts fairly and effectively.

Here are my main questions:

Should I entertain the idea of terminating my current contracts, or is it better to stick to my original wholesale plan?

What strategies or precautions can I take to protect myself and ensure I maximize the value of these deals?

Are there any red flags I should watch out for when dealing with buyers who propose alternative arrangements like this?

I want to make the best decision while honoring my agreements and maintaining professional integrity in this deal. Any advice or lessons learned from more experienced wholesalers would be greatly appreciated.

Thanks in advance for your help!

[Amir Khan]

@Jevani P. Barron first if you are within your inspection period, you may be able to terminate the contract without any reason. But if that period has expired, what would be your reason to terminate the contract?  And/or are you willing to take the risk of being sued by the seller for not performing on a legal contract (and losing your earnest money)?

Your potential buyer suggesting you terminate the contract and them paying you a fee does sounds fishy to me. Why are they proposing that if they want the property?

[Jevani P. Barron]

@amirkhan Thank you for your prompt response! Since this is a deal with a family relative, we decided to forgo the inspection period as I’m already familiar with the properties. Similarly, earnest money wasn’t included as part of the contract.

The potential buyer’s suggestion to switch to his contract, which includes a fee to me, seems to be because he plans to sell the property to one of his investors. That’s the impression I got based on our conversation.

[Jerryll Noorden]

Do not terminate the contract.

My first and immediate question to them would be "WHY?!"

"You are asking me to extinguish any leverage I have and left vulnerable for anyone to steal the deal from under me". 

The fact they ask you to do this is not only a red flag for obvious reasons, but also because, they should know better how risky this is for you and if they had true good intentions they would have understood that and not offer you that option.

What you can do is tell them.. "pay me double of my expected assignment fee upfront., or in escrow and I will terminate it. If everything goes smoothly, I will pay you back all the overages of that double the escrow.

I'd be interested what they would say to that!

[David Martoyan]

@Jevani P. Barron 

First off, congrats on locking down two contracts, big step forward! About the buyer’s suggestion, I’d be really cautious. Terminating your contracts could jeopardize your position. You’ve already done the heavy lifting, so giving up control might cost you more than you gain.

Ask the buyer why they want you to terminate the contracts. It’s worth understanding their opinion and sometimes this kind of request means they see more potential in the deals than they’re letting on. If they’re serious, they should still be willing to work through you under your terms. I’ve seen situations like this before, and keeping control of the contracts has always been the better play. You should always protect your position, make sure everything is in writing, and don’t hesitate to explore the full value of your deals by marketing to other buyers. With the right approach, you can turn these opportunities into great wins!

[David Martoyan]

Quote from @Jerryll Noorden:

Do not terminate the contract.

My first and immediate question to them would be "WHY?!"

"You are asking me to extinguish any leverage I have and left vulnerable for anyone to steal the deal from under me". 

The fact they ask you to do this is not only a red flag for obvious reasons, but also because, they should know better how risky this is for you and if they had true good intentions they would have understood that and not offer you that option.

What you can do is tell them.. "pay me double of my expected assignment fee upfront., or in escrow and I will terminate it. If everything goes smoothly, I will pay you back all the overages of that double the escrow.

I'd be interested what they would say to that!

 Exactly, that is a very valid point just ask WHY? and I am over 90% certain they wouldn't be able to provide a valid and a reasonable answer. 

[Jerryll Noorden]

Quote from @David Martoyan:

Quote from @Jerryll Noorden:

Do not terminate the contract.

My first and immediate question to them would be "WHY?!"

"You are asking me to extinguish any leverage I have and left vulnerable for anyone to steal the deal from under me". 

The fact they ask you to do this is not only a red flag for obvious reasons, but also because, they should know better how risky this is for you and if they had true good intentions they would have understood that and not offer you that option.

What you can do is tell them.. "pay me double of my expected assignment fee upfront., or in escrow and I will terminate it. If everything goes smoothly, I will pay you back all the overages of that double the escrow.

I'd be interested what they would say to that!

 Exactly, that is a very valid point just ask WHY? and I am over 90% certain they wouldn't be able to provide a valid and a reasonable answer. 

 My thoughts exactly!