Seller went behind my back and sold the property.

Wholesaling
10yFollow

Seller went behind my back and sold the property.

Account Closed
La Place, LA · Member since 2016 · 18 posts · 12 votes

Hello everyone. 

Let me start by excusing myself if I make and grammatical errors, but I am typing fast because I am a little POA.

Okay, so today I was supposed to close on my first wholesale deal. Got the property under contract with my seller and got my buyer to sign his assignable contract. Title company called me a hour before closing to schedule a time for me to pick up my check, everything good (or so I thought). An 1 hour later, I get a call again from the Title company pretty much warning me of what was taking place in the closing room. The seller and end buyer went behind my back and closed on the deal with paying me. I get an email from the buyer and a text from the seller telling me what they did. The sellers reasoning was because "she thought I was purchasing the property myself " and I "misrepresented " her. I told her, she signed a contract that states, I can assign it to another buyer and that she was still getting the price she agreed upon when she signed the contract. I think her real reason is she saw how much I was making off the deal (which was just $4000) and wanted more. My question to you guys is should I pursue legal matters or just move on to the next deal?

0Reply
395 views

Most Popular Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y

@Dan H.  title company has zero to do with this.. they are neutral escrow agents and take directions from the principals... the seller can cancel that escrow if they wish and open a new one and close.. I have only had this happen to me once in all my 42 years of selling RE.. but my seller came to closing and told title to remove my commission ( I was and am a RE broker)... they took direction from seller and I did not get paid.. :(  but no matter I moved on.

I think the real issue here is were most wholesalers are DEAD wrong and its in the subtrifuge and fraud in the inducement into the contract in the first place when they give sellers the impression they are going to buy the property.. I highly doubt this young lady told the seller she does not have the ability to buy it and will not buy it if she cannot assign the contract  ( assignee clause is fine but its intent). 

so look at it from sellers point of view they have no clue that someone else is going to buy it show up and  see this wholesaler making 4k off of her.. get pissed and do this.. it probably would not have mattered if the OP was present at the closing the seller could still have just said no.. walked out got with the buyer opened escrow and closed.. @Alexander Felice  I understand the concept of recording your purchase contract to tie up the property.. but I would caution folks on that one.. In my state I would have your butt for that if you could not prove you had the funds to close in cash as you represented on your mailer or whatever direct marketing type of piece you did.

I could be wrong but I Highly doubt the OP told the seller straight up in essence i am acting as a broker.. I am not going to close on this personally I am going to try to make 2 to 5k assigning this deal.

now if she disclosed that to the seller.. maybe the seller does not go into contract in the first place. Sellers are getting smarter unless your dealing with totally uneducated sellers. 

What wholesalers need to come to grips with is they should set up money to actually close on the deals  

and factor that into their costs then resell.. this assures you success.. other wise you get this situation and all this bad juju going around.. you have the seller pissed because you lied to them ( or they think you did) and the buyer he is happy he got it for 4k cheaper and could care less about the wholesaler and the wholesaler is out time and what ever money they spent on marketing.. when this wholesaler could have set up transactional funding for a modest fee.. done it the right way and off you go.

Allthough I understand many wholesalers cannot come into title because of excess baggage in their names.. but they could set up an LLC to do this.

Podcast Guest on Show #222
JLH Capital Partners51 Review
WebsiteView Page
21Reply
See this reply in the discussion

102 Replies

Jump to latestLatest
  • Matt Vogt
    Investor · LaGrange GA · Member since 2014 · 121 posts · 55 votes
    10y

    Yes I would bring a small claims suit if you have a few hours and want to gamble the $100 or so to do it. I would start by suing the seller, and then would follow-up with a suit on the buyer. I would double check your contracts to ensure that you have a case, but it sure sounds like it. 

    Additionally, I would try to figure out a way to prevent this going forward. Maybe you should be in the close meetings with seller/buyer. 

    1Reply
  • Account Closed
    OP
    La Place, LA · Member since 2016 · 18 posts · 12 votes
    10y

    Thank you. Yes, I am beating myself up about not being there. It was my first deal, and I've learned my lesson for sure!

    0Reply
  • Anastasia Jordan
    Investor · Birmingham, AL · Member since 2016 · 446 posts · 305 votes
    10y

    If you don't have a real estate license the judge is going to eat you up.

    7Reply
  • Account Closed
    OP
    La Place, LA · Member since 2016 · 18 posts · 12 votes
    10y

    Really?? Even though there is a legally signed contract?

    1Reply
  • Anastasia Jordan
    Investor · Birmingham, AL · Member since 2016 · 446 posts · 305 votes
    10y

    The buyer & seller are going to say you were brokering real estate without a license, then snitch to the Louisiana Real Estate Commission, and that's a $5,000 fine if found guilty.   

    You still gonna roll the dice in small claims court?

    2Reply
  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    10y
    Originally posted by @Account Closed:

    Really?? Even though there is a legally signed contract?

     Talk to a lawyer, don't let someone on the internet convince you to give up money. If you're legal, they will help you, if you're not they will tell you. 

    [email protected]Podcast Guest on Show #301
    15Reply
  • Account Closed
    OP
    La Place, LA · Member since 2016 · 18 posts · 12 votes
    10y

    Thank you very much !! Wholesaling is very much legal in Louisiana and does not require you to have a real estate license. She signed a contract and breached the terms within it

    4Reply
  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    10y
    Originally posted by @Account Closed:

    Thank you very much !! Wholesaling is very much legal in Louisiana and does not require you to have a real estate license. She signed a contract and breached the terms within it

     I don't know state law but it varies.

    In NC if you recorded the transaction at the courthouse you would be 100% covered. Check with lawyer, if you did it wrong, they will tell you how to never do it wrong again ;) 

    quick meeting with a lawyer won't cost you much! Get it done! 

    [email protected]Podcast Guest on Show #301
    0Reply
  • Account Closed
    OP
    La Place, LA · Member since 2016 · 18 posts · 12 votes
    10y

    I most definitely will. Thank you!!

    0Reply
  • Stephen Leonard
    Flipper/Investor/Realtor · Gretna, LA · Member since 2014 · 85 posts · 40 votes
    10y

    there is nothing  wrong with wholesaling in Louisiana and you  are not required tonhabe a license.  Ashia King is the principal in the purchase and sale. She didn't  broker a deal she purchased  and sold a property.   

    The title company working  with you  should have helped  you  protect  yourself.   You  may have to file suit but find a good attorney that does real estate  law 

    Good luck 

    Stephen

    2Reply
  • Account Closed
    OP
    La Place, LA · Member since 2016 · 18 posts · 12 votes
    10y

    Thank you so much!! I too was thinking, why would the Title company continue with the transaction. The title company did not honor the contract as well is what I'm being told

    1Reply
  • Anastasia Jordan
    Investor · Birmingham, AL · Member since 2016 · 446 posts · 305 votes
    10y

    I'm curious to know how does the seller, buyer, and title company simultaneously stab a wholesaler in the back. Somebody had to have initiated the passing of knives, lol. 

    Are title companies responsible for stopping underhanded deals? 

    2Reply
  • Anastasia Jordan
    Investor · Birmingham, AL · Member since 2016 · 446 posts · 305 votes
    10y

    Is it common for the buyer to discuss their contract with you to the seller?

    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    10y
    Originally posted by @Matt Vogt:

    Yes I would bring a small claims suit if you have a few hours and want to gamble the $100 or so to do it. I would start by suing the seller, and then would follow-up with a suit on the buyer. I would double check your contracts to ensure that you have a case, but it sure sounds like it. 

    Additionally, I would try to figure out a way to prevent this going forward. Maybe you should be in the close meetings with seller/buyer. 

     I would consult with a attorney familiar with the RE laws in Louisianna but in my opinion the title company is also culpable and unlike the buyer or seller should be professionals and know their responsibility.  In addition, they are the only party that having a suit against is probable to reduce probability of this occurring again as the seller and buyer are both unlikely to use a wholesaler again especially if they are of the belief they were deceived. 

    Good luck.  

    0Reply
  • Joshua Meyers
    Somerset, PA · Member since 2015 · 103 posts · 24 votes
    10y
    Ashia King your buyer screwed you over. They were dirty enough to undercut all the work you put into the property for $4000. How did the buyer and seller link up without you knowing anyway?
    0Reply
  • Account Closed
    OP
    La Place, LA · Member since 2016 · 18 posts · 12 votes
    10y
    Originally posted by @Joshua Meyers:

    Ashia King your buyer screwed you over. They were dirty enough to undercut all the work you put into the property for $4000. How did the buyer and seller link up without you knowing anyway?

     They met at the closing table, for which I was not there (MY BIG MISTAKE) . I was called 1 hour prior to closing by the title company telling me when to come pick up my check. 1 hour later title company calls back waring me of what was taking place in the closing room and that I would not be getting a check

    0Reply
  • Joshua Meyers
    Somerset, PA · Member since 2015 · 103 posts · 24 votes
    10y
    Ashia King It's partially your fault but partially the buyer's fault as well. I'm going to assume that you don't know your buyer that well, or I can't imagine they would've stolen the property out from under you. I'm sorry this happened but for $4000 it's probably best to just let it go and learn from the mistake. The cost and time to pursue legal action might be of better use finding another deal. I recommend investing in finding better buyers and developing a system/rapport with them. Our buyers know that if they steal one we'll never do business with them again. They have no reason to try and go behind our back because it will cost them much more than the assignment fee
    2Reply
  • Account Closed
    OP
    La Place, LA · Member since 2016 · 18 posts · 12 votes
    10y
    Originally posted by @Joshua Meyers:

    Ashia King It's partially your fault but partially the buyer's fault as well. I'm going to assume that you don't know your buyer that well, or I can't imagine they would've stolen the property out from under you. I'm sorry this happened but for $4000 it's probably best to just let it go and learn from the mistake. The cost and time to pursue legal action might be of better use finding another deal. I recommend investing in finding better buyers and developing a system/rapport with them. Our buyers know that if they steal one we'll never do business with them again. They have no reason to try and go behind our back because it will cost them much more than the assignment fee

     You are so right, I am constantly beating myself up for being so gullible/"nice" and not being there. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Dan H.  title company has zero to do with this.. they are neutral escrow agents and take directions from the principals... the seller can cancel that escrow if they wish and open a new one and close.. I have only had this happen to me once in all my 42 years of selling RE.. but my seller came to closing and told title to remove my commission ( I was and am a RE broker)... they took direction from seller and I did not get paid.. :(  but no matter I moved on.

    I think the real issue here is were most wholesalers are DEAD wrong and its in the subtrifuge and fraud in the inducement into the contract in the first place when they give sellers the impression they are going to buy the property.. I highly doubt this young lady told the seller she does not have the ability to buy it and will not buy it if she cannot assign the contract  ( assignee clause is fine but its intent). 

    so look at it from sellers point of view they have no clue that someone else is going to buy it show up and  see this wholesaler making 4k off of her.. get pissed and do this.. it probably would not have mattered if the OP was present at the closing the seller could still have just said no.. walked out got with the buyer opened escrow and closed.. @Alexander Felice  I understand the concept of recording your purchase contract to tie up the property.. but I would caution folks on that one.. In my state I would have your butt for that if you could not prove you had the funds to close in cash as you represented on your mailer or whatever direct marketing type of piece you did.

    I could be wrong but I Highly doubt the OP told the seller straight up in essence i am acting as a broker.. I am not going to close on this personally I am going to try to make 2 to 5k assigning this deal.

    now if she disclosed that to the seller.. maybe the seller does not go into contract in the first place. Sellers are getting smarter unless your dealing with totally uneducated sellers. 

    What wholesalers need to come to grips with is they should set up money to actually close on the deals  

    and factor that into their costs then resell.. this assures you success.. other wise you get this situation and all this bad juju going around.. you have the seller pissed because you lied to them ( or they think you did) and the buyer he is happy he got it for 4k cheaper and could care less about the wholesaler and the wholesaler is out time and what ever money they spent on marketing.. when this wholesaler could have set up transactional funding for a modest fee.. done it the right way and off you go.

    Allthough I understand many wholesalers cannot come into title because of excess baggage in their names.. but they could set up an LLC to do this.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    21Reply
  • Dylan TanakaPro Member
    Real Estate Agent · Detroit, MI · Member since 2008 · 455 posts · 178 votes
    10y
    Ashia King I agree with Dan Heuschele & Stephen Leonard. Talk to a licensed real estate attorney. Simultaneously look for new deals and if fighting for what you are rightfully owed becomes too cumbersome put it in the rear view.
    0Reply
  • Todd Plambeck
    Agent/Investor · Murphy, TX · Member since 2013 · 542 posts · 304 votes
    10y

    At the very least, you should tell everyone you know involved in real estate investing that the buyer did this to you.  The buyer may find it difficult to find more wholesale deals if others find out what they did in your case.

    4Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    10y

    Everyone has to realize these two basic premises.

    • When you assign a contract, you are giving ALL your rights to the contract to the buyer. You are removing your name on the purchase agreement replacing it with your buyers. You're out of the picture on the purchase agreement.
    • Your assignment agreement is ONLY with the buyer. In exchange for replacing your name on the contract, you agreed to receive a fee.

    That said, you didn't collect your assignment fee when you assigned it, or have the assignment fee escrowed at the title co. (oops) The buyer agreed to pay it, likely at closing, assuming your assignment was specific.

    The buyer and seller both have the right to change the purchase agreement. So, the buyer and seller could legally cancel the existing contract and create a new one. (Remember, you're no longer the buyer) If you were at the closing table, you may have been able to prevent it, but you would not be able to legally stop it.

    The title co also would not be able to stop those changes, as the buyer and the seller have the right to change their agreement. A newly written agreement would take the assignment out of play from the title co perspective. The title co is a facilitator for the written agreement in the transaction, even when the buyer and seller make a last minute change. At most, they could decline to perform the closing.

    Your buyer is the only one in the transaction that owes you the assignment fee. Changing or even cancelling the original purchase agreement does not remove the buyer's obligation to pay the assignment fee they agreed to.

    It's up to you if you want to pursue the buyer under the terms of your assignment agreement, or take it as a painful lesson learned.

    9Reply
  • Luke G.
    Investor · Asheville, NC · Member since 2015 · 69 posts · 23 votes
    10y
    That is terrible, and during your first one at that :( I wish you better luck next time! What a sleazeball buyer!
    1Reply
  • Luke G.
    Investor · Asheville, NC · Member since 2015 · 69 posts · 23 votes
    10y
    Perhaps approach the buyer and ask for $2,000 or tell him that you will go to far lengths with legal action to make sure he/she learns their lesson?
    1Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y
    Darrin got it before I could......the seller honored their contract, which you assigned to your buyer. You are no longer part of that contract so the title co. can't listen to you, and they are not at fault.
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free