Seller went behind my back and sold the property.

[Account Closed]

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?

[Jay Hinrichs]

@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.