What happens when a seller backs out of a signed contract ?

Question

I  had a house under contract as of Feb, 28th.  Mind you this is my first  wholesale deal.  The seller said he had to move to California.  I found a  buyer Last week and we signed assignment contract today.  To good to be  true right?  So, I faxed over the original contract and assignment both  to my attorney to help me through the wholesale process and my  assignee's attorney.  A few minutes later I get a call from the seller  saying something came up and he is no longer moving. Sounds a little  suspect.  I informed my attorney and my assignee right after. Has this  ever happened to anyone?  If so what happened next?  I didn't know you  could just back out of a contract that has not expired and with earnest  money given etc...Another good question is what would happen if I never  found a buyer?  I am awaiting to see what the attorneys decide to do...

Jay Hinrichs · Answer

Account Closed  terrible advice... its one thing to be a bona fide buyer and another being a wholesaler trying to make middle man fee's with no real ability to close.

clouding title is a bush league move.. unless you are buying it put up a ton of EM and seller is backing out then you can sue for performance... however probably not many have ever done this.. I myself have.

you then need to put 100% of the purchase price in cash into escrow while you litigate.. Most wholesalers I suspect simply can't do that plus come up with the 10 to 20k in legal fees to prosecute the litigation.

sometimes sellers change their minds its the risk real estate agents and ( wholesalers which are really real estate agents with no license) run.. it happens move on

Michaela G. · Answer

I've had it happen twice. Both times I had filed a memorandum/affidavit, stating that I have a valid contract to purchase this property. That clouded the title.

I sued for performance and got both of those properties.

Jeff B. · Answer

Your problem is backing out of your buyers contract - - you are now in a position of RE Fraud, attempting to sell what you do not own.  Good luck.

Account Closed · Answer

Provided your contract is in order and legal - you have a right to force the sale or record your contract in order to put yourself in the chain of title.

He will have to pay you to go away -

Yes we have had that happen to us - my son recently got a seller to pay him a large amount to walk away from his contract.

This is serious - you don't need to be abused by the seller - he have a profit that was made - he - the seller needs to pay you!

Jay Hinrichs · Answer

@Jared K.  although correct etc... most wholesalers who find them selves in this situation the last thing they have is funds for litigation.

I just did my first specific performance suit as a buyer this last year it took about 2 years and a little over 10k.. I won though

and the only reason I did it was that I paid the ladys back tax's she was going to lose it.. and that was 42k... then she went 1000% dark and holed up in her extreme hoarder house. I even sent the cops over on a wellness check I thought maybe she expired.

but no just was not going to sell.. so she lived in a home that was uninhabitable to most humans for 2 years for free.. once the judge signed my order the title company transferred title based on that order but waited another 60 days incase she appealed.

and in Oregon at least I had to have the full cash money to buy the property sit in escrow for those two years and this was 6 figures.. so while granted some wholesaler may be able to pull this off economically .. the reality is they won't..

wholesaler are just real estate agents selling real estate illegally by and large.. so its nothing different than us brokers having a sale fail.. it happens get over it move on.

we are now just tearing this house down.. I am going to post pictures of what a house looks like with 6 feet of garbage through out it.. we had to knock the side walls out to get the garbage out...

Benjamin M. Winans · Answer

@Anita Gee thanks so much for sharing your experience. Keep your head up; you're a better investor after going through this. ☺

Damarius Gilbert · Answer

Being the middle man/woman, you get in where you fit in. If it doesn't fit just move on, whatever you get in wholesaling is just a bonus. Because we have no intentions of buying in the first place. I had wholesaler/scavenger swoop in and take one of my deals before, I know it sucks. That was the first lesson I learned, never tell another wholesaler about a potential deal you don't have under contract yet.Maybe a Non disclosure before you tell another wholesaler ab a deal.

Anita Gee · Answer

thanks @Damarius Gilbert..

Anita Gee · Answer

Hello everyone,

Here's an update about that wholesale deal! Well mind you the seller supposedly claimed that he wasn't moving any longer.  He then had his attorney send my attorney a letter stating the deal would not take place.  This morning I happened to get an email from another wholesaler I informed about the deal when it was under contract. To my surprise the house was on his list of homes.  Which means my intuition of the seller going with someone else was correct.  Not only that I told the wholesaler about the deal thinking he'd be interested and next thing you know it's a cancelled contract and he now has it under contract.  I am learning fast that this game can be cut throat.  I informed my attorney because she works with the other  wholesaler sometimes for deals.  He referred the attorney to me actually.  She said he didn't send that deal to her; as he works with a few other attorneys sometimes.        My question is how do I prevent this from happening again in the future?

What happens when a seller backs out of a signed contract ?

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