House under contract

[Gregory Jerome]

My questions is what are your options to make money on a property when you have it under contract but can’t find a buyer ?

Is it all over should you back out and collect your Ernest money or is there something that can be done

Thank you

[Anthony Thompson]

@Gregory Jerome I think your three options are: 1) try harder to find a buyer, 2) buy it yourself, or 3) back out.

If you're having trouble finding a buyer, and you're pretty sure a number of buyers have reviewed it, then it probably means it's not as much of as a deal as you thought it was.

Usually that's because you over-estimated the ARV (after repair value), under-estimated the cost of the repairs, or both.

If you think it's been reviewed by a good number of buyers, and you don't have the ability to close yourself, then you can back out. Though depending on your paperwork and who's holding the deposit, you may have trouble getting your deposit back.

If you think this is the route you're going to have to take, then you owe it to the homeowner to let them know ASAP. And you need to seriously re-evaluate your method of determining ARV or repair estimates - whichever one seemed off. If none of your buyers told you which one was off, then you should assume you need to work on both.

I tell new wholesalers this all the time but I'm afraid most don't listen: You should be putting things under contract for a price you yourself would be willing to close on, and you should actually have the ability to close on the property.

If neither of those things is true, I think you're playing with fire by putting things under contract with homeowners anyway, knowing you have neither the ability nor willingness to actually close. I know this has been an issue in Ohio, and I suspect many other states at this point. Research it yourself and come to your own judgments - I'm not at attorney, though the guy at that Ohio link actually is, if you want to see some of the general issues at play.

But either way, I recommend treating homeowners with respect. If you have to back out, it should be very rare, you should be very apologetic about it, and the reason should be something other than "I couldn't find someone else to buy it, and I never had the ability to buy it in the first place".