Should I tell seller no?

Question

I had a seller ask me,  "When a home is under contract can the seller still attempt to sell?"  I was going to tell the seller no it's not possible to do if it is under contract. Of course I don't want the seller to sell the property without me. That would take profit away from me. If a seller wants to take matters into their own hands and sell their house while cutting me out of the deal, should I allow this to happen if they find a buyer on their own before I do?

Jimmy C. · Answer

Yeah you could get a non exclusive option contract. It plainly states that the seller can notify you if they take someone elses offer. I have seen this before when other wholesalers want to work together.

But if its a GREAT price that you can negotiate, you should really just have a state approved P&S signed and put up some escrow money. That is, if its a great deal you can definitely sell.

Steve Babiak · Answer

Somebody coined the term "flex option" for use under similar circumstances; here are some links you can peruse:

http://www.biggerpockets.com/forums/67/topics/41369-seller-wont-let-me-put-the-house-under-contract-

http://www.google.com/search?q=site%3Abiggerpockets.com%2Fforums+flex+option&btnG=Search&hl=en&safe=active

Account Closed · Answer

For me, the main goal is to help the seller out of their situation. So yes, I would let the contract go unless you have a buyer lined up for them. There is more to this business than making money. If you make it your number one priority to help the seller out, the money will follow...and it will follow in much greater quantities.

Antonio Bodley · Answer

Bill Gulley Actually the wholesale contract as it called is really a standard purchase and sale contract I got from flipthiswholesaler.net.

Timothy Rogers I would not want to buy from other wholesalers either. I am strictly FSBO. I don't wan't something I can't put under contract for a discount.

Jimmy C. I have a standard purchase and sale contract I was going to use between me and the private seller.

Timothy Rogers · Answer

@Antonio Bodley The seller is seeing you as a realtor almost. Not all potential buyers will come to you. Some buyers don't know nothing about the REI business. It would be up to you to market the property to your buyers and other investors. Some of the buyers coming to your seller could wait until your contract expire. Some buyers and investors will not buy from a wholesaler.

Bill Gulley · Answer

When I said EM was irrelevant, I meant with that example, as it is relevant.

Earnest money,option price paid, rent deposits all have something in common, it's money with a contract.

If you consider basic contract law and the elements necessary for a valid contract you'll find that consideration must be given, the type and by whom depends on the type of contract and performance required.

Also mentioned was a "wholesale sale contract" so I guess this is some guruized contract that may not be widely used in your area. There is no reason what so ever that a standard real estate contract with addendums that are normally used in the state could not be used.

A seller who may receive back up contracts, say through a brokerage and MLS may be set by local custom, that a seller can, and with such contracts money is given and held in escow with the broker initially or sent to the closing escrow, but money has been deposited for the contract.

I have given earnest money notes as consideration for contracts, use to be my usual practice.

Hope I cleared this up for ya....good luck....

Antonio Bodley · Answer

Timothy Rogers I have not put any earnest money with the contract yet. The seller is in the decision making process right now and needs more time from what I was told.

Bill Gulley I wouldn't want to do that and have not done that. Neither of us signed the contract yet. This is the sellers first time selling the home and does not know how wholesale contracts work, so I was asked to bare with the seller until this person fully understands how this business transaction works.

Michael Lauther It is not legal just yet because I have not given any earnest money to the seller. Seller still wants more time to understand the contract better. The seller did ask me something like this," I was wondering if someone comes to me and wants to buy the home or have questions, would I refer them to you?" Yes? No? I believe the seller is saying she have had people asking her about selling the home because they want to buy, but if  I am the one who controls the contract the buyers would have to contact me and not the seller.

Timothy Rogers · Answer

@Antonio Bodley
Has the contract gone to title company? or  Are you still in the negotiating stage?

@ Bill Gulley
 I don't give earnest money on my contracts just option money, because I am going to assign the contract. The option money will allow me the time to market to my investors.  TREC (Texas Real Estate Commission) contracts gives you that option.

I had a wholesaler marketing my property I had under contract. I found out about it, because the wholesaler email the property I had under contract to me. The wholesaler had me on his email list. The wholesaler said they had the property under contract. So I called the seller and he told me he had not signed any contract with the wholesaler, but he did. The wholesaler trick the seller by telling the seller to sign here so the wholesaler could be able to talk to the bank. It was not a bank authorization seller was signing, instead it was a contract. The contract stated that wholesaler gave $500 option money to seller, but seller did not receive any money. I enter a contract with the seller and gave $60 option money to seller to control the contract and took the contract to the title company to begin title work. The wholesaler title company had to stop all title work due to invalid contract.

Bill Gulley · Answer

Yes, to clarify, accept other offers was "to receive" other offers, not agree to sell by acceptance of other offers.....okay....

Michael Lauther · Answer

Antonio , If I understand this post correctly you have a contract which is assignable, to buy this property as a wholesaler and intend to market it to your investor list.

You would have given some EM and have established some period of time to close. If these are the facts then you would have a legal contract ( not a legal opinion) and your seller would not be able to accept another offer and sell without being in violation of the contract. In the absence of verbiage re back up offers, I am unclear about the right to take back up offers but it would be reasonable that a seller be able to protect his position if you fail to comply with your contract.

As a property owner I would not agree to a contract where a wholesaler was not qualified to buy the property himself if I were bound by an agreement that restricted my ability to sell.

Should I tell seller no?

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