Backing out of wholesale contract

[Michael Lerch]

This is the last thing I wanted to have happen, but I need to get out of this contract. I couldn't find an investor to assign the contract to, and now I'm supposed to close on May 14th for $14,000 plus closing costs. I sent a notice of cancellation in an e-mail to the seller on our purchase agreement under the inspection clause that after further inspection it became apparent that it would need more repair than originally thought. He wasn't happy.

Now he's saying if I don't buy it he'll go to his attorney and say I had plenty of time to get a real inspection done, it's not an excuse, it's a signed contract to purchase, and that I can't back out. I feel like he's just trying to scare me into the deal (the scaring part is working), but I always thought as long as I gave written notice before the closing date I was able to back out.

This isn't something I want to make a habit of doing. In all honesty I would rather buy it because it has a tenant at $400 a month and It's over 2% on the 50/2% rule so I know it'll cashflow ok, or I could get a new tenant at $550-$600 which would be even better. The problem is I'm so new at this that I don't have any capital from wholesaling yet to buy it. I don't think a HML will lend a small amount like this either. I'm kind of screwed if somehow I'm stuck buying this.

Does anyone have any helpful advice or a similar situation they were in? I'm waiting to see if I get a phone call or letter from his attorney or not this week, and if it comes to that I guess I'll need to get a RE attorney.