Has anyone dealt with sellers that seem motivated at first, but then change?

Question

'Hi BP family, I have been coming across sellers, that seem like they are motivated, then after we negotiate a price, and I am ready to put them under contract, they say they don't want to sign a contract they just want to sell for cash'.

Aaron Mazzrillo · Answer

In California, all real estate transactions need to be in writing.. to be enforceable in court. I've purchased close to 100 houses without ever getting anything in writing. Once you come to an agreement, contact escrow and have them send escrow instructions out ASAP. I pay for my preferred escrow company to Fedex them. Once the escrow instructions are signed, you have your contract. Sitting around waiting on a seller to sign a contract and get it back to you is costing you deals so skip that step and just get them into escrow.

Deborah Saddler · Answer

Again thanks for all who replied, so grateful for all of your help and assistance.

Account Closed · Answer

I talk to people everyday who do not know what escrow and title or how it works. Many have never bought or sold property before or if the have, they didn't use escrow.  I talked to a 20-something seller yesterday who owns a property free and clear that she bought 3 years ago.  She was honest and said she just signed the papers that were sent to her when she bought it (it was an REO) and really didn't understand anything.  She had no idea about escrow or title insurance, she thought she had to pay her past due property taxes out of pocket before she could sell it, she thought an agent was paid up front, etc. She has $150K in equity but doesn't know the first thing about real estate transactions.  I review that stuff with people over and over again.

The OP's seller may not have the first clue why escrow and title is needed.  He may really believe that a cash offers means cash in exchange for a deed.  I say that escrow collects my money and the seller's signed deed.   When escrow has both, they give the money to the seller and record the deed.  People can understand it easily if you break it way down.

Aaron Mazzrillo · Answer

My only answer to that is; get yourself a new escrow! That and gift cards to nice restaurants and Starbucks go real far in getting what you need done from escrow in a timely manner. Once I come to agreement with a seller, I email the specific terms to my escrow lady. She types it up and sends it out Fedex the same day, unless it is too late, then it goes out the next morning. I never said anything about 'basic escrow instructions.' So, while my seller is getting the documents necessary to close the deal (like the grant deed), you're seller is getting a contract, which then needs to be typed into escrow instructions, sent back to the seller to be signed, and sent back to escrow. I've purchased more than one house where the seller had signed a contract with another investor. I've even purchased one for $10K less than the other investor was offering because that investor was taking too long to close and was only giving the seller a $5,000 deposit. I told the seller I'd give them 100% deposit.

Not sure what you mean by 'not recommending using escrow instructions' unless you are not using escrow at all which I sometimes don't use either, particularly on subject to deals.

Joel Owens · Answer

While there are generalities with buying properties the exact process does vary by state.

How you set the documents and how you close deals. This is why you will hear varying experiences from multiple investors doing different things.

Find out what is common FOR THE AREA that you invest in.

Account Closed · Answer

I would never wait for escrow instructions to be delivered to sellers.  Where I am, it would be 3 or 4 days minimum before the seller had something to sign.  I overnight a simple 3 or 4 page purchase agreement to the sellers. I include a copy for their records, an information sheet with contact info for me and escrow/title, and a pre addressed overnight mailer with my account info so the PA gets to escrow the next day.  I also schedule pick-up of the mailers when I'm working with sellers with transportation or scheduling challenges.

While using escrow instructions in CA is common, I don't recommend it.  Basic escrow instructions would need a lot of amending IMO to address the things in my contract.

Brandon Krieg · Answer

Hi Deborah,

In my initial conversation with sellers, I let them know that I'll need to see the place before I can put an offer in.  I know there are plenty of people who are comfortable investing 'sight unseen' into properties, but I like to see and feel the house and neighborhood.

Once I'm there, I explain the process, the speed of transaction, etcetera.  As with all wholesaling deals, it's important to have an idea of who you might sell to at the end of the day.  If you're confident you can sell their property fast and for cash, they will feel that confidence.

Also, it's probably good to mention that this just happens sometimes, and not to stress about it too much.  People's situations change, and motivations may disappear.  And if you get a weird vibe, like something wrong or shady is going on, I'd say just walk away.

Steve Babiak · Answer

IMO, you're not properly explaining to them what an "all CASH" purchase really is.  It means not having the buyer go through a bank to get the funding, and the various bureaucratic things that go with that; it does not mean that they get cash on the spot like at the local pawn shop or "we buy gold" shop.

Sam Craven · Answer

Deborah, in TX that right to market is inherent to the contract.  But i put it in special provisions anyhow just to be perfectly clear with my sellers.  (Only if i'm wholesaling it, if i'm rehabbing it then its not in the contract.)

Deborah Saddler · Answer

Joel Owens, thanks for your reply.  Yes you may be right.  I just don't understand the part where they say one thing, and turn around and do the complete opposite?  I did not know about the " Right to continued marketing " clause.  Will have to check it out.

Has anyone dealt with sellers that seem motivated at first, but then change?

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