The Crazy Wholesale Ride
When we get involved with a project, we like to make it as complicated as possible. No, wait, that doesn’t sound right! Unfortunately, it is how our story goes for a property we purchased in Montclair, NJ in 2014-15. A lengthy closing,the NJ courts involved, and the seedy underbelly of wholesale selling were all a part of this project. Hang on for the crazy ride!
Purchasing the Estate
We received a call from the attorney of the estate who had heard of our services. After reviewing the property, we initially offered $150,000 in October of 2014 to purchase the home. Our papers were then formally filed with the probate court of Essex county. The reason the courts had to be involved was because any residual amounts of the estate were due to the state,as there appeared to be fraud within the estate. In December 2014, we had to lower our offer by $20,000. There was evidence of a leaking oil tank found in the soil on the property and the cost for cleanup was approximately $20,000.
The amended contract was agreed to by both parties and signed by the end of February 2015. After being cleared by the courts, we were able to obtain clear title and close in March of 2015. This was 5 months from our initial offer till closing.
Don’t Forget the Inter-office Disputes
During the time of the closing of this estate, a previous partner was in the process of leaving. There was a disagreement on the pro rata share of profits from any resale of this property. Eventually, we continued without our partner to ensure a fair share for all.
The Wholesale of our Wholesale
Once our property went out to the wholesale market, more than a dozen parties tried to wholesale our wholesale! In April 2015, we accepted an offer of $175,000 and entered into a contract. On May 4, we had to cancel that contract when we found this party ILLEGALLY marketing our property for sale on real estate sites!
We continued our hard work and were able to then obtain an offer from another party for $190,000. We made it very clear to this party that we would not tolerate them trying to wholesale our wholesale. We wanted to make sure they would be the ones coming to the closing table before entering into a contract. Despite them initially trying to wholesale our wholesale, they agreed that they would be coming to the closing table and entered the contract. On June 23, 2105, we finally closed on this property!
The End Result
Despite the wild ride, we cleared a little over $50,000 for only holding the property for 3 months. Not too shabby!
Comments (2)
Hi JJ, thanks for your questions!
1. We closed on the property from the estate with state court approval using our own funds. We did some light cleaning to the property and held it for over 30 days prior to selling it to the 2nd party. They were willing to pay that amount because they saw something in the market that said it was still a good deal at that price. It turns out they just recently resold it at a decently high price (higher than my initial estimated ARV), but they had to hold it for about 2 years.
2. First of all, it was illegal because I owned the property and they were marketing it as if they were the owners. Second, they had not intentions of getting to the closing table in a reasonable manner, they were stalling at every turn once they thought we were under contract. I have no desire to deal with people such as that, as I do not conduct my business that way.
Peter Kraft, almost 7 years ago
Thank you for the post Peter! I'm a newbie that is getting into the wholesaling game so forgive me if my questions seem a bit elementary as i'm still in the initial learning phases. The two questions I had were 1. How were you able to sell to the second party who wanted to wholesale it initially for the price you sold at netting over $50,000. Was it a case of the courts wanting to get rid of it and out of probate therefore they would qualify as a motivated seller? Why was the second party willing to pay that amount? 2. I get that some wholesalers can not play by the rules as in the first party that wanted the property, but why did you specifically not want the second party not to wholesale the property? Was it as simple as a case of making sure that when it was time to sit down at the closing table that you knew they were going to show up and purchase the property? Would it have been okay with you if they did a double close then, and ended up wholesaling it that way.
Thank you for your post and your time,
JJ McGuigan
J.j. McGuigan, almost 7 years ago