All Forum Posts by: Andrew Christie

House under contract in a pretty rough area. Not a good area for fix and flip, but will cash flow for rental. House doesn't need much work, maybe about $5k, or so we thought until the termite inspection came back. There's serious damage, but no way to know exactly how much without tearing out drywall and removing exterior. The seller has no car, so she doesn't have many options. What would you do?

What really gets me about situations like these is, if I was the buyer and that happened to me, I would NEVER dream of asking the seller to pay. These buyers have to know that you're not responsible, yet they ask anyway. If the water heater was brand new, then that would be one thing. But it was an older unit and, since they had an inspection, they had to be aware of that. If the buyer wants a home warranty, then they should buy a home warranty, or at least ask the seller to throw one in when negotiating the purchase price.

I have to say that I'm really on the fence about this. I can certainly see the value in goodwill. Even though rehabbed homes is not an item that you're going to have repeat buyer's for, it might go a long way in the eyes of the buyer's agent who you may either work with again down the road or may spread the word about you. But it really upsets me when people agree to something, but then later expect more than what they agreed to. In my opinion, the buyer's request for you to replace the water essentially unethical since it's outside of your contractual agreement. Buy hey... you gotta do what you gotta do.

The bottom is is that it's a tough call and there are many other variables that would come in to play for me to determine how I'd handle it.

I'd assume the wholesaler is using his own contract since, at least in our area, the standard contract that agents use is non-assignable (although I realize that section can be crossed out). But the buyer would most likely be working with an agent. Many agents don't understand the concept of assigning contracts and are afraid to use anything other than their own standard forms and contracts.

As a licensed agent, I see wholesalers in our area putting some of their deals on the MLS and disclosing themselves as the 'contract owner'. So I'm not sure how it works when this wholesaler (contract owner) finds a buyer. He can't assign his existing contract. Are these wholesalers doing double closings?

Thanks!

Yes, age is just a number, but it can be an extremely good and useful point of reference for one's maturity level. You may not agree now, but that's only because it doesn't currently work to your favor.

Now, I came on to this board to request advice. If anyone wants to question my integrity or ethics, that's your call and you're certainly welcome to your opinion. I'd be willing to discuss it in a mature, professional manner. But I'm not going to get into name calling and cursing. There's simply no point.

And as far as the POF, I'm not in the habit of sending such information to complete strangers, especially when they tell me that they know I'm a liar and think that they can dictate my use of this site. You guys were shooting me down from the very beginning. No matter what I say, it's wrong. Even if I send you a POF, you're just going to come back and say I Photoshopped it.

This is a obvious a battle that I can't win so I choose not to fight. Like I said, I learned a lot about this experience and will adjust how I use this site accordingly. One of the best adjustments I can make at this point is to discontinue monitoring this pointless discussion and focus on real business.

For those of you who were actually helpful (Jeffrey, Aaron, James, Barry), thank you! You're the guys that add value to sites like these and your input is greatly apprecaited!

I nines a good source for transactional funding. Recommendations?

Jeffrey! Ah!!! Love your post! So refreshing to have good, constructive feedback and advice with some semblance of intelligence and logic. I was beginning to thing that didn't exist on this site.

Yes, I agree that what you describe is the best process. I do intend to purchase this property if I don't find a buyer that will pay what I think is a good price. Of course, my price is better and I'm definitely willing to pay that, but my preference would be to collect the assignment fee.

As I've said, I do already have a couple of buyers looking, but no guarantees that they will pan out. So I'll send you the information. Let me know if you have any interest.

Hey Jason:

I could stoop to your level of name-calling, but I'll take your age into consideration and just chalk it up to immaturity. Did you run out of YouTube videos to make fun of? Good luck finishing your schooling son.

I certainly don't disagree with you and emphatically agree that the best way to wholesale, from an ethics perspective, is to buy it outright. Unfortunately, it's a very costly and inefficient method, and in this area, at least, it's a romantic idea. The problem with it is the closing fees involved, and your not just paying those fees once, you're paying them twice, both on your purchase and on your sale. And if you put it on the MLS, take 3% right off the top (assuming your licensed yourself, otherwise it's 6%). Sometimes those fees can outright kill a deal if the seller is refusing to come down a couple of grand to cover closing costs. But if you were able to offer a little more by entering into an assignable contract, thereby avoiding those costs altogether, you may very well now be making a deal where before, there was no deal. The seller would be happy, you'd be happy, and your buyer would be happy. It may require that you not provide a detailed explanation of how the whole process works because, let's face it, it's complicated and complications scare people. Scared people don't like to sign things. And perhaps some people feel that's not ethical, BUT, you've been able to solve everyone's issues. I think you can debate about the ethics endlessly, but the outcome is for the greater good.

The other aspect you bring up is pretty obvious. If it's a good enough deal, people will buy it. And yes, that sounds very good. However, in practice, there are many elements that make it much less simple than you make it sound. There are many, many variables that go into the value of a property. Some tangible, some subjective, some obvious, some subtle. It's not difficult at all for even the most experienced wholesalers to misjudge a property's value, for the whatever reason. I have done it myself and I have personally witnessed the president of our local real estate investor's group do it. It just happens! And then there's the fact that wholesalers spend a lot of time, money, and effort trying to find a deal. Some even pay franchise fees (HomeVestors). Sometimes (whether this is right or wrong) they get desperate because, as with many businesses, they may be experiencing a cash crunch. Desperation often leads to logic-defying behavior, such as trying to market and unmarketable deal. And then, of course, unless you're an experienced and certified home inspector, it can be difficult to know exactly what a good deal is if you're unaware of some obscure issues with the house. Unless you want to pay $300 for each and every one of your potential wholesale deals, which is just not feasible. So yeah, it's easy to say, just get a good deal and people will want it, but that's not always easy to do.

And the reason I don't have to go back to her on price is because my price with the seller is so good that I will buy it for myself if I can't get the assignment fee out of it that I want. But even then, I have several other options to pursue. Again, time is my biggest concern right now.