By Sean Terry
How should investors wholesaling houses deal with sellers that try to back out of contracts? What best practices cover these situations? What legal recourse is available?
Sometimes it can seem like hunting down and signing up deals is the hard part. Then sellers try to back out, creating a ton of stress and frustration, as well as financial loss for wholesalers. This is going to happen. Often deals can be saved, others times they can’t be. Red flags may be seen at the beginning, in other scenarios deals fall apart minutes before the scheduled real estate closing, or even at the closing table. This gets even worse for those that are attempting double closings and have an end buyer with cash on the line.
First, recognise that sellers will get cold feet, change their minds, or try to change the terms even at the last second. There can be a variety of reasons for this from simply getting nervous about making the right decision, friends, family and Realtors suggesting they could get a better deal, or even the competition trying to scoop the deal by offering a little more money.
The best way to combat these situations is clearly to get a jump on them. This can be done by anticipating and cutting off objections before they even arise, as well as being prepared with the right answers and hard data to overcome concerns when they arise.
It’s also certainly smart to determine in advance what you will be willing to negotiate on and give up in the worst case scenario.
There will absolutely be situations when sellers are adamant about backing out and will sign other contracts despite having a written agreement in place. It is technically possible to sue for damages, breach of contract, and possibly even tie up the property in court for a while.
However, just because those wholesaling houses have the right to, doesn’t mean that it will be fast, easy or profitable at the end of the day. Then ask which local sellers are going to want to contract with you after they drag your name through the mud in the news.
You may be able to get a quick resolution by requesting the seller buy their way out of the contract. Though there may also be scenarios, especially when homeowners are in seriously distressed situations that you may find the nice thing to do is to let them go. For example; when a family members of their will buy it for more money and net them more money. However, this doesn’t mean you shouldn’t warn them about the risks.
Sean Terry is a Real Estate Investing Mogul that hosts the #1 Real Estate Investing podcast in iTunes, if you would like more great information on Money Making in Real Estate you can visit http://Flip2Freedom.com.
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