I have set my business up such that I’m concentrating on lease option and contract assignments. The issue is that I have one of my sellers that wants to approve my buyers credit, job and rental refs.
I’m trying to determine the best way to handle this without losing the deal. My concerns are that he is then controling my sell side of the deal with his approval or denial. The other concern that I have is in the event that he’s an unscrupoulous seller and gets the buyers info and then trys to end around me. I can put additional provisions in the contracts to prevent this, but he could still do it and then I’m stuck chasing him for the cash from the deal?
Help, please way in on this, how would you handle this?
Everyone handles it a little differently, but I always review the buyer’s situation and info with the seller, to give them the “final approval” so that they feel they are making the final decision, as it is their house, and they don’t want to go around me, as they don’t want to or know how to handle anything in regards to contracts etc.
I’ve never had an issue, but…we just had a seller who has been a RE Broker since dirt got hard, and he and his wife met with the buyer and drilled her on anything they could, and when I found out I told the seller that it sounds like they aren’t ready for our program, and that I felt we needed to pull their house from our program, so I moved the buyer to a house that she actually likes FAR better!
There is a difference between a seller wanting to just feel like they are comfortable with the buyer, and trying to pretend they are CIA doing a background check for secret service…all the while, being completely CLUELESS about what is required for mortgage!!!
Let the seller feel involved if he wants, but if they overstep, let them know it, and if ned be, pull the plug…otherwise you have a built in issue for months, because guess who is going to call you every week when they do a drive by and see that the hedge on the left side needs to be trimmed, or there is a picket in the fence that looks loose…seriously…choose your battles amigo…
In my opinion you SHOULD let the seller approve the tenant/buyer, especially considering this is an assignment…like pilot, I always give the owner the final say…I do the screening, they have final say.
Remember you’re in and out the deal so if the tenant defaults the owner is left holding the bag not you…so if you put someone in there without their blessing so to speak then they could come back later & claim you just stuck a deadbeat in there in an effort to get at the option fee, with no regard for the t/b’s qualifications…let them make the call and you’ve somewhat absolved yourself of that liability.
Far as getting screwed out the deal, 2 solutions:
Don’t provide the applicant’s name/contact info to the seller until they approve. Let them see all the screening data except name & contact info. If they ask why cite company policy due to privacy concerns (actually a valid & truthful concern…I may implement this myself)
File an affadavit at the courthouse to cloud title. This wont kick in til the house actually sells but what the heck.
Pilot and NSU hit it on the head. My only serious concern is that the seller
would attempt to do a “reach around” on you, but if you cloud the title and
don’t provide the buyer’s information, this shouldn’t be a problem.
However, the systemic problem is that the seller wants to be in control
(and you don’t own the house); it’s almost as though you have a
“landlord” looking over your shoulder.
In my experience, the more you conceed, the more you conceed, ad infinitum.
Over the past 22 years, I’ve completed hundreds of transactions. One of my requirements is to find seller’s who will not intrude with my business model. If I can’t dictate the way a deal is structure, which includes me selecting my own buyers or tenant/buyers, I tell the seller to sell to someone else.
I’m not the one with a house in need of selling, he is. If I offer him a good deal and he puts conditions like approving the other side of my business, pluck him as a weed! There are too many sellers in need of what we do to have to endure a conditional seller like you describe.
When you are ready to walk away from any deal that does not fit your business model, that’s when you will get the deals you want. This is your business, not the seller’s! Treat your business with respect, then you will gain the confidence of a seller, who will not question your judgments, and he will sell the home to you on your terms.
While I agree with you 100% in situations where you’re staying “in the deal” or otherwise need to be in complete control, when it comes to cooperative assignments I WANT the seller to have that final say-so in this regard. I don’t want them coming back to me 6 months later saying I forced some deadbeat into their house.
But in either case I see what you’re saying…never appear to “need” any one deal, no matter how good it is. Sellers can sense this like a dog can sense fear.