2 contracts on one house

General Real Estate Investing
1

Hello,
I would like to see how other professionals would handle this problem.

I have a contract on a house. It is the 3rd contract. The first 1 was put on hold because seller could not get tenant out of house. The close date had come and gone by the time they evicted. 2nd contract was same as first but new price because of damage tenant caused and new dates. It happen to be in dec. now so holidays,damage,and price proved hard to wholesale. I re-negotiated with seller one day before contract ended.(although in 2nd contract I had 60 day extension)3rd contract, we agreed on lower price, assume mortgage and do owner financing, a few days later selller says i dont want to do that i need the money, my relative wants to buy. I say sorry we have a contract. A few days later I get told I wont sell to you. Now today I find out she signed a contract with another guy a few days earlier. He got a memorandum and I did not. I have 2 to 4 end buyers because I keep working on it to close as cash instead of O/F. besides attorneys what is the integrity thing to do? I dont think walking away is the answer.
Thanks for your input.

2

A professional may have many irons in the fire at the same time. Since this deal did not work out, a professional would move on to the next one.

Going to court just costs you time and a lot of money with no assurance that you will prevail. It is hard to see that you were damaged, so it will be hard for a court to rule in your favor.

3

I don’t see why walking away isn’t an option? Sounds like with all the turmoil that you have dealt with that you have become emotionally invested in the property and will probably end up making an emotional-tied decision later on down the road. If you were having trouble selling in the second contract with a 60 day extension (so what sixty days on the original 30?) at that price, you probably should have walked away then.

But then again, I’m a newbie, so what do I know.
-Troy

4

I see what you guys are saying, but look at it from this side,
lets say the house is worth 100k and and you picked it up for 70k
then u were able to negotiate it down another 10k now your at 60k
would you let someone else just walk in and take your deal? Just throw ur hands up and say ok ?

5

You did not close the deal, twice. It’s that simple. Because you did not close the deal, the seller lost confidence in your ability to close and chose to accept an offer from a more reliable buyer.

Just how I see it.

6

From your post lets say that you are just wholesaling the property. You haven’t identified on who you are planning on closing with. If it is going to be another investor what kind of investor are they?

A rehabber? $.60/$ doesn’t seem low enough they usually look for $.30/$.40.
A L/O? Well $.60/$ may be good enough for them. You know they make a good bit on the interest and may be willing to pay more.
A SFH-LL? Well, $.60/$ may not cash flow enough. Depends on your local rents
A Flipper? Goodness $.60/$ doesn’t make them a penny.
Retail? Well at $.60/$ You should be able to make a nice little payday even with both a buyer and seller Realtor.

If you only got the seller to go down to $.60/$ and it took you more then 2 contracts to sell I’d walk away and write it all up as an educational expense.

7

Thanks people,
It has definitely been an educational experience for sure. The kind you cant learn in books.

Ok, look at the first contract, it was never really in place because the seller could not get the tenant to move out so they had to use the eviction process. I just put it on hold. SO it really starts with the second contract. Which happen to put us right in the month of dec. Hello… Holidays,shopping, etc.etc. It proved hard to get interested buyers…(L.L and Rehabbers and even Retail Handyman Buyers). (Never used the 60 extension because I wrote another contract instead!)

So that tells me I need lower price…got lower price…(next couple days was new years)
So in the mean time im getting to work on it and the seller changes their mind, Then all of a sudden word gets around theres someone else trying to sell the house (buyers say) etc.etc. you know the rest.

8

The first contract was in full force and effect, so you can’t say it did not really count.

Why did the tenant have to move out? By law, tenant leases convey with the property, so you could have bought the property with a tenant in place. If you did not want the tenant, then your options are to either wait until the lease expires and the tenant moves out, or you pass on this property and go on to the next one.

If the property you buy is aready tenant occupied, you have to honor any existing lease. You don’t have to renew the lease, but if the tenant does not want to move and if there are no grounds for a forcible eviction, you inherit the tenant when you buy a tenant occupied property.

You don’t tell us why the tenant had to be “evicted”. I am guessing that the tenant was not at the end of his lease. Because it took so long to get the tenant moved out, I think it is more likely that the tenant was not really evicted but that his lease was not renewed when it expired.

I am guessing that you placed contract restrictions on the seller that could not be lawfully satisfied on or before your scheduled closing date. Why didn’t you keep the contract and change the settlement date, perhaps add an addendum which gave you a repair concession?

You chose to cancel the deal and write a new contract which the seller apparently accepted. You were planning to wholesale the property anyway, but when you found no one interested at your price at that time of the year, you cancelled the second deal.

You negotiated a thrd contract at an even lower price on terms the seller could not afford. So, since you had already failed to purchase the property on two previous attempts, why should the seller have any confidence you would perform the third time around.

The seller got a better offer and told you to walk. I don’t blame him.

Now, you can pay an attorney thousands of $$ to sue for specific performance. Buy since you did not suffer any monetary damage, and because you failed to perform twice before, I think your chances of winning a lawsuit are miniscule.

Don’t spend any more time or money on this deal. Just go on to the next one. Figure out what you did wrong and change your business practices.