Okay, say I find a good investment house, motivated seller… I get him to sign on a Sales contract and give him a deposit to seal the deal. Let’s say I now go about shopping for an REInvestor to take it off my hands… the clock is ticking and say two weeks or so go by.
Since I haven’t the funds to actually buy the home, what’s the best “plan-B” to use if I can’t find an investor-buyer?? Do I just forfiet the deposit? If it’s just $100 I don’t mind that. But what worries me is that I’ve now used up a few weeks of the Seller’s time… now he’s got even LESS time to sell his home before forclosure. What’s to keep him from suing me for damages to his credit and lost revenue (house proceeds) on account of I didn’t finish out the deal as I’d promised?
This is the only thing I’m feeling a bit uncomfortable with in Bird-Dogging… using up the Seller’s time and not closing. Any ideas on all this to minimize the fallout or ensure having a buyer that won’t squeeze me out of the deal?
I signed a contract once with a lady in foreclosure. She wanted the earnest money in cash. I made check out to title company. I later found out she had gotten over a dozen other contracts and actually got some cash from some of them as well. Her attorney let me know real fast that it was his house and not hers as it was payment for her divorce.
Weird things happen in the foreclosure business including sellers selling to many others, filing BK at the last minute, borrowing the money from dead relatives, getting extensions, forbearance agreements etc.
Sure they may want to sue you, if you can not close, but that costs thousands and if they had money they would not be in foreclosure. The contracts only allow for the earnest money as damages.
I understand your desire not to want to tie up the seller and waist their time. Actually if you are just birddogging you will not get a contract but just try to get someone to buy and give you a finders fee. You will be wholesaling if you get it under contract and try to flip or assign the contract.
Another thing is if it is a super deal and you have lined up buyers in a buyer list you should be able to sell the house in a few hours time. If it is not that great of a deal it will take longer and you may not be able to sell it.
One more idea: If you feel really bad you may let the owners know what is up and maybe get the first right of refusal option or something to that effect where if they find a better deal you will let them go with it and give you back the earnest money. When you are first starting out this may be a good way to take some of the pressure off yourself. One you get GOOD you will be signing a buy deal in one hand and a sell deal with the other and making some great money.
I appreciate your ethics in this question. A lot of heartless investors out there like vultures that see blood and act like they care about the sellers but go for the eyeballs first.