I have a deal under contract for $250k which I want to assign for $265k, which will make it one of the lowest priced houses in the neighborhood.
The trouble is that he sellers (divorce) are refusing to let me back into the house until I show a pre-approval letter. I have submitted a pre-approval letter from a buyer (the contract is assignable), and the listing agent does not consider the pre-approval legitimate since it is from another buyer.
Also, I have 5 interested buyers but I cannot get access to the house to show it to them. How do I convince the sellers to let me in to the house without unnecessarily pissing them off in the event that I do not produce a buyer and have to walk away from the deal?
Pre-Approval letters are not too difficult to find - many hard money lenders give them out without too much trouble. If you have a relationship with your buyers maybe they can swing one for you.
Do you know any mortgage brokers - they oftentimes can help you.
Kill them and take their house…haha…just joking…no offense,seriously… explain to them every detail about the deal… and I’m just thinking why the hell sellers act like that…common…We ( wholesalers) help them…they should not act like that, Demanding…well…that’s human nature… goodluck to you dude…
How did you get the property under contract if it’s listed with an agent without having to submit proof of funds or pre-approval with your offer anyway?
What lender is your end buyer using? Hopefully not FHA
If the contract is assignable then just assign your interest in the deal to the buyer and let them close with the seller.
Otherwise get a pre-approval letter from a transactional funder, give it to the sellers agent, assign the deal then submit the buyers pre-approval letter to the agent letting them know you assigned the contract.
Or to keep down problems in this case just do a double closing to keep down confusion.
Hi, thanks for all replies. I actually did get an approval letter originally from realestatedayfunding.com to make the offer. Now they want to verify that it is legit. Sellers/listing agents are concerned for two reasons:
they had a buyer in contract before who was unable to get financing, and they are facing pre-foreclosure.
there is a mortgage contingency in the contract which is my only escape from the deal, which basically says that if I can’t get financing I can get out of the deal.
As a result of #2, I applied for a mortgage right away after going into contract, since my current income history basically makes it very difficult for me to get a mortgage, and this is my potential out if necessary.
Sellers are aware of my mortgage denial and are very wary of letting anyone in the house, though I have several buyers who want to get in and some are pre-approved.
I did get a pre-approval from a buyer and send it in, now I have to convince them that a pre-approval from a buyer is as good as a pre-approval from me…
Also have to find a buyer who can close quickly with conventional financing.
This is my first deal, so I know that there were many mistakes, but I still think it is possible to sell this deal to an end buyer (cash buyers are offering a lower price than I am in contract for, but it is still a very good deal I think for an end user)
Tell them you have 5+ buyers and you are about to take those buyers and walk if they don’t take advantage of it. They’d be stupid not to. Otherwise they are not motivated to me.
I can’t imagine why they wouldn’t jump all over that. Never try to convince a seller. They need you, not the other way around.
In your original inquiry you didn’t reveal the fact that the property is in pre-foreclosure. This is the reason they are scrutinizing you so hard because the want a legit buyer to keep the home from being foreclosed.
I wouldn’t tie up a pre-foreclosure unless I knew for a fact that I had a buyer. I believe you can do options on short sales so you probably should have made an option offer first. They would have known you were not a cash buyer.
I don’t believe you will be able to get away with an assignment on a short sale. Especially if the end buyer is going conventional. You will need to do a double closing. The problem with a double closing is your end buyer is going conventional so you will probably run into a seasoning issue. Unless you can get a loan that does not require seasoning.
Then you also have to find an attorney closing office or however closings are handled in your area that will do a double closing with an end buyer who is going conventional. Not saying it’s not possible.
Do you not have a buyers agent? I don’t see how they can keep you from accessing the property and at the same time be keeping your earnest money?
I don’t see how you are going to double close with an end buyer that is going conventional unless you find them a loan with no seasoning. Also a closing agent that will double close with a conventional buyer. Not saying it’s impossible
Thanks for all of the replies and moral support. How much I don’t know about this process is becoming more and more evident/embarrasing.
I didn’t want to overwhelm with details from the beginning, but to recap the situation:
This was a deal I found off of MLS, sellers were motivated due to pre-foreclosure, and house was very difficult to show due to divorce.
(i.e. wife lived in house, wouldn’t show it to anyone, basically the same situation is going on now)
Due to lack of knowledge and eagerness to do first deal, I put 10% down on the house. (10% = $25k + $2k to borrow deposit money for 3 months)
(afterwards I learned that I could have put down only $5k)
So I am basically tied to the deal in a sense that I need to get the deposit money back. I could request a refund of deposit based upon mortgage contingency or because the seller is not letting me see the house, but I will still lose the $2k for the borrowed money plus attorney fees. Obviously I don’t want to use up time and give the seller any reason to claim a right to my deposit, or claim that I am holding up their sale.
If the deal really can’t work or is highly improbable, then I’m thinking I should pull out as soon as possible and cut my losses.
I just wanted to give it a few more days and get some of the pre-approved buyers I have into the house.
I do have an attorney who can do a double close and a title company he works with. Title report is already done, CO is checked.
The big question is if I can get end buyers in to see the house, agree on price, and be able to close with conventional financing, either through assingment or double close, within 45 days…
By the way… I am located in downstate New York. I am getting the impression that, while not impossible, these types of deals are more difficult to do here, and certainly not as common as other parts of the country.
Luckily I have an attorney who works with investors and has done these types of deals before. I am just concerned that access to the house, conventional financing, and the time frame could be a problem…
You should have an inspection period in your contract. How in the world can you do your inspections if you can’t get inside the property. You have a right to this!
Do you have a buyers agent? If you don’t then get one and have them go over your rights in the contract pronto.
If you have already been denied a mortgage then more than likely you should be able to back out of the deal on that basis I believe.
If you know you are trying to wholesale a deal then you should never put up a huge earnest money especially when you know you don’t have any way to close if you don’t find a buyer.
Just don’t beat yourself up! Keep learning and growing.
The contract says that I can see the house at reasonable times given reasonable notice for inspection.
I do believe I have the right to back out of the deal based upon the mortgage contingency, but I don’t want to push my luck with an irrate seller and $25k at risk - I would rather back out early than wait 45 days.
I don’t have a buyer’s agent, but I do have a good attorney who works with investors - trouble is I brought him in after the contract was written. The first thing he told me was that I never had to put down more than $5k for a deposit.
Problem is that all of my buyers (end-buyers) are conventional, at this price. I have cash offers from investors who can close in one week if I could renegotiate for a price of $25k-$30k lower. (Would still be $40k over what sellers owe on mortgage, I think)
My plan is to get the end buyers in ASAP to see if they want to buy, otherwise plan to walk, but offer a cash buyer who can close in a week if they are willing to take $25k less.
I spoke with the seller today and explained the assignment process, there is a chance she may be a little less irrate and may set up a showing appt… I am praying somehow we can renegotiate for less and get a cash buyer who can close the deal and be done with it…
Run this by your attorney to see the best way this can be executed in light of the fact that you have a real estate agent involved in the transaction. The agent may kill this, but I believe it can be done if you do it near closing or at closing to where the closing agent can explain what is being done.
Try to make sure you close the deal at your attorneys office.
It should work even with a short sale and you can do this with any type of pre-approved buyer even those using FHA or conventional.
If you have a pre-approved buyer in place, write up a purchase and sales contract with the buyer. Notify the agent and the seller that you have a pre-approved buyer and you will be releasing your rights in the contract back to the seller.(consult your attorney to see the best time to do this)
To use a conventional buyer you first have to determine if the seller has even owned that property for 3 months.
Have the buyer close directly with the seller for the amount you contracted with the buyer.
Have the seller fill out a invoice/release agreement paying you the excess difference that is left over after the buyer has paid the seller.
Ex. If your contract with the seller was for 250k and you found a pre-approved buyer for 265k. Let the buyer close with the seller for 265k. Have the seller sign an invoice/release agreement paying you the 15k that will be left over. If you don’t do this then the seller will be making a 15k profit!
Consult your attorney to see if this can be done on a pre-foreclosure. I believe it should not be a problem. Your real problem will be that bone head agent.