How to lose $6,500 in 30 seconds
My buddy Rich and I had a deal going in Corcoran California. This deal came from a post card campaign we went together on. We had the deal wrapped up last summer for 65K I believe and then sellers told us they decided to keep it as a rental.
Then about a month ago the sellers contacted me that their renters had just moved out and they were now ready to sell and wanted to know if I was still interested in buying. Rich went back over to check out the property and the sellers had upgraded with carpet and Lino, unfortunately over gorgeous hard wood flooring, and the kitchen was still the original dating back 60 years or so.
We got the house this time on contract for 75K. It was a great looking house so I decided to market it at $86,500
One of my regular buyers sent me an email and said to send him the assignment immediately. Rich and I had to fight tooth and nail to get the sellers down to 75K and how they had wasted out time and screwed us over the last time was still fresh in our minds. Rich and I talked about how the $11,500 assignment fee we were getting might freak them out and screw up the deal because we knew how difficult these people were.
It was getting close to a closing and the Title Company had requested the seller’s info cuz they needed to fill out some more paperwork and come in for the final signing. A few weeks had went by and I asked Rich to call the Title company and see what was up and if we cud push it along.
NOW, This is the crazy part… Rich tells the Title girl to hide the amount we were making and according to her he repeated it several times before hanging up.
I didn’t know anything about this until the buyer calls me up and tears me a new anal cavity. He chewed me out good, He says this blankity blank guy called his title girl and she called him and who the hell does he think he is and he was backing out of the deal unless I got rid of him and he was only going to pay $5,000 on this deal and if I didn’t like he didn’t care and to never send him a deal with that other ahole’s name on it. He went on an on about he had never jacked me down on my prices and how we had done a lot of deals together. If this guy calls him he will tell him the same thing.
I agreed to the 5K assignment, losing $750 buks kinda hurt. Rich was losing out on $5,700 for making the mistake, I think it may have been unethical what he was asking, maybe even illegal. The Title Company is bonded, doing what Rich suggested might have lost them their license. Maybe the Title girl shud of just told him she couldn’t do that.
I was sort of in shock, Rich was understandably upset and was asking who gets the $6,500 I told him probably the Buyer/ Realtor. He says that’s BS and not right and started going on a tangent. I told him I was really worried he wud do something else that wud make it worse and nobody wud make any money. He said he was going to shut his pie hole. And wanted to send an apology to the Title girl.
Maybe I shud have split the $5K with Rich, but it was his mistake, not mine and he lost me $750.
I told Rich that I had lost much more than that from some of my stupid mistakes and we wud make it up on the next deals.
It never gets too boring around here.
Let’s learn from our mistakes and let’s make some Money….
Rando
Hi Rando,
The buyer can not borrow an assignment fee from a lender because it is not able to be placed on the HUD 1.
The seller should never know what your making because the title / escrow officer can not disclose what is not on the HUD 1 to buyer!
Because your assignment fee exceeds 7% which is the proven statistical margin a buyer will come out of pocket to purchase considering it can’t be borrowed, you should have borrowed transactional funding to buy and close over to your end buyer; then of course everything could be borrowed because your buyer is buying from you!
The maximum a buyer would pay for assignment is $5,250 before they walk away as this is a lot of cash for a $75k contract. Had you used transactional funding the seller would never know you had a buyer margin of $11,500 dollars.
You should be using and naming your own title / escrow company and talking to a closing officer about what you want to achieve before you name that company and closing agent in your contract!
It would have cost the two of you $1,312.50 to pay transactional funding costs which would have been cheap and could be factored into your asking price.
GR
That’s interesting Gold river, but I have done several deals for $14 & 15K and it went thru with out a hitch, one house I got for 30K and sold for 45K and another deal I got for $22,500 and sold for $38K
I only had a problem once when I jumped my fee from 4k to 6K only because I negotiated the seller down and the price to the buyer was still the same. The buyer was an ex cop and a Realtor and he went behind my back and cut me out of the deal even though I had a signed contract with seller.
Before I found out this info he also cheated me out of a $2,000 fee going behind my back with my wholesaling partner.
That was my fault cuz I didn’t have it in writing with the other wholesaler. Be learning those lessons.
And then he accused me of being dishonest, Oh the inhumanity.
This idiot probably didn’t realize that he wud lose out on some serious money in the future because of the insane deals I find.
I may do double closings if the assignment gets to a ridiculous level.
Thank for the input.
Rando
It gets even crazier. The deal closed a few weeks ago and I was relieved to get my 5K.
Now My bird dog partner Rich went behind my back again and emails the buyer realtor Seth, well Seth emails him back to talk to Rando and forwarded me that email.
In the email Rich said he was also going to contact Jennifer the Title girl.
I was freaking out. I emailed Rich and asked him what is going on, why did you email Seth, are you asking for money?
Holy Crap, Rich fires back that Seth stole his money and he has every right to demand it back and started asking wud you let someone steal from you and lay down and take it.
I emailed him back, he didn’t steal your money, it was a penalty, we wer both penalized because of your mistake, you lost $$5,750 and I lost $750.
Rich shoots back, I apologized to Jennifer.
I was now getting seriously irate. You asked the Title girl to illegally hide profits on a transaction, Her company cud lose their business. You have embarrassed me and yourself. You continue to rehash all this BS and now you have lost much more than $5,750…
Seth don’t want to do business with you, I don’t want to do business with you, You have tarnished Seth’s reputation and mine because you don’t know when to walk away and shut up. Your future profits working with me are going to be less than nil. I asked him, do you understand now?
Then he replies yes, then wants to know who gets the profits he lost. Like I know.
I can sort of understand his motivation, he’s a general contractor barley scraping by with tons of debt.
Just 6 months ago he purchased a new car, he said it was going to be used to do Real Estate deals. I cudnt figure that out either.
He is computer illiterate, I’ve begged him for 3 years to take a night class and I’ve sent him a half dozen books to read on wholesaling, he refuses to read any, and he’s trying to do everything from a $200 laptop that is years old and slower that a cement tird.
It’s time to cut the ties with this guy.
I got better things to do, like make money…
Rando