First, your contract with your SELLER should have an “escape clause” such as: this offer is subjec to buyer’s partner’s approval or something along those lines.
This is used as a backdoor for you incase something is inherently wrong with the deal or if you cannot find a buyer, you can simply walk away.
Now, that being said - you are entering into a legal contract and possibly giving the SELLER false hopes of their property being SOLD when in reality, you are just fishing for an end buyer. This is unethical.
Therefore, always be upfront with the seller and tell them the best case scenario and wrost case.
Always try to find atleast 2-5 buyers for your deal. Incase 1 or 2 backout, you have others waiting to buy.
Read a few books on flipping and you’ll get the hang of it.
What happens if you are a wholesaler and the buyer backs out of the deal? How does the contract work? Are you responsible for buying the property or can you just have a date on the contract and after that date you back out? Or are you able to back out at any time?
Obviously I’m new, but I promise that once I get a good understanding on this I’ll be out doing it and will be able to bring more knowledge and ideas back to this site.
Please don’t tie up somebody’s property with a contract if you can’t close on it yourself. I always put an early deadline in my assignments requiring the buyer to close at least 24 hours before my contract deadline. If they don’t close, I step into their shoes and close it myself.
Last summer I had a newbie investor buy a contract from me. He gave me $500 non-refundable deposit and showed me a pre-approval letter from a private lender. 3 days before the closing, I found out his credit was crap and he wasn’t able to get the money for closing. I called my hard money lender who funded the deal and closed on it myself. I kept the $500 deposit and have never heard from that buyer wannabe again. A tough lesson for him. Another day investing for me. Now I require a minimum of $1500 depsoit non-refundable.
Posted by Kristine-CA on January 07, 2005 at 24:29:19:
Zach: depends on what your contract says. If you are thinking that you
can’t close on a deal, then you may want to consider an option to buy
instead of a purchase contract. You can read about options here in the
archives.
There are also many ideas about “weasel clauses” and subject to
partner inspection clauses in the archives. Everyone has to decide for
themselves how they feel about these. But since I wouldn’t appreciate
it if I was the seller, I don’t have such clauses in my contracts.
Please remember that if you sign a contract that says you are buying,
you are really messing with people’s lives if you aren’t sure that you
will buy. In my opinion it’s not about protecting yourself as much as
it’s about treating people the way you want to be treated. Kristine