Yup, it’s question and answer time again…
(And yes, the subject line is an “Airplane 2” reference. Great movie! But that’s not important right now…)
In the last two weeks, I have had two deals (one during negotiations and one after a contract was signed) fall apart because they are short sales (undisclosed to me) that people are trying to flip. Because I source my own deals and I have limited involvement with wholesalers, I was unaware that this presents possible legal problems. My settlement company and attorney have uncovered these issues before I unwittingly did anything wrong… I play by the rules but it kills the deals. Are you seeing more of this as I have?
Thank you, Joe H.
My understanding (and backed by my attorneys) is that wholesaling a short sale isn’t “illegal”, but that it usually isn’t allowed by the contractual terms of the sale that the bank requires. The major banks seem to take this view. I’ve had conversations with smaller local banks who disagree and are happy to let someone flip a property. Their view is that as long as they got their price, then they shouldn’t care what happens after that. Obviously the investor is out to make a profit, so why make it difficult. I agree with this free market view.
But the problem you seem to be running into is that some wholesalers don’t think they should be disclosing what they are doing. That’s just poor business in my opinion. They should disclose everything so their buyer knows what they are getting into. So if they are putting a short sale property into an LLC and then selling the LLC to you, that’s fine. As long as you know!
Too many wholesalers seem afraid of how the buyer will respond, so they just leave them in the dark. I suppose the way around this is to demand to see all the details of the deal from the wholesaler, and if they aren’t producing the needed info, then to bail out on them.
In my case, once I select a buyer, I give that buyer my custom-designed Assignment Contract as well as my original 4-page contract with the seller. Both are straight out of my Rapid Cash Generator Implementation Kit.
If there are any peculiarities to the deal, we disclose and discuss them then and they talk to my settlement attorney about any issues. Doing it any other way is just wrong in my book.
You recently wrote about team members who eventually flake out and then you need to replace them. I think I have to replace my attorney. After doing three deals with him I would have thought he’d want more of my business. Why does this happen?
Thanks, Sara S.
Were there any obvious reasons? Like if your deals didn’t go smoothly or took up too much time or you were a pain in the butt to work with?
Otherwise, how much did you make on the deals?
Often times I find the only reason certain team members flake out is because of jealousy or resentment. They simply start to resent how much you make per deal. Especially if they think it was “easy money” for you but they did most of the “work”.
Is making too much, too fast, with minimal effort a flaw to my Rapid Cash Generator methods?
Nope. I’d rather just replace a broken team member than not keep doing what I’m doing.
So just always keep a backup team on deck. Someone you are grooming for a rainy day.
A hospital? What is it?
It’s a big building with patients, but that’s not important right now.
(Yes, another Airplane 2 joke. It never gets old for me.)
Traction Real Estate Mentors
PS — I almost forgot to shamelessly plug my upcoming 1-Day Rapid Cash Generator MasterClass.
I won’t let you down like that.
So go here: