Seller wants to change the terms

[jhanson8 0]

I wanted to see if anyone has encountered this before and how you dealt with it. I have a seller under a LO contract with these terms:

• $188k purchase price, they owe $180k (Comps between $175k and $199k)

• $1150/mo. with no rent credits, they're payment is $1118/mo. (Rental comps between $1100 and $1275)

• 2 year lease

• Great location near a military base

• I have until July 31st to walk away

 

The sellers' bought the house for their son and his wife. They lived in the home for two years, but he's been transferred to another base. They had it as a FSBO for 4 months, then as a rental. They were excited about our arrangement until they saw my Craigslist ad.

 

I'm advertising the home for $199K and $1200/mo. with an 18 month lease. They sent an email saying they want to renegotiate our agreement to the terms I'm advertising. I haven't responded yet since I just got the email about an hour ago. It's a good deal for me, so I don't want to change the terms too much, but I also don't want to anger these people and lose the deal altogether. I was very clear during negotiations that I'm in this for profit and they knew I would be offering the home for more than they were getting. Anyone have a similar experience? Should I have advertised differently? How should I move forward?

[MichaelC 160]

Unless you misled them in any way, you have a legally binding deal. If it was good enough when they signed, it's good enough now. Greed is kicking in and overriding their sense of honesty and fair play.

I'd tell them immediately that you expect them to honor the agreement. And I'd give them the option to buy out my interest for $_____. Fill in the blank. Truth is, the deal is not such a great one strictly from those numbers you posted. So the aggravation that may be attached to it give me cause for concern. I'd opt for the buyout myself and be done with it.

[Jason (AL) 1]

Good ol' Craigslist.

I've had a seller see my CL ad one time, and was asking

about the option consideration amount listed in the ad. This was a CA, by the way.

It can be a double-edged sword, given that they can see their

house listed with bigger numbers than they agreed to sell/lease it for.

With a CA, all of the numbers match up, except for that nice lil' chunk upfront...that

being the option consideration/your profit.

 

I also no longer advertise houses I'm selling on CL.

A majority of the time, I've found the deal on CL, so the sellers are bound

to check it out again. Thus seeing the monetary differences.

Instead, I use postlets.com. It has the html code for CL ads, but I don't use it.

Directionals, a sign in the yard, and a newspaper ad are plenty enough for me.

 

Given your numbers listed, I'm assuming this is a sandwich LO.

You could explain further about you being in this for a profit...this is your business...etc. etc.

However, if they give you any more heat, I'd just switch it up to a CA.

You don't work for free, so if they balk at you making anything, it's a no-brainer to move on and

let them sell it themselves.

[MichaelC 160]

Jason is kinder than me, apparently. I'd take the harder line because I'm crotchety and have no patience for someone without any respect for the contract they signed.

Oh, that, and I suggest you never write in your ads how much option money you want. Let the t/b tell you first They may have more than you're asking.

[jhanson8 0]

This deal was designed to be a sandwich LO all along because they didn't want to deal with tenants. I tried to sell them on an assignment, but they only agreed if I would stay a part of the deal. The monthly cashflow is lacking, but the potential $11k at the back end was enough to keep me in.

 

Our contract has a buyout clause equal to one month's rent, so I responded back like MC said. I told them that our contract is binding, but if they want out they can buy my interest for that amount. Or, I can assign whatever deal I find to them and they can get a little higher purchase price (minus the assignment fee). However, I will not be renegotiating our agreement at this time. This is becoming such a headache. Their response? "We didn't know you would be getting that much of a profit. We feel we are entitled to some of that since it is our house." (emphasis in original)

 

I had a feeling CL would come back to bite me. That is where I found them in the first place. I guess from now on I'll keep the purchase price off the ad and only show the monthly.

[MichaelC 160]

"We didn't know you would be getting that much of a profit. We feel we are entitled to some of that since it is our house." Your profit margin should make no difference to them. If the terms were acceptable then, those same terms should be acceptable now. Again, the greed factor is what is driving this tantrum.

Further confirms my suspicions they will be a pain in the ass to deal with. I'd definitely go with the buyout. What was their reaction?

[Jason (AL) 1]

Jason is kinder than me, apparently. I'd take the harder line because I'm crotchety and have no patience for someone without any respect for the contract they signed.

 

The gloves would've come off after receiving a response like:

"We didn't know you would be getting that much of a profit. We feel we are entitled to some of that since it is our house."

 

True, if they agreed upon and signed off on the terms, then it's official.

Most definitely charge them to release you. They seem to be a

migraine, waiting to happen.

 

Yes, don't re-advertise on CL.

[<Steve> 82]

Maybe the seller can help with the marketing expense. Say $500. paid up front; and being that this is a SLO with all the Advantages, maybe they can share in the risk over the lease term. I'm sure this will change their mind.

[jhanson8 0]

UPDATE

 

Well, I've had two phone conversations with the couple. Last night the husband called to say that I "hid" the buyout clause in the contract. Then, he offered me $200 for my expenses (gas money and advertising). I told him that offer was unacceptable. I also told him that his and his wife's initials are right next to the buyout clause indicating they were aware and understood it (I'm no newbie to contracts). He was really starting to get nasty with me, so just to push his buttons I offered to renegotiate a new contract with him...after he buys me out of our current contract.

 

So, he agrees to pay the buyout, but in return they want the information for all the TB's that I was in contact with about their house. I almost laughed out loud, then declined without explanation. He said his lawyer would be contacting me and then hung up. I did not sleep well last night...

 

Early this morning his wife called who is far more pleasant. She apologized for his behavior on the phone, but felt that he made some valid points and that I should reconsider. She admits they never consulted their attorney, even though they had been advised to seek legal counsel before signing and made a big deal over having their attorney review the contract. Still, she felt that I had been dishonest with them about pricing and my fees.

 

My response, in a nutshell: "How am I the dishonest one? You lied about not knowing the buyout clause. You lied about having your lawyer review the contracts. You have changed your story several times. I'm the only one being honest here."

 

I guess this hit home, because she said I was right and that they should honor the agreement. I tried to reassure her that the deal is still good for them and remind her how enthusiastic they were a few days ago. She's going to speak to her husband about it, but she expects the deal to stay in place. I don't want the deal anymore. Can I force them to buy me out, or do I have to walk away with nothing?

 

My considered opinion: Buyers and Sellers Suck!!

 

So, what mistakes did I make? I thought I handled it well and covered all my bases from the beginning. A little constructive criticism is appreciated. How have you guys handled issues like this before?

[MichaelC 160]

My considered opinion: Buyers and Sellers Suck!!

Hehe. No argument here. I always like to say, "Buyers are liars, sellers are story tellers".

 

As for how you handled yourself, I would say damn well. You are on the right side of this argument. The only argument hubby is making is that he is a victim. There's no truth to this, of course. The only thing he is a victim of is his own greed.

So the question becomes, what should you do? If you hold your ground and are unable to find your t/b, you cancel your agreement and walk away with nothing for your troubles. If you do find a t/b, I suspect this clown is going to be a pain in the ass for the duration. Were I in your shoes, I'd want out, but I certainly wouldn't let on. I'm thinking my approach would be that of the reasonable, nice guy, who is now willing to lower the agreed to buyout clause. $200? No way. But there will be a happy medium somewhere to be found, unless this guy is a real jerk. Actually, he is. But his wife is there to keep him in check, I suspect. Max out what you can get and move on.

[dionwisn 0]

My considered opinion: Buyers and Sellers Suck!!

Consider it a favor the guy is giving you a hard time. Also look at it from a fiscal standpoint is 24 months working for this clown worth $11,000 backend?

[<Steve> 82]

Way to keep your 'Poker Face' on this one. I think I would have exploded after being so far in the deal to have the seller all of a sudden freak. And holding the seller to the contract is a great way to stay in control.

So, what mistakes did I make? I thought I handled it well and covered all my bases from the beginning. A little constructive criticism is appreciated. How have you guys handled issues like this before?

There are a couple things that I would remind the seller when they first had issue with your profit. One if they hired a realtor their fee would be 6% to 7%; your services are free to them. If you are including the Naked Investor Advantages in the deal, than for the seller, their property goes on automatic pilot and all they do is receive a rent check every month. And that is huge as this seller did not want to deal with tenants and toilets. Lastly, I have told sellers that I do not know what the deal will end up being with the tenant/buyer. Each property is different. The numbers I advertise are negotiable; I start high and only negotiate my numbers to make sure “you” Mr. Seller “will receive the purchase price we have agreed to. That is not negotiated!”

[MichaelC 160]

Lastly, I have told sellers that I do not know what the deal will end up being with the tenant/buyer. Each property is different. The numbers I advertise are negotiable; I start high and only negotiate my numbers to make sure “you” Mr. Seller “will receive the purchase price we have agreed to. That is not negotiated!”

Excellent, Steve.

[jhanson8 0]

UPDATE UPDATE

 

I spoke with the wife this morning. Their lawyer told them that my buyout fee is reasonable. Duh. However, she would like me to continue marketing the house until we come to a resolution. She also wanted to know if there has been any interest from TB's so far, and if any TB's have requested to view the home. She couldn't tell me if they were going to go through with a buyout or actually stick with the original deal until her husband got home from work.

 

With my "poker face" firmly in place, I believe she "tipped her hand" here. I think they're trying one, or both, of these tactics:

1) They're stalling for time. They know that I have until July 31st to find a buyer and get the deal done, or I'll have to walk away with nothing.

2) They're trying to go around me and deal directly with the buyer. She was very interested in TB's wanting to view the home, which we agreed they would handle.

 

Either way, I'm not worried. My contract has a standard "procuring cause" section, so if I find a TB who meets their terms and they decline, or if they lease and/or sell to one of my TB's within one year, I'm entitled to my buyout fee. Plus, I have three TB's ready to see the house. I understand that greed has kicked in, but they're making this ridiculously hard on themselves...

[Andrew Ikeda 0]

Wow! Jhanson8, I don't envy you or wish you anything bad, but I do want to say thanks for sharing all the nitty-gritty details of this deal you're working on. I have to say that I've learned a ton reading this thread.

 

Best of luck to you in this deal. Keep us posted.

 

Andrew