Since this scenario has arisen for me recently on a couple of really good deals with a lot of income potential, I thought I would take the time to explain to you how to get around this problem.
Sometimes you will put a piece of property under contract with a seller, get all the way through the closing process right up to the time of closing and for some reason the seller changes their mind and decides not to sell to you.
There are a lot of reasons this situation will occur. One is that the seller may have gotten a better offer on the property after putting it under contract with you. Or maybe a relative tells them they didn’t sell for enough money or maybe they just get cold feet and decide not to sell. None of these are a good reason for them not to sell to you, especially when you have a valid contract with your seller and have followed through as you are required to within the confines of the contract.
Hopefully during the time between putting the property under contract and the closing, you have followed all the steps necessary to close and have either followed up with the seller or had your title agent or attorney following up with the seller to make sure they are performing on the requirements of the contract. If you follow up regularly with sellers during the closing process, this will significantly reduce the seller’s anxieties and you will be much more likely to close your deals.
Still, sometimes a scenario will come up and even though you have followed through, the seller still decides not to sell the property to you. So what do you do next? I will mention here that if the property is the seller’s homesteaded property, there isn’t much you can do about it. The law will not force the seller to go through with the contract and sell their homestead. However, if the property is not the seller’s homesteaded property, there are definitely remedies you can implement to get your deal closed, especially if there is a lot of profit in it for you.
The first thing I do if I smell trouble with a deal is to file an “affidavit and memorandum of agreement concerning real estate†against the property, thus clouding the title to the property. This can prevent the seller from trying to sell the property to anyone else. This does not work in every state. The next thing I will do immediately is to let the seller know that if they do not follow through on their end of the deal, I will immediately file suit for non-performance under the contract. I remind the seller that this will end up costing them a lot more money and significantly reduce the amount they would receive from the sale of the property.
Follow up next week for part two of “So What Do We Do When The Seller Won’t Closeâ€
In the meantime, for more information on tools for your real estate investing business, visit my website at marketingmagiclady.com.