{"id":7905,"date":"2021-12-16T13:54:07","date_gmt":"2021-12-16T13:54:07","guid":{"rendered":"https:\/\/realestatewealthnetwork.com\/blog\/?p=7905"},"modified":"2021-12-16T13:55:43","modified_gmt":"2021-12-16T13:55:43","slug":"motivated-seller-backs-out","status":"publish","type":"post","link":"https:\/\/realestatewealthnetwork.com\/blog\/motivated-seller-backs-out\/","title":{"rendered":"What To Do If A Motivated Seller Backs Out"},"content":{"rendered":"

I\u2019ve received many questions from students I\u2019m mentoring about what to do if a motivated seller backs out of a deal.<\/p>\n

Today, I\u2019m sharing an interesting and difficult situation that happened to one of those clients. We\u2019ll call him Oliver. He asked:<\/p>\n

\u201cI had a contract with a few sellers where the seller received higher offers after we agreed on a price. Do I file a notice of intent with the courthouse to prevent the sale of the house to the other buyer or just find another deal?\u201d<\/em><\/p>\n

See, very interesting question... <\/p>\n

Here\u2019s The Deal...<\/h2>\n

So, if you have a written contract with a seller and it was signed by all parties\u2026 and the seller then agreed to sell to someone else for any other reason (in this case, another buyer offering more) \u2014 Oliver absolutely has the right to pursue what\u2019s called \u201cspecific performance<\/strong>.\u201d <\/p>\n

I\u2019m going to say there's about a 98% chance that language is in your agreement. Specific performance is in most real estate contracts. <\/p>\n

The way it\u2019s worded is that the buyer is held accountable to the extent of their earnest money deposit. Meaning, if they bail on the deal, they lose their deposit and that's the end of it. And most real estate contracts also say that the seller is obliged to act according to the terms of the contract\u2026 to the extent that the buyer can sue them to perform specifically<\/em> as stated in the contract \u2014 thus the term specific performance.<\/p>\n

Motivated Seller Backs Out - Time To Make Your Move<\/h2>\n

So, Oliver could hire an attorney and file a lawsuit. Or, he could do what he suggested, which is to record the Affidavit and Memorandum of Agreement Concerning Real Estate.<\/p>\n

That\u2019s a pretty common document. And what that will do is cloud the seller's title, and it should prevent the closing agent, attorney or title company from facilitating the transfer of title from that seller to another buyer.<\/p>\n

What will happen is, during the title examination, the closing agent will see that document and know that there\u2019s now a title issue here that will need to be cleaned up. They\u2019ll see that Oliver had an agreement to buy the house.<\/p>\n

The closing agent will see that Oliver recorded a document evidencing his agreement with the seller and it will stop this transaction dead in its tracks\u2026<\/h4>\n

\u2026 until \u2014 and if \u2014 they can get Oliver to release it. <\/p>\n

Then, Oliver is going to get a call \u2014 might be the closing agent, might be the seller \u2014 and they're going to say, \u201cOk, we did have a deal. So what's it going to take for you to release this?\u201d<\/p>\n

Now Oliver does some math. He\u2019s thinking he was going to wholesale the deal and make about $18,000 bucks on it. So, that's what it's going to cost the seller to get out of the agreement. $18k to release it. Or, if the seller prefers, they can sell the house to Oliver as originally agreed to. <\/p>\n

Either Way, You Are In The Driver\u2019s Seat.<\/h2>\n

Oliver needs to be sure that before he records the affidavit, he does in fact have a written contract signed by the seller and that it is in force and has not expired. If not, he might end up being on the short end of the stick\u2026 accused of Slander of Title. <\/p>\n

So, I suggest you be extra careful and write in the addenda section of the purchase and sale agreement you\u2019re using: <\/p>\n

Evidence of this agreement may be recorded on the public record.<\/em><\/p>\n

That's language an attorney gave me years ago. I suggest you ask your own attorney about this and for language to use because, after all, I\u2019m not an attorney and am not offering legal advice here.<\/p>\n

Then What Happens Is\u2026<\/h2>\n

If you record the affidavit and the seller or their council says, \u201cWhoa, not cool,\u201d you\u2019ll say, \u201cWell, look right there, see what it says: Evidence of this agreement may be recorded on the public record. And that's what I've done. I did that because I was concerned you might welch on me\u2026 and, it seems you have.\u201d<\/p>\n

Basically, using that language and recording the document is kind of playing hardball. But if you\u2019re concerned about the seller welching, it\u2019s a powerful tool in getting them to do what they said they would do.<\/p>\n

(True Story) Motivated Seller Backs Out On ME!<\/h2>\n

Before I wrap this up, I want to share a little anecdote on this topic. It\u2019s kind of nuts, actually\u2026<\/p>\n

I was going through some files the other day and I came across an affidavit I recorded on a house that I had under contract \u2014 and for who knows what reason the seller basically stopped responding. His attorney stopped responding to my attorney too. <\/p>\n

They just went dark. <\/p>\n

So, I recorded the affidavit... <\/p>\n

I recorded it 17 years ago. <\/p>\n

And still, to this day, the house is not sold. It\u2019s 17 years later and the affidavit is still sitting on that title. Obviously, I never pressed the issue because I was and remain too busy but I figure eventually something will happen.<\/p>\n

Told you it was nuts.<\/p>\n

So, one way to protect yourself when a motivated seller backs out is to make sure that specific performance language is included in your contract, and then <\/strong>record the affidavit. But be careful and do it with good local council.<\/p>\n

(Your Take) Motivated Seller Backs Out On YOU?<\/h2>\n

Have you ever dealt with a motivated seller backing out of a deal? How did you handle it? Let me know in the comments! <\/p>\n

And if you have questions similar to Oliver\u2019s, I meet twice monthly with my Inner Circle students covering topics JUST like this and more during my LIVE Deal Maker Webinars. You can click here if you\u2019d like to sign up and join us for the next one.<\/a><\/p>\n

Regards,<\/p>\n

Cameron Dunlap<\/p>","protected":false},"excerpt":{"rendered":"

I\u2019ve received many questions from students I\u2019m mentoring about what to do if a motivated seller backs out of a deal. Today, I\u2019m sharing an interesting and difficult situation that happened to one of those clients. We\u2019ll call him Oliver. He asked: \u201cI had a contract with a few sellers where the seller received higher […]<\/p>\n