Re: No Good Deed Goes Unpunished! - Long - Posted by Matt B
Posted by Matt B on October 26, 2000 at 14:11:23:
I think all of us who have even a little experience will probably have similar stories. I used to bend over backwards to “help” some of these people, and learned the hard way to run my business AS A BUSINESS. What would a bank do if these people stopped paying?
I had a guy who looked at a house that I was offering with owner financing. I was asking the fair market value for it, and intended to sell the note at close. This guy told me about his past credit problems, how he was working on cleaning them up, and even showed me a copy of his credit report that he recently pulled to see what he needed to work on. I ran his credit by a note buyer, who agreed to buy the note when it was created.
Once I was sure that I could sell the note, I wrote up the contract and told him that I would need a $500 earnest money deposit. I also worked a great deal for him, structuring the deal so that he would only have a $2,000 down payment, with me paying his closing costs. I did all I could to help this guy and his nice wife and 2 kids. When I went to his apartment to get the contract signed, I sat down with him and his wife and read and explained every last word on the purchase contract. I asked them if they had any questions. I asked them if they were sure that they would be able to come up with the $2,000 down payment, because, I told them, if they couldn’t, and had already signed the contract, they would be in default and I could keep their earnest money. They said that they understood.
The guy then went to get the cashier’s check that I told him to have made up for the earnest money deposit. He handed me the check, but it was only for $220. He explained that he had to wait until the next week when he was paid to give me the rest of the $500. This was a huge warning sign that I sort of ignored. I asked him if he was sure that he would have the rest in a week. I asked him if he were sure that he would be able to come up with the remaining $1,500 for the down payment. I told him that if he wasn’t able to come up with either of these, he would be in default and forfeit his deposit. He said that he understood.
To shorten a VERY long story, he wasn’t home when I went over the next week to pick up the remainder. He called me a few times, telling me to come over and get the money. EVERY time I went over, nobody was home. I wrote him a letter warning him that he was in default, and if he wanted the house, he had better come up with the rest of the money. He called me a few days later and said that he just wanted his money back because his mom told him that the house wasn’t a good deal!
I bent all my rules for this guy and now he wanted his money back. I told him that since he was in default and kept telling me to come to his house to get the money when he wasn’t home, I would be keeping his deposit. He took me to court about it. I figured that this would be the quickest hearing that I had ever been to. After he fumbled around and stuttered to the judge that he wanted his deposit back, I told the judge what I had told him. The judge asked if I had warned him that he could lose his deposit if he didn’t come up with the rest. He said yes, plus it was right on the contract in front of the judge. The judge then asked me what I “gave” this guy for his $220!!! I told the judge that I had “given” this guy the right to buy the house, and took it off the market to hold it for him. I have no clue how, but I lost! I now use an attorney for ANY legal matter!
I also have a tenant/buyer that I thought would be a problem. She was going through a divorce when she first checked out one of my properties. She had to borrow $2,000 from her mom in order to get enough for the option deposit, which was $3,000, but she did it. Well, last Christmas, she didn’t pay her rent. I called and left several messages, which were never returned. I then went out to the property. She was home and I asked what was going on. She told me that (here comes a good one) she had forgotten to put a return address on the envelope so the post office sent it back to her. She told me they were really starting to crack down on that. It actually took a second to hit me that she was telling me that some psychic at the post office saw her no return address envelope, used their psychic power to determine who had sent it, and sent it back to her! I went to the post office and sent her eviction notice certified. In 2 days, the payment was in my hand.
I won’t even bother with late notices or phone calls any more. I’m tired of sob stories too. My tenant/buyers know my policies. I make sure that I carefully explian and put in writing what they are. If they are late, they get a notice sent to them and they don’t get that month’s rent credit. Seems to be working just fine now that I am the mean old wicked landlord now.