Posted by Mike on April 10, 2002 at 20:47:13:
John Burley suggests you add a contingency to your offer that you ask for- Right to show property to potential OCCUPANTS in privacy with reasonable notice.
Question: Showing a house someone lives in? - Posted by Keri
Posted by Keri on April 10, 2002 at 19:06:08:
I have a question about selling/wholesaling/flipping houses that I have a contract on but the people are still living there.
Here’s the scenario:
I have a contract with the homeowner to purchase and I want to sell to another investor and either flip the contract or do a double closing…in the letter I sent and the contract it says that if the homeowner gets a better offer/higher offer that I will cancel the contract (this was recommended from someone as a way to ease the homeowner’s mind about being taken advantage of before I talk to them)…how can I have investors look at the property without making the owners a better offer? I am assuming that some or all of the potential investors will want to look at the property to see it’s condition before agreeing to a price to purchase from me. I know that I have the property under contract at this point, but what’s to prevent them from talking to the homeowners and making another offer since they are probably still going to be living there when the investor looks at the property and up until right before the settlement date?
Should I stipulate something in the contract about allowing investors/buyers to see the property? How do you do this when you have to handle this type of situation?
Thanks for your help…
Keri
PS Do I always have to be there to show the property or is seeing it from the outside a good enough preliminary look for a potential investor? Any thoughts or comments on this would be appreciated.
Re: Question: Showing a house someone lives in? - Posted by Brent_IL
Posted by Brent_IL on April 10, 2002 at 23:08:24:
I agree with what the two Mike’s have said.
What’s done is done, but in the future consider this also. Your contract says if the homeowner gets a better offer/higher offer that you will cancel the contract. The one I use is a prominently displayed “Seller’s Option to Cancel” that gives the seller the right to cancel by paying me 3% of the sales price plus up to 3% of verified expenses connected with the subject property.
When I explain it to the sellers I exaggerate by saying, "Although we have a good deal, a fair deal, just suppose that the city decided that a new runway could be built only if it went through your living room and offered the owner a million dollars for the property. Normally, the owner they’d be talking to would be me. This section gives you the right to tear up our agreement by paying …?
If the seller wants out, at least you would get paid for making the offer. On an hourly basis it’s good compensation.
Re: Question: Showing a house someone lives in? - Posted by Mike Daly (GA)
Posted by Mike Daly (GA) on April 10, 2002 at 19:40:20:
Well, first off if it’s a situation where the homeowner is still living in the house, it’s best to let them know upfront that your intention is to flip it (but don’t use the word “flip”:). If it was vacant that would be different – but with him still in the house there’s no way you can show the house without him realizing what you’re trying to do.
As far as the cancellation clause, I wouldn’t have put that in unless the seller requested that and it was necessary to do the deal. Since it’s a done deal already, I’d at least make it clear in the contract that the seller cannot cancel and then sell to a buyer that found the property thru your marketing efforts. It should also state the cancellation must be in writing and sent by certified mail. To further protect yourself, you can record an affidavit that just states you have a contract to purchase the property. If the seller does try to go around you, this will cloud the title.
You also want a clause that gives you access to the property so you can show it. If you’ve established some good rapport with him, he might even be willing to give you a key so you can show it when he’s not present.