Flipp'n a Home

[alexmorrow]

Ok, so I found an investor that may be interested in purchasing a home that I found through Craigslist. However, I haven't bought the home yet and I'm curious to know WHY an investor wouldn't just buy directly from the current owner instead of buying it through me. I don't have any keys to the home so the owner is going to have to show it to the investor. Why wouldn't he just buy it from the owner after he views the home? After all, he knows who owns it and how much the asking price is for the home.

[Michael Quarles]

Until you get the friggin contract that can happen... MY God.... Why are investors so afraid of getting a contract signed? It isnt like you are going to have your arm cut off.

[alexmorrow]

Hmm...any other suggestions or comments? Jim?

[brianb_cobbres]

He may think you have it under contract? Beyond that there is no reason.

So, either get it under contract so you have something to assign or prepare to be cut out of the deal once the investor figures it out.

[alexmorrow]

So, then in your opinion, how would you go about flipping a home to another investor? Please take me step-by-step on how you would manage to get the investor to walk through the home and not go ahead and purchase it directly from the seller? I mean, if this investor walks through the home...that is being shown by the seller...he's going to know exactly what I paid for it and then he'll know exactly what my margin is. Don't you think that might prevent me from flipping the home to him?

[Michael Quarles]

That post is the biggest bunch of crap I have read in a long time... We all know that if you do not sign a contract then the "Verbal" agreement you have creates a fraudulent contract. So you’re telling everyone to go out the and commit fraud... That's nice..

Your quote says it best when you do business you will find some people can be trusted by just their word and others can not...
The key word here is "Some" which is why you should always have a contract.

The fact that you don’t sign one with someone seems to imply that you don’t want to get into an agreement that you have to honor. Where is the honor in that.

Lets assume that you are a great guy and keep your word when it fits you... What happens when you die or the other party dies? Without an agreement what then...

So how does escrow or an attorney carry out your requests? do they read your mind or ask themselves "what would an honest person do"?

The advice you gave is why someone else needs a disclaimer to protect the site...

For the original poster.... According to the "used to be a time " rule I guess you should carry around a set of pistals and shoot the sob if he takes your deal...

[alexmorrow]

I think contracts are important. However, I also believe that your word means something too. Maybe I should put it under contract? However, don't you think that if I'm upfront about what I make off the home that the investor will appreciate that?

[Michael Quarles]

Jim I am confused... But heck I have been there before and probably will again...

You just warned me via a PM that you are going to ban me from the site for my rebuttal about your post and yet you post that comment.

The poster needs solid advice and your advice could be taken by investors as the "Way to do things" and no one should enter into a fraudulent contract.

Irrespective of their credibility or lack of.

Michael Quarles
AKA "Big Mike"

[brianb_cobbres]

Sorry Jim but I have to disagree with you on this one. You may feel comfortable working without a contract but recommending the average investor go without is simply bad advice. Have a signed agreement ensures both parties are aware of the terms of a deal and understand their part in the agreement. If nothing else it serves as a backup to the handshake and verbal discussion eliminating or at least reducing the chance that either party will forget or misinterpret the terms.

Remember the old telephone game where you take a line of kids and have them pass a verbal message down the line. In almost every case the message the last kid hears is very different from the original. Had them been passing a written message (contract/agreement) then the final message is almost guaranteed to match the original. Writing it down and getting both parties to sign is simply good business. And yes, I understand that contracts are made to be broken and are only worth the paper they are written on so trust and honor will always be a factor but that simply is not enough.

Look, even when I work on a project at the old J.O.B. we have a policy of using statements of work where the business owner documents their requirements, both parties review and negotiate the final specifications, and both parties/groups sign the SOW acknowledging their acceptance of the project. Is it a "contract"? No but it is an agreement between two parties where both acknowledge their part in the relationship. Do I require them to sign because I don't trust them? Well yeah but thats a different discussion.

Contracts are good food.


And Michael, crap or not a verbal contract is not fraud. Verbal contracts can and have been upheld in courts all over the country. You really need to really tone down those responses.

[Debbie]

Jim I am confused... But heck I have been there before and probably will again...

You just warned me via a PM that you are going to ban me from the site for my rebuttal about your post and yet you post that comment.

The poster needs solid advice and your advice could be taken by investors as the "Way to do things" and no one should enter into a fraudulent contract.

Irrespective of their credibility or lack of.

Michael Quarles
AKA "Big Mike"

Mike,

Alex did ask a good question. He's just not clear why some investors doesn't get a contract if aware of such existing property.

In this case, by all appearances, this investor may be assuming that Alex will get or already got the contract.

Keep in mind, many of our MB members are newbies and want to learn to avoid any potential mistakes or jeopardize potential relationships with other investors.

Instant criticisms doesn't help, Mike.

[Tim]

That post is the biggest bunch of crap I have read in a long time... We all know that if you do not sign a contract then the "Verbal" agreement you have creates a fraudulent contract. So you’re telling everyone to go out the and commit fraud... That's nice..
You are completely clueless about contract law.

[alexmorrow]

Wow...I tend to start heated discussions. I understand both points. I think in the case of the investor Jim and I both know, I don't need a contract. However, with anyone new, I would need one. Maybe just to put the home under a contract before having the investor walk through the home. I think if I am honest and upfront with the investor, he/she will be more willing to work with me in the future. In the end, even if I sell a home for more than the seller 's asking price, it could still be a great deal for the investor I'm flipping it to. For anyone that I don't really know too well, what contract(s) do wholesalers use when flipping a home to another investor?

[Jim FL]

Jim I am confused... But heck I have been there before and probably will again...

You just warned me via a PM that you are going to ban me from the site for my rebuttal about your post and yet you post that comment.

The poster needs solid advice and your advice could be taken by investors as the "Way to do things" and no one should enter into a fraudulent contract.

Irrespective of their credibility or lack of.

Michael Quarles
AKA "Big Mike"

Mike and others in the thread.......

WHOAH!!!!!!!!
WAIT a minute..........
I'll inject myself here, whether you like it or not.

Ban someone for that?
Were you REALLY threatened with being banned?

Dan, Debbie?
Come on now.....please step in here.........

Jim, sounds to me like your liberal side is showing again. :-)

Trust me, folks start getting banned around here for threads like this, and I'll leave..........you won't need to ban me.

This is just plain nuts.

And Jim, good for you that you get deals done over the phone, paperwork free.
I think ALL of us who have been in business for some time can get things done like that, and do.

However, on a forum, even if the original poster is someone LOCAL to me, I'd not post to not use a contract.

Someone else might read that BAD advice.

A verbal contract is only worth the paper it's written on.........

Happy Times,
Jim FL

[Jim FL]

Mike,

Alex did ask a good question. He's just not clear why some investors doesn't get a contract if aware of such existing property.

In this case, by all appearances, this investor may be assuming that Alex will get or already got the contract.

Keep in mind, many of our MB members are newbies and want to learn to avoid any potential mistakes or jeopardize potential relationships with other investors.

Instant criticisms doesn't help, Mike.

Debbie,
INSTANT criticism (not plural, for some reason, you always put S's on the end of things).........
Where?

Ah, okay, let's look at this thread a minute.........with an example.

POSTER:
"Hey guys, how do I flip/wholesale a property?"

"RESPONSE":
Agree on a price with the seller, agree on a higher price with the buyer, keep the difference?"

POSTER:
DO I need a contract of some sort to get that done?

RESPONSE:
Nope, handshake, especially if you are new, just keep your word, others will too!

Ah What!!?!?!?!

That is the WORST advice I've seen in YEARS!

Now, sure, I like Jim and others I'm sure, (Michael too), have been on the phone, 'made a deal', and then took it down (closed it) later, a few days, a week, whatever.
However, when it 'gets taken down' (closes), paperwork is done.

This thread blew me away.............

Jim FL

[Michael Quarles]

Tim... I dont think I am clueless... California Law is very on point with respect to a verbal contract.

Here is te definition of Statute of Frauds

What Is a Statute of Frauds?
A "statute of frauds" requires that certain contracts be in writing, and that they be signed by all parties to be bound by the contract. Although there can be significant variation between jurisdictions, the most common types of contracts to which a statute of fraud applies are:

Contracts involving the sale or transfer of land;

Contracts to answer for the debt or duty of another;

Contracts that, by its terms, cannot be completed within one year. (Please note that the fact that a contract is not completed within one year does not mean that it is voidable under a statute of frauds. For the statute to apply, the actual terms of the contract must make it impossible for performance to be completed within one year); and

Certain contracts for the sale of goods, under the Uniform Commercial Code.

Typically, to satisfy the requirements of the statute, the writing must identify the contracting parties, recite the subject matter of the contract such that it can reasonably be identified, and present the essential terms and conditions of the parties' agreement. (Under the Uniform Commercial Code, to satisfy the statute, the writing for the sale of goods need only be signed by the party to be charged, and a quantity term.)

Please note that, even without respect to the Statute of Frauds, it is good practice to reduce the essential terms of any contract to a signed, written agreement. Even when a Statute of Frauds does not apply to an oral contract,[1] it may be very difficult to prove and enforce the contract in the absence of a written agreement.

The Purpose of a Statute of Frauds
The purpose of a "statute of frauds" is, as the name suggests, to prevent injury from fraudulent conduct. There is some criticism of the continued existence of these statutes, as they are often used by parties who freely entered into fair contracts yet wish to avoid having to fulfill their agreements. At the same time, the abuses these statutes were designed to prevent are quite real, so a strong argument remains to keep them in place. It is also arguably good public policy to require that parties to certain significant transactions, such as those of long duration or which involve real estate, reduce their agreements to writing. A writing will both reduce the chance of future litigation, and also give the parties the opportunity to take a second look at the terms and conditions of their agremeent before it becomes final.

The Effect of a Statute of Frauds
A statute of frauds does not of itself render a contract void. The statute makes certain contracts "voidable" by one of the parties, in the event that the party does not wish to follow through on the agreement. (A contract that is "void" cannot be enforced. A contract that is "voidable" remains valid unless one of the parties chooses to void the contract.)

Sometimes, a party to a contract that would otherwise be invalid under a "statute of frauds" will nonetheless be able to enforce it, on the basis of "partial performance" or "promissory estoppel". Where "partial performance" exists, a party who has accepted partial performance by another party under the contract will typically be barred from asserting the "Statute of Frauds" in order to avoid meeting its own contractual obligations. "Promissory estoppel"[2] exists where significant inequities (unfairness) would result from releasing a party from the contract, and the party seeking release knew or reasonably should have known that those inequities would be created at the time of the original agreement. For example, where the party which seeks to be released knew that the other party would incur significant expense in obtaining materials which cannot be transferred to other work, a court may find that under the circumstances the contract should be enforced despite the statute of frauds.

As previously noted, if all parties agree that they are bound by the contract, the contract will remain enforceable despite the statute of frauds.

[Tim]

Michael,

You are either misreading or misunderstanding what you cited.

An oral contract is not a fraudulent contract and the statute of frauds does not make oral contracts fraudulent. The statute of fraud, in every state, can render an oral contract void and unenforceable but that does not mean the parties engaged in fraud by using an oral contract.

The statute of frauds defines which contracts must be in written form to be completely enforceable. Nothing more.

BTW, you engage in an oral contract every time you order coffee at Starbucks on a burger at Wendy's.

Also, note the last line in what you cite...
As previously noted, if all parties agree that they are bound by the contract, the contract will remain enforceable despite the statute of frauds.
A fraudulent contract, by definition, is unenforceable. Therefore, even California recognizes oral contracts.

Also, it is common courtesy to give a link to your source materials...
I am pretty sure this is the source you used and it is not California specific. (http://www.expertlaw.com/library/business/statute_of_frauds.html) If you used some other source, please provide the link.

[Michael Quarles]

Jim FL. I was going to post the "Ban" commits but thought I would wait.

To everyone who finds me offensive and too direct... Life is direct. Would you rather talk to someone who is willing to call you for something or talk to someone who will say "Ya you’re right" then when you’re gone think "they are stupid"?


Life is too short... I know without any reservation that I have made mistakes. Heck the last major one was my last business venture... WOW what a disaster... And if I am wrong please point it out to me I promise I wont bite your ear off.

One more thing I hate people writing between the lines... It is in MHO childish.. If you cannot stand up to someone and call them out then you should just not write...

Michael

[Debbie]

TIME OUT!

I am seeing mis-communications and mis-interpretations.

I know what triggered it and it's getting out of hand right now.

Until all involved parties cools off, I am going to temporarily close this thread.

This thread will re-open tomorrow morning (3/10/08).

In the meantime, some of you will receive private emails from me sometime today.

Have a great day.

[Debbie]

This thread is now re-opened.

[SlumLordMike]

In my travels I have seen deals successfully go to closing without a contract other than the one used to close. I've done all of mine that way. If I get there and the other party doesn't want to buy or sell, I will simply walk away and move on the next deal. (it hasn't happenned yet) On the other hand, I have witnessed other investor's deals go south because another party swooped in with better numbers. Having a contract in place would have most likely prevented it. If I find a deal where I stand to make a bunch of money, I will go through the trouble to get something signed as soon as possible in the future. There is no right or wrong here. It is simply what the investor is comfortable with. Even newbie investors can make that choice for themselves. So yes, I am officially sitting on the fence on this topic.

Ding-Ding: Round 2

[Michael Quarles]

No round two....

I am drinking herbal tea now...

[Debbie]

No round two....

I am drinking herbal tea now...

Didja have plenty of beer with Jim FL last night? :SM083:

[Jim FL]

Didja have plenty of beer with Jim FL last night? :SM083:


.........Irish Whiskey is my preferred, thanks. :-)

[SlumLordMike]

Nobody axed you biker boy ;)

LOL

I got my KLR 650 out of the shed last week. Trying to see if I can make it through season 2 without skinning my arse.

Season 1 ......didn't go so well. ;)

Peace Jim,

M*