The Truth About Sellers Cancelling Real Estate Contracts

Welcome back to the channel, everyone. This is Nathan Payne, and today we're going to be talking about when can a seller back out of a real estate contract and how you can stop that if that is something that's happening to you. This is super important, guys, because if you don't know if a seller can back out of a contract or even know how to react to this situation, you're going to lose out on a lot of deals. So stay tuned and watch the video. By the end of this video, you're going to know, can a seller really back out of a real estate contract? Also, why would a seller want to back out of a contract if they agreed to sell the house to you? Also, when can a seller back out? What can you do about it if a seller wants to back out of a contract that you have with them? All right. So the main topic, the main question of today's video is, can a seller back out of a real estate contract? And unfortunately, yes, they can. Someone can sign any document ever and back out. By falling off the face of the earth. If I sign an agreement with you to, you know, go wash your car for the rest of the year and then you never see me again, what are you going to do about it? Right. And that's a weird example, but I'm just saying, if you sign an agreement with someone, really the only thing that can help you to enforce that is more paperwork or suing someone. But you can't make someone do something even if they put their signature on something. I mean, they could die. So what are you going to, you know, I'm not trying to be grim or anything, but if someone passes away and they signed to sell their house, something, you can't— there's not much you can do about it, right? So if a seller tries to back out of a deal, yes, they can. But there are ways, as this has probably happened since the beginning of time, there are ways that you can stop this from happening, or you can protect yourself. And that's what we're gonna go over in today's video. So before we kind of dive into what you can do to stop this from happening, let's kind of talk about some reasons why a seller would want to back out of a contract. Let me talk to you about one of the situations I had when I was brand new and had no idea how to stop this from happening. And I just I just trusted people when they said they were going to do something. All right, I'll give you a good little experience. I was brand new to wholesaling, brand new to real estate investing, and I went to this guy's house with one of my employees at the time. We were doing negotiation. I was teaching him, training him how to be an acquisitions manager. So he sat down with this guy and we walked through the house. He showed us the property. It needed a lot of work, and he was telling us the whole time why he wanted to sell. He needed to sell because he needed the money. He wanted to move somewhere else, and he was just tired of the place. We had a good hour conversation with him. It was pretty interesting too. He And he actually, we were sitting on the couch right in front of him and he's like, hey, I got a bunch of guns underneath that couch. You want to check them out? And we're like, oh yeah, sure. So we lift up the seat cushions of the couch we were sitting on. There was a bunch of guns. It was really weird. But anyway, so we were chilling with him and we eventually got down to an agreement on to buy his house. We were like, hey, you know, we can buy the house for, let's say, I think it was like $205,000. And he was like, ah, I'd like to get a little bit more. But we're like, we stayed firm and we're like, that's the best we can do. And he agreed on it. So we signed the paperwork, shook his hand, and we said, okay, we're going to close in 14 days. So as we're driving away, he— not as we're driving away, maybe like an hour later, he calls us and he's like, hey guys, I can't sell the property to you. And we're like, why? What happened? He's like, my girlfriend, she doesn't want me to sell the house. And me being naive, you know, after an hour of talking to him and him saying he's going to sell and he's motivated and he needs to, Now his girlfriend doesn't want him to sell. Now with more experience, I probably would ask more questions, but then I was, I just trusted the guy said, oh, well, you know what? Look, we don't want, we don't want to cause any problems. We'll just cancel the contract. You don't have to sell it to us if your girlfriend doesn't want you to sell it. And then, you know, that was it. I didn't think about it anymore. Just trusted what the guy said. So I'm on the market, I'm on the MLS, just looking at deals like a month or two later. No, it must have been like 2 or 3 months. A little longer, right? So I'm looking at deals on the MLS and I noticed that the house that we had made the offer on was for sale and I was like, oh, what, what the heck, it's for sale? And what had happened is he had sold the property to another investor probably that same day or someone else and they had flipped it and they were selling the property for like $350,000. He had sold, he told me he wasn't gonna sell, his girlfriend didn't want to sell, and I said, okay, that's fine, we forgot about it. And he sold to someone else probably that same day for more, maybe a couple thousand dollars more, who knows. But I trusted that what he said was true instead of verifying and doing what I know now, what I'm going to teach you guys. But that's basically how someone has been able to back out of a contract and without me verifying or diving deeper how it's impacted me when that could have been a deal I had, or I could at least negotiate with a little bit more by asking more questions. So that story is probably something that's happened to a ton of you, especially when you're newer. But what you need to do in order to stop that from happening is you just need to know that most of the time why people try to back out of contracts is not that they don't want to sell, because I mean, originally they wanted to sell because they talked to you. And if something hasn't drastically changed, that probably— they probably still want to sell. It's usually because they have a better offer or someone came in after you and said, hey, I can offer more money. I mean, it's happened many, many, many times to me where sellers try to back out just because someone's coming after and said they want— they can pay more. And I'm now through the experience and this sore feeling happening where I lost out on a deal just because I didn't probe and ask more questions. I'm prepared for that situation. So when someone calls me and says, ah, you know, I don't want to sell, or I've decided to do this and keep it, I ask more questions. These are some of the questions that you're going to need to ask. But before I get into them, let me tell you about something I want to give you. What I want to give you guys is the Painless Wholesaling Mind Map, and it's in the link below. And let me tell you why you need it. If you are working with sellers, and as if this has ever happened to you when a seller's tried to back out of a deal, you need my mind map because I give away the process and the system of exactly how to file an affidavit of memorandum or notice of interest, which we're going to get into in the video on how to protect your deal if a seller tries to back out. So check out my mind map. Not only does it have paperwork on that, but it's got every contract, everything you need, and the step-by-step process of how to do deals. Check it out. It's literally absolutely free. Let's talk about if a seller tries to back out of a deal. You guys heard about my situation. This is how I would have handled this situation if it happened again. I signed the contract, I'm driving away. An hour later he calls and he says, Hey, Nate, I don't want to sell the house anymore. My girlfriend doesn't want me to sell it. This is how I would have reacted. And this is how you would— I recommend you do if this happens. I say, oh, you know, wow, what happened? I thought, you know, I thought you needed to move. I thought you had to go somewhere. Does your girlfriend like— does she not— she not care like what you need to do or if you didn't have the money to do it? I would ask a little bit more questions about that. And if he's like, oh, no, you know, I decided to come. I came up with the money. I need to stay. I'd say, hey, look, I totally get it. You don't need to move. I can't make you move. That's no problem. But you signed an agreement for us to buy the house. Your girlfriend doesn't own the house. What I can do for you is I, because you signed the agreement, I can put a notice of interest on the house just to protect my interest to buy it. If you don't want to sell right now, that's completely fine. But when you do sell it, I'm going to be there so I can buy it just so we can work together because that's what we agreed on. You signed, I signed. I'd love to work with you. And if he starts getting squirmy and fishy and be like, well, well, Just like, hey, it must be something else. Is it the price? Did someone offer you a little bit more money? Because, you know, like I said, we agreed on to buy this house, and if you don't want to sell it to me right now, that's fine. But you did sign. So, you know, either now or later, it doesn't matter to me because I, you know, we agreed to buy your house and that's what we agreed on. So that is how you handle the situation. You tell them, hey, that's fine. You know, I'm ready to buy it. But if you don't want to sell it to me now, I'm going to buy it eventually because we have this agreement in place and it's legally binding. And if you don't want to sell now, that's fine. And if they act a little squirmy or fishy about it, you'd say, oh, it must be something with the price. Are you talking to someone else? And if you are, it's okay. I know I'm not the only one that's talked to you. What's going on? And let's negotiate. Let's figure this out. Now, if he comes in and says, I have someone that's offering $300,000 and you offer me $205,000, I know that that's not true. I know what the other buyer is just trying to do is get in on the deal and then he's going to lowball them later. So I would say, hey, look, I know you're getting that offer, but do you know what I know in the condition of your house, that that person is just trying to get in this deal and they're going to try and lowball you later. I've been honest and open, open, honest with you since we started. That's not very honest. As you know, that's not going to happen. And we have signed the agreement. And I'm telling you right now that, you know, if you don't want to sell the house right now, it's fine. But if you do sell, you've agreed to sell to me. So that is how I would handle the situation if it happened again. And what do you need in place? Well, of course, you need a contract that's signed, and this contract needs to have the verbiage and the wording that allows you to file an affidavit of memorandum, notice of interest. So you have the interest to buy the property, you can exercise your right to do that. So you need a contract, you need to be able to file notice of interest, affidavit of memorandum. They're interchangeable, they're the same thing. You need to be able to file that, get it notarized, and file with the county wherever you're at. You need that, and you need to be able to have that negotiation conversation with them and just talk to them open and honestly, be like, hey, look, we talked for a long time. What's really changed in the last hour? What's changed in the last week? I know you still need to sell. And if you don't, if something, by some miracle, you're able to come up with all that money and you don't need to sell, then I'll be ready for you when you do. So that's the conversation that I would have with people and how you have to analyze and determine what's going on. Don't be like me when I first started where you just say, oh, okay, I trust exactly what you said, even though everything we just talked about for the last couple hours is the exact opposite. Call it out. If something smells fishy, probably is. Just talk to the people, be open, transparent, and just attack it if it sounds weird. I want to invite you to join my Painless Wholesaling Club, where if you want to learn how to get into real estate investing for a very, very affordable price, check it out. I work with you on weekly coaching calls, I provide you leads, and I help you work through situations just like this so you can overcome them and you don't mess around and lose out on deals like I did in the beginning because I didn't have someone in my corner.