The Titanium Vault hosted by RJ Bates III

We Messed Up This House Deal So You Don’t Have To!

• RJ Bates III • Episode 559

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If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

We are nationwide virtual wholesalers and on this channel we share EVERYTHING that we do inside our business. So if you’re looking to close more deals - at higher assignments - anywhere in the country… You’re in the right place.

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Over 10 years in the real estate investing business
Closed deals in all 50 states
​Owned rentals in 12 states
​Flipped houses in 11 states
​Closed on over 2,000 properties
​125 contracts in 50 days (all live on YouTube)
​Back to back Closers Olympics Champion
Trained thousands of wholesalers to close more deals

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Speaker 1:

Welcome back to oh, that's Fucking Adorable the series where I talk about things that don't go so well so you can learn about them and not replicate the exact same situation in your wholesaling business. Today, we are going to be talking about a deal that we just recently closed, a couple of weeks ago, and the seller decided I'm not going to move out of the house. Oh man, now listen, there are always signs that there's going to be something that goes wrong during a transaction, within the communication prior to closing. Now, we were on top of this, we were aware of all of the red flags that stood out to us. All right, but and I will say, I believe we did everything correctly in this transaction to prepare ourselves and try to eliminate anything negative from happening, but still, sometimes shit happens. So we'll talk about where did this lead come from? Okay, so this is a speed to lead. Coupon club lead right. Acquisitions team locked it up, did a great job, highly motivated seller. Price was slightly incorrect. Did a great job educating the seller, got the seller to come down to the correct price, got a signed contract.

Speaker 1:

I actually dispo'd this deal which, funny enough, I do like very little dispositions. This might be like one of two or three deals this entire year that I will dispo myself. And the reason why I dispoed is because I was sitting on the couch and I was watching the Dallas Stars play. Or actually, I was waiting on the couch and I was watching the Dallas Stars play. Well, actually I was waiting on the Dallas Stars playoff game to start and our team in the team chat was talking about hey, we just got to sign contract. You know, congrats, high five, the funny gifs, everything like that. And the numbers of this deal were in the chat. And simultaneous to that happening, an end buyer inside of TU texted me, asked me a question, and I said well, actually, funny enough, we're about to dispo a deal to you. And he said, well, what is it? And so I told him the numbers. He said, yeah, sounds great. Had some questions went back and forth. Two days later we had a signed assignment Boom, deal is done, all right, transaction coordination's open, title's open. We're moving forward, fast forward.

Speaker 1:

About two weeks and it's 7.15 in the morning, I'm at the gym, I'm on the elliptical Heart rate. My whoop is telling me I'm in heart rate zone four, which is like, between you know, I think it's the 80 to 90% of your maximum heart rate. Right, I'm full workout, I'm feeling it, I'm feeling good about myself. Right, I'm getting that workout in. And my phone rings. And I know this because on the elliptical I've got my phone sitting up so I can watch my whoop and see where my HR zones are. Because I got the new whoop and it told me like hey, I need to spend more time in HR zones four and five, and so I'm doing the elliptical and so I wanted to get a solid 15 to 20 minutes in HR zone four, and so I'm just now getting up to that point, I'm in the groove, and my phone starts ringing and it doesn't say, like potential spam or scam likely, it says a name. And it's funny because, like, I recognize the name but I kind of don't and I don't understand why I would recognize the name. And then, you know, I don't answer the the phone because, one, it's seven o'clock in the morning, 7, 15 in the morning, and two, I don't know who it is and I'm in the middle of a workout. But then I get a second call right again from this same person, and so I'm like, all right, the fact that I somewhat recognize this name. I need to to answer this call. So I answer and I'm huffing and puffing. You know, hello, you know this is RJ, you know something like that. And it was the homeowner, it was the seller, and he said, hey, is this RJ Bates? And I was like, yes, it is. And he's like, are you the owner of titanium investments? I'm like, yes, I am like, yes, it is. And he's like, are you the owner of titanium investments? I'm like, yes, I am. And he's like, all right, well, I'm, I'm under contract with a titanium investments, but I'm talking to someone else. I've never actually spoken to you. Is this legitimate? Is this a real deal? Like is, is cash really gonna be in my bank account in like a week from now? And so I'm like, yes, it absolutely is.

Speaker 1:

Now, funny enough, there was an agreement that the HVAC on this property was going to be replaced. Prior to us closing, the seller had told our acquisitions team up front that, hey, the HVAC's not working, but before closing I will have that replaced. And then he came back to us and said, hey, I messed up. I don't have the money, I'm not going to be able to do the HVAC, and so we already knew that we had to get a price reduction that would account for the HVAC not being replaced, and then we were just going to give that exact same price reduction to our invite. So I was like, well, actually, now that I got you on the phone, I know that my team is needing to reach out to you about the price reduction it's needing.

Speaker 1:

Now again, I'm in the middle of a workout, sweating, huffing and puffing, and I'm in the middle of the gym not really wanting to have this conversation. But I'm like, hey, while I got you on the phone, we need to come down on the price. So I get them to come down $7,500 for the HVAC, all right. So then I tell the end buyer hey, we got a $7,500 price reduction, we'll just give you that $7,500. No worries.

Speaker 1:

But this was the red flag the fact that the seller felt like he needed to look up my information and call me and ask if this was legitimate. Here's the thing. It's a red flag because, for whatever reason, he was concerned that we weren't legitimate, it almost always guarantees that the seller is going to do something to try to mess this deal up. Well, sure enough, the phone calls continue on a daily basis. When are you guys going to close? Can we close early? We kept telling him like, hey, we're going to close, we're actually going to close slightly before the closing date, but it's not going to happen today, it's going to happen on this specific date. So, two, three days before closing, seller calls why no, when are we closing? Hey, we're closing on this day.

Speaker 1:

And then he says well, how much time are you going to give me to move out of the house? You need to be out of the house at closing. Well, I can't do that, I need time. Okay, well, there's been no conversation in regards to you needing a lease back. However, there was communication about you being out of the house.

Speaker 1:

But, all right, again, we had the red flag. Here it comes. Here's what we need to do. We need to give you a lease back. How long do you need? So the closing is gonna take place on a Monday. We're gonna give him a lease back until 5 pm on Wednesday. We tell him we're going to hold $5,000 in escrow If he's out by 5 pm on Wednesday before he gets the $5,000, if he's not, the end buyer is going to keep the $5,000.

Speaker 1:

As he said, he only needs one day. He's like it's not that much stuff. You know I'm going to have movers, I'm going to have this. We had also invested, out of our cut $1,000. In a dumpster for him, because he said he couldn't afford a dumpster and he just wanted to throw a bunch of stuff away. So we got a 400 dumpster delivered to his house and we just ate that. We didn't charge him anything, we just 400 dumpster. There you go all right.

Speaker 1:

So closing goes down smoothly somewhat smoothly, I mean. There was. There was some little title issues with the docs and the wire being received on cutoff times and whatnot. Everybody got funded. On Tuesday, however, there was a mistake that was made and it ended up being crucial. The title company received the lease back, but somehow it didn't make it onto the settlement statement in the HUD and it wasn't caught by anybody. It wasn't caught by us, it wasn't caught by the seller, it wasn't caught by the buyer and it just was forgotten about. And so the $5,000 that was to be held in escrow was not and it was wired to the seller. So now the seller feels like he has time to move out of the property and the leverage that we had, which was that $5,000, has been lost because it was deposited to the seller.

Speaker 1:

So Tuesday comes and goes. Wednesday comes, buyer sends over his realtor to look at the property. Seller has not moved out. There's stuff all over the place. There's a U-Haul truck, there's just belongings out all over the front yard, there's people coming and going, but he's nowhere near moved out of the property.

Speaker 1:

And so we start obviously our buyer's concerned. We start calling the seller, seller's start, obviously our buyers concerned. We start calling the seller, sellers making excuses there was rain, movers screwed him over. You know all the excuse, plus the story is happening. You know these are all the reasons why he hasn't moved over, moved out. Then on Thursday, hey, are we going to be out today? Absolutely, I'm going to be out, Don't worry about it.

Speaker 1:

Later that afternoon, nowhere close to being moved out of the property. And then he hits us with the bombshell Well, you guys know they sent me all of my money. They didn't hold that $5,000 back. So we actually found out that the seller received that lease back money from the seller. So we started reaching out to the title company and we're like, hey, there was a mistake. And obviously they're like how did this happen? We're like how did this happen? They started contacting the seller. Luckily for us, the seller was pretty cool about this. He did answer the phone from the title company and eventually he did wire the money back to the title company. So I do appreciate that.

Speaker 1:

However, it took us a while to get to that point, because we went all the way through the weekend, even into the next week, several days, to get to that point. Because we went all the way through the weekend, even into the next week, several days, and it eventually got to the point where over the weekend he was still making excuses. I called the seller back. I called the seller back and I said hey, this is RJ Bates. Remember when you called me and you asked me if this was real, is the money in your bank account? He said yes. I said is it real? He said yes, sir Mike, then I need you. I need you to take this serious and I need you to move out of the house. This is the arrangement that we had. It's the agreement. You called me, worried whether or not we were going to perform, and we did. At this point in time, I need you to get out of the house or we are going to have to go over there and we are going to have to remove the belongings and we're going to have to have you removed for trespassing on the property. And so eventually, about 48 hours after that conversation, he moved out of the property. Luckily, somehow, the attorney at the title company did have him wire the money back. The end buyer ended up keeping that $5,000.

Speaker 1:

And here's the moral of this story. There was a couple of mistakes that were happening. One when the red flag came up with the conversation. To me we should have buttoned up all of the communication. We should have made sure everything was held in line. Every single closing that you ever have. Make sure you review that settlement statement from front to back and make sure Don't just go look to see if they have your assignment fee on there, but make sure everything is correct, including any leaseback amount. That was a mistake that we made internally. We don't make those very often, but we did. And of course, the one time we make that mistake where we don't check to see if the leaseback was held in escrow, we needed it held in escrow.

Speaker 1:

And then, when it comes to this level of communication, anytime a seller does not do what they are obligated to do in a transaction. Do not just leave your end buyer high and dry. See, we were over the top communication with the seller, the title company, making sure that the buyer got what they agreed to on the lease back Everything from across the board. We made sure that it was handled, even though the seller didn't get out in the timeframe that he necessarily said he would, or what the buyer wanted him to. It only cost us about a week and realistically this is over a 4th of July weekend, so it really didn't hinder the buyer too bad, because I don't think there was too much work going to be happening on a national holiday weekend, but it still was slightly embarrassing in how it all went down.

Speaker 1:

There was mistakes that were made. This is why I always want to share these with you guys, so you can not replicate this in your business. So again, when red flags come up, button up that communication, double and triple, check your settlement statements and then also, when mistakes are happening, own it, take that accountability and make sure that you rectify the situation so you can keep that relationship with your end buyers. All right, guys, that's our episode of. Oh, that's fucking adorable. Show me some love. Let me know if you've ever had a similar circumstance happen on one of your deals. In the comments make sure you like today's video. We'll see you guys tomorrow.