I Terminated the Assignment and Didn't Think Twice

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Transcript

Why This Story Matters Now

SPEAKER_00 0:00

What do you guys want to talk about today? In the wise words of the great Cody Rhodes, I think we're going to be talking about a situation I just had with a Daisy China. And how I had to terminate an assignment and how the whole thing played out. I didn't really plan on making a YouTube video about this, but I decided to do that after I made a post on my Facebook. And it's funny because I I decided I was going to do today's video on this topic because I made the post. Let me see here. I made the post February 26th. So, you know, a while ago, and it it gained a little bit of traction where some of the response was negative, which caught me off guard because as I was making the post, I was thinking, you know, anybody that wholesales correctly is going to understand where I'm coming from. But that wasn't the case. Not everybody felt like I was in the right. Which some of the time it just needed a little bit more context. I just had to kind of explain my position on it. And some people still, even with the context, disagreed with my take on it. And now it's a little bit concerning because I am regularly making videos and talking about regulations, how wholesaling is viewed as an industry, why regulations are coming down, why things are becoming harder, and doing things the right way. Yet, some people in the wholesaling world, despite everything that's going on with new regulations coming down, more transparency needed, more disclosures, aka more paperwork. In the words of some people on my post, worthless, flimsy pieces of paper, it's kind of shocking. And so I decided hey, I'm going to make this video today. It's a good topic. We'll talk about it. I'll do it live so I can answer any questions that people have about this situation. We're going to go through the entire situation, everything that took place, so you'll have all of the context. But even with that being said, today, just 20, 30 minutes before, I received more comments on my post disagreeing with my stance on this. Basically saying that Daisy Chaining deals is perfectly okay. I should have respected the fact that this person breached their contract, breached the agreement, didn't pay attention to the flimsy pieces of paper, which is just wild perspectives. And so it makes me even want to talk about this more because as an industry, this is a problem that we feel like this is okay. So let's break this entire situation down. And I'll even give you the insight to how this whole this whole thing took place. Sam Weaver, Titanium University member, been in TU for several months. Great kid, works his ass off, great work ethic. He ends up during the December challenge that we ran inside of Titanium University on Titanium Investments General Manager Danny Herman's team. So we had different teams, different team leaders, nothing really company oriented. Sam's up on Danny's team, and Sam worked his his tail off and really impressed Danny. And so at the end of Santa's Little Helper Challenge, we offered Sam a position to do acquisitions for titanium investments, which he accepted. So he's been with us for a couple months now. This lead comes in through a PPO provider. It's a land deal in Dallas, Texas. He does a great job using the closure's formula, goes through, gets a signed contract. It's a really good deal. It's not only a really good deal, but it's in our original market, Dallas, Texas. That is where we have done more deals than we've done anywhere else in the United States. And so not only are we pumped up that it's a good deal, but we're pumped up about the location. We're pumped up about the fact that it's a vacant land deal. There's tons of new builds going on around it. We can clearly see that there's plenty of in buyers surrounding this area, utilizing investor base. And so we're excited about this. We're just going to go in. We're going to be able to find the in buyers very, very easily, not a mass marketing effort. And so Justin May, who is also originally TU member, impressed us. We offered him a position to do dispositions for titanium investments. He takes this deal on. The night before, the same day that we locked it up. I walk into Cassie's office. She's got a little mini fridge, keeps waters, Red Bulls, whatnot in there. I walk into her office. I hear her doing her end-of-day meeting with Danny Herman. And he mentions tomorrow that Dallas deal is getting a sign. So I stop and I kind of, whoa, we got a Dallas deal. What's up with that one? And Danny and Cassie are like, we didn't want to tell you. We just wanted to surprise you, but we got a really good deal in Dallas, Texas. It's a vacant land deal, blah, blah, blah. We think we're going to be able to move this for about a$40,000 assignment fee. Awesome. Love those. Good job. So I jokingly say if that thing's not assigned by tomorrow morning or by tomorrow at noon, I'm going to go assign that thing myself. So next morning, Danny's running the start-up day meeting with the team. And he uses my words. And he's like, hey, team, listen, RJ said if this deal is not assigned by noon, he's going to come in, he's going to assign it himself. So Justin jumps right on it, starts reaching out to buyers, gets a buyer on the line. Buyer says, Yep, I'll take it. Boom.$40,000 assignment. Now he goes through the vetting process. This buyer's it in buyer. It's going to develop there. Wants to take it down. Understood everything about it. Had no problem with our price point whatsoever. Boom, signed assignment. Now, when we send an assignment, there's a couple of different things that I want you guys to understand. First of all, the way that our assignment agreement is written up, it cannot be assigned again. So you cannot assign our assignment. That is clearly written into the agreement. So that's one. Two, anytime that we get a signed assignment with an in buyer, we discuss with them. It's a negotiable term based off of the day of the week and the time in which the assignments get signed on when the non-refundable earnest money will be deposited. So in this scenario, we talked about it. We know exactly when the non-refundable earnest money needs to be deposited. Everything gets signed. Transaction coordinator sends everything over to the title company. So I was literally this morning looking at the email chain. I'm seeing transaction coordinator sent over, sign this sign uh purchase and sell agreement with the seller. Next day, signed assignment with the end buyer. The next day, the next business day. I believe this went over a weekend. The next business day, hey, has the end buyer deposited earnest money? No. Hey, just a couple hours later. Hey, just following up, want to verify have you received the non-refundable earnest money from the buyer? No. Have you heard from the buyer? No. Okay, at that point in time, Justin reaches out to the end buyer. No response. By the end of the day, hey, just following up again. Has the buyer deposited his non-refundable earnest money? No. Okay. Next morning. Any sign of those funds? No. Have you heard from the buyer? No. We reach out to the buyer. No response. Friendly little nudge, text message like, hey, we need that non-refundable earnest money deposited, or we're gonna have to terminate the agreement. No response, no earnest money deposited. So we terminate the the assignment agreement with the the in buyer. Now come to find out that in buyer was not an in buyer, it was a daisy chaining wholesaler. Okay, so we terminate that agreement with the in buyer or the daisy chaining wholesaler. We then go back to investor base and start reaching out to other end buyers. Now, one of the things that was I was accused of in my Facebook post was how could I be so lucky to on my first dial to reach out to the actual in buyer that the Daisy Chaining wholesaler had found. That's not the case. We reached out to numerous buyers in the area. Like I said, vacant land, quite a few number of new builds going on there. There's quite a few in buyers for us to reach out to. So we reached out to several in buyers in the area, one of which we connect with, and he says, Wait, what's the address? We tell him, and he says, Well, that's funny. I was just under contract on that property, it just got terminated because the wholesaler that I was under assignment with said he lost the contract. Are you guys the ones that are actually direct to seller? We are. So you have a contract. I still really want to buy this piece of land. In fact, this is what I was under contract for. It was, of course, because it got daisy chain, more than what we sold it for. I want to buy it, I want to buy it for that price. So if you're really the contract holder, send me the assignment. I want the deal. I've already deposited my earnest money at this title company, which was a different title company. Now, another thing that I got accused of was that the title company alerted us to what was happening. That didn't happen. Never once did a title company tell us that there was another buyer or who that buyer was, what their contact information, or the fact that they had deposited earnest money. It was a whole different title company. He told us that the end buyer did because one of the things that he wanted to negotiate in the assignment was I need to get my earnest money back from that title company, and that's the earnest money that I want to use with you guys. So I'm waiting on that. It's been terminated, it's gonna get released to me, but I don't know if I'm gonna have it today in time to be able to wire it out to you guys. So I need a little bit extra time to deposit my non-fundable earnest money again, transparency, honesty about what was taking place. So the in-buyer for the Daisy Chaining wholesaler ends up becoming our buyer. Now, I found that to be ironic. We do uh a significant amount of transactions across the United States. I can't quite remember a scenario in which we assigned a deal to a daisy chainer without knowing it, and then upon terminating that for breach of a contract, finding the daisy chainers and buyer. Now, here's the thing: the reason why we terminated the assignment is because the non-refundable earnest money from the daisy chaining wholesaler was not deposited. Also, we had a right because the fact that they assigned an assignment that could not be assigned. That was also a breach of the assignment agreement, but that wasn't the reason why, because we didn't even know that was happening. We terminated because of the breach of contract per our rights, that's why we have contracts and signed legally binding agreements. I have to protect my company and I have to protect the seller who is motivated to sell this to us for a reason. So anytime I'm assigning my rights to that contract to someone, I have to protect myself and the seller, which we do that through non-refundable earnest money deposits and timelines. That didn't happen. So we exercised our right to terminate that and then found the Daisy Chaining Wholesaler's in buyer. Now, what's funny about this is that earnest money deposit from the in buyer was deposited. So I actually don't know why the Daisy Chaining wholesaler did not deposit their earnest money. I don't know if it was because they were trying to get that release to them to then be able to deposit it at our title company. Maybe that was a scenario. I don't know why. There's been zero communication. We have not been able to get a hold of this person. That's why we terminated it. And so when I made the post on Facebook and people were up in arms about the fact that I circumvented the Daisy Channing wholesaler and kicked them out of the deal, it's like what wild assumptions. So let me make sure I understand this correctly. You had to market the property to find a daisy chainer, right? That person then finds an end buyer. Now you're saying that when you start marketing the deal again, the very first buyer you call just happens to be a brand new buyer, someone who wasn't on your list the first time, but now somehow is. All of that is just incorrect. But okay, well, we'll get down to it. That's hard to believe. I'd be willing to bet a title company gave you a heads up that the contract had been assigned for more money, along with the new buyer's contact information. None of that ever happened. Then that same title company tells you there was no earnest money, and suddenly this new buyer appears on your list in round two. No, the title company didn't tell us. We repeatedly asked the title company because that's part of our process to make sure that we're not left screwing over sellers or left with a buyer who's not actually a buyer. Two other observations. First, you're selling a$7,000 guru course, yet some random wholesaler was able to wholesale your own deal for$15,000 more than you did. Second, you daisy chain deals yourself fairly often. So criticizing someone else for doing it seems inconsistent. One titanium university is not a guru course. Does it include a course? Yes. Is that what we sell? No, we do not sell education, we sell implementation and community. For anyone that's a part of titanium university, they will absolutely tell you that. That's our job. Our job is to solve sellers' problems and to provide great deals to end buyers, not to squeeze every last drop of the juice out of the deal before an in buyer takes it. That being said, this buyer was adamant about the fact that he wanted to buy this property at that price. He was like, Listen, I'm ready to go. I want the deal. Send me the assignment right now. I was ready to close. So, yes, we are a for-profit organization. But when we set the price, we actually set our price at lower than that. And as a wholesale operation, we have several rules. One of which it's first come, first serve. We do not do bidding wars with our end buyers. So when this original buyer came to us and said, I will take it, at the price of which you're asking, we assign the deal. That is how we run our wholesale operation at Titanium Investments. I don't apologize, I'm not embarrassed. I willingly chose to put this out on social media to try to bring light to some of the negative things that are happening inside of our own industry. Yesterday's video was about how wholesalers are literally burning down our own industry because of shit like this. This is what I'm talking about. And the fact that other wholesalers are defending these actions. Now, let's talk about the fact that some people believe that doing a joint venture is the exact same thing as daisy chaining a deal. That is absolutely false. The difference is daisy chaining a deal is when you're not transparent about what's happening, you don't have equitable interest in a property, or in this scenario, you breach contracts. This is why it has a negative light on it. Had this person come to me and said, Hey, I'll I have a buyer that will pay more for this property. I could give you your price if you can give me a JV agreement and I'll go get this buyer at more. You don't have to give me any of your own assignment fee. We would have done that, wouldn't have had to deposit earnest money at all. And that same end buyer would be buying the deal, and this daisy chainer wouldn't have been a daisy chainer. We would have had a JV agreement and he would be making fifteen thousand dollars. The issue was wasn't transparent about what the true intentions were, did not hold up his end of the signed agreement, didn't deposit the earnest money, and then also assigned a document that was not assignable. Those are issues. So for people to say that a JV is the same as a daisy chain is incorrect. That joint venture agreement is what gives your company equitable interest and allows you to assign your rights to an in buyer. That's why we do it. It's how you don't get cut out of deals. It's how you make sure that you're protected and also that you're doing things legally correct. Now, later on, when I responded to this, what I the response was is that there is no difference between Daisy Chain and JV. Either way you take it, you're not direct a seller, and that flimsy piece of paper in between means nothing, which you just also further proved by terminating and reselling. Okay, it's not a flimsy piece of paper, it's a legally binding document that all real estate transactions have involved. It's what literally tells the title company what to do on the transaction. What is the chain of events? Seller signs a purchase and sell agreement with a wholesaler. That purchase and sell agreement is assignable. Wholesaler assigns his or hers equitable interest to an end buyer. That's what happened. That's the chain of event on the flimsy pieces of paper. That signed assignment was not assignable. I don't know why the daisy chaining wholesaler went to a different title company. Because that was one of the questions I got asked. I don't know. I don't know why they thought that that was going to work or how they were going to make it work. I don't run a daisy chaining wholesale operation, so I don't understand the ins and outs of why they did that. But that assignment was never assignable. Maybe they were going to try to double close it. I don't know. The end buyer did say he signed an assignment, not a purchase and sell agreement. So that kind of rules out a double close to my to me, but who knows? The earnest money was never deposited. These things are what made that flimsy piece of paper become terminated. Not me looking at it and saying, This flimsy piece of paper means nothing. No, I really wouldn't have had much of a leg to stand on if the Daisy Chainer had deposited earnest money and then tried to double close this deal. Because the two mistakes were no earnest money deposit and then an assignment on a non-assignable assignment agreement. So if the Daisy Chainer had not made those mistakes, I wouldn't have been able to terminate that. When there's a correct way to run a wholesaling operation where you don't have to do these things, I've never had to daisy chain a deal, I've done many joint ventures, but never a daisy chain this way, it's not necessary. Why do you think they want us to become licensed? Well, one, I think it's because they want to grab money. Two, it's because realtors are held to a standard when it comes to what paperwork. This right here. And it wasn't just one person, it was multiple people. Multiple people, none from my community, none from Titanium University, but from other places, it absolutely was heavily defended. And like most things, it was only a handful of people. The majority of comments on there were like, hey, you did the right thing, good job, laughed about it. But people from other communities sat there and said, I agree with the Daisy Chainer. I think you're in the wrong, RJ. So my question to you is if this message that I'm sharing with you over the past 28 minutes, if you're like, hey, that actually I agree with RJ. Maybe go take a look at the comments on my Facebook post from what was the date? February 26th. Go look at the comments. Look at the communities that those negative comments are from, and then ask yourself: is that a community that I actually want to be a part of? Do I want to follow leaders in that community that suggest that this is the correct way that the wholesaling industry should run itself? Because I can guarantee you, if you agree with that, the regulations are only going to become worse and worse for us as an industry. So make a decision now before in a few years it looks completely different. And we're first a licensed realtor, then a wholesaler.