Is It Legal for Someone to Try to Resell a House They Only Have an Offer On

[billwright]

My question involves real estate located in the State of:

North Carolina


Ok, I am looking at a home that is listed as Short Sale. I contacted a company that is trying to sell this house (was not MLS) and after doing research it ends up the company trying to sell to me does NOT own this house. They simply have an offer in on the house that is pending bank approval.

I contacted the original lister via MLS listing and he confirmed that it is simply just an offer and is NOT a accepted contract. So is it legal for this properties management group to try and sell this house to me (they actually send me a contract to sign) if they don't even own it (or under contract to own it).

It makes no sense, I am advised to simply go to the original lister who represents the owners and make an offer. But I'm trying to figure out if I need to report or do anything with this middle company simply trying to flip something they don't own.

[SChinFChin]

My question involves real estate located in the State of:

North Carolina


Ok, I am looking at a home that is listed as Short Sale. I contacted a company that is trying to sell this house (was not MLS) and after doing research it ends up the company trying to sell to me does NOT own this house. They simply have an offer in on the house that is pending bank approval.

I contacted the original lister via MLS listing and he confirmed that it is simply just an offer and is NOT a accepted contract. So is it legal for this properties management group to try and sell this house to me (they actually send me a contract to sign) if they don't even own it (or under contract to own it).

It makes no sense, I am advised to simply go to the original lister who represents the owners and make an offer. But I'm trying to figure out if I need to report or do anything with this middle company simply trying to flip something they don't own.

If the seller has a bona-fide "assignable" Purchase and Sales contract with the original seller (the owner or another contract holder), then he can sell the property provided the contract was first accepted by the original sellers.

So, you are correct.

If you were given a P&S contract to sign, the contract should identify the seller as a "contract vendee", and as such, he must have an accepted contract. The P&S contract should read "... party of the first part, John Seller, the contract vendee ..."

However, I know some folks dealing in "flip" transactions. which is what this is, is shy about signing contracts, because they would have to pay a deposit, and risk losing it if he doesn't find a buyer, within the specified contract time limits. So, what is apparently done here is the so called "contract vendee" is trying to round up a buyer first, then rushes back to sign his contract, hoping no one would find out what he did.

Not only that, he might take your deposit to make his deposit.

The other way for the seller to work this deal is to collect a small fee from the seller for finding him a buyer, i.e. you, but he would be in violation of laws prohibiting the collecting of sales commissions unless he is a licensed broker or agent in most states.

Now, something like the following can happen if you try to be cute and sign a contract directly from the owner.

This flipper probably made an offer, was sent a contract signed by the owner, for him to sign and return, but held by the flipper. From the owner's standpoint, he only so far got an offer.

If this happened, you find out that the contract was not yet accepted, and you rush out to sign you contract with the owner, the flipper can then gum up your transaction by signing his contract, and then going to court and claiming the owner signed "two contracts", and his was signed first and is the legitimate one, and if he gone out to file a "vendee lien", his contract would be the "legitmate" contract.

The way out is to "buy him out", which is all he wants to begin with. I don't know if the "flipper" has a copy of the contract with the owner's signature on it already, but not yet returned.

You are dealing with a cute and tricky character here, and if it was me, I would proceed with caution.

Finally, in business, selling what you don't already own is done often, and not considered illegal. The story was, when IBM signed a contract with Bill Gates thinking he had a working operating system, Gates said he's got it, but actually didn't. He then went out to purchase it from someone he knew who had it, as the story goes, for $50,000, and tweaked it.

The rest is history, and no one said it was illegal.