This summer a Charlotte homeowner contacted me through the JMS website for a cash offer on their home. Their listing with another real estate agent had expired.
They had also signed a separate purchase agreement with a company that presented itself as a cash buyer. That company offered the contract to other investors at a higher price. The sale never closed, and the company told the sellers over the phone that it would cancel.
The paperwork issue came from that cash-buying company. It had recorded a memorandum against the property that still needed to be addressed.
They had already tried one. Before calling me, they signed a purchase contract with a company that presented itself as a cash buyer. The contract was then offered to other investors at a higher price. The sale never closed, and the company told the sellers over the phone that it would cancel.
What was still on record
Before I talk numbers with a seller, I look at the public record. Here I found a Memorandum of Contract that the company had recorded with the Mecklenburg County Register of Deeds. It told anyone searching the property that a buyer claimed a contract on it.
A phone call doesn’t change the public record. Neither does a cancellation signed between two parties. North Carolina law includes expiration provisions for recorded memoranda. These sellers didn’t want to wait and find out how a future buyer’s attorney would read it. They wanted the filing addressed now.
What I did about it
- Questioned the cancellation paperwork. The proposed amendment promised to release the memorandum. A promise to record something isn’t proof that it was recorded.
- Asked for proof. I requested a copy of the recorded release, with its recording date and recording information.
- Followed up until it arrived. The recorded release arrived on July 23. That evening, I let the sellers know we were ready to go live. The listing went live the following day.
Why I didn’t buy it
I could have made an offer through JMS. As an investor, my price is set by what the house will sell for after repairs, minus my costs and profit.
I walked the sellers through two estimates: their net from a cash sale and their net from listing at a price that fit the home’s condition. For them, listing came out ahead, so that’s what I recommended.
I’m also a licensed real estate broker with Keller Williams Realty Ballantyne Area, so I listed it. That meant I earned a commission instead of an investor’s profit, and I’d rather you hear that from me. The home has since sold.
Questions to ask any cash buyer before you sign
- Are you buying this house yourself, or do you plan to assign the contract to someone else?
- Will you record anything against my property? If so, what?
- If we cancel, will you sign and record a release within a set number of days, and will you put that in the contract?
- Can I see proof of funds for the full purchase price?
- Who is the closing attorney, and can I talk to them?
If a buyer won’t answer those in writing, that’s your answer.
For a closer look at fees, deposits, cancellation rights and closing costs, read How to Read a Cash Offer Contract Line by Line.
For more on why some investors record a memorandum in the first place, read Cash Offer or Equity Grab? What Ballantyne Homeowners Need to Understand Before Signing.
A note about my roles
JMS Home Buyers buys homes directly and does not assign its purchase contracts. I’m also a licensed real estate broker. When a cash sale isn’t the best option for a seller, I’ll say so, even when it means JMS doesn’t buy the house.
Jody Christensen
JMS Home Buyers