Inspection Contingency

AMEN to this! I had a 30 day inspection period, and boy, did it save my bacon! Just two days before my inspections were due to actually happen (And thus make my EM non refundable because they were to be used to pay the man,) they revealed to my realtor and I that "Oh, yeah, that clause about the last utility bill in our last counter? Yeah, that's a water bill to the City of over $1,000, and the title cannot be transferred or insured until that's paid."
I actually considered doing that, and then realized that this property was clearly, no longer a deal and was going to nickel and dime me to death! Pulled the plug on it right then and there.
Pity, it was an INCREDIBLY FAST short sale, (less than two months from first offer to banks final counter and acceptance!) and to have gone so far with it and then drop it seems a shame, but THEY should have been more up front about that particular bill instead of making it sound like the last month of electric when it was something the city could put a lien on the house for!

Happy to hear you used the inspection contingency to protect your EM deposit.

Sorry to hear that the deal died.

Thanks for the response to the post.

Dan

Appreciate your advice on the 15 day inspection period. Common sense to have a shorter period of time if fierce competition.

Yeah, I'm more than a little bummed that the deal died, too. It was my first and I had such high hopes!
Still, going to try again!

If competition in your market is tough then by all means adjust the inspection contingency accordingly but try to always leave yourself ample time to get the deal sold.

inspection contingencies are the most important. If your contract that you are using isn't sufficient then you can always add in your own.

Here is a good contingency you can always use which you can always back out of a contract just based upon your inspection of the property.

"This offer is contingent upon approval and/or inspection of the property by buyer and/or buyers partners within XXX business days of acceptance."

Simple, it doesn't draw too big of a red flag.

you always need to have control of your options in any contract

Mikessler
Keep moving forward!!!

Remember that if you are assigning the contract that this is your time to present the deal to your buyers. For this reason you will want to push for as long as you can on your "inspection" period and/or "due diligence" time. I normally push and get 10-14 days. The longer the better Remember, this is "your" offer. Don't let an agent push you do to any different. I'd rather offer a higher earnest money and longer "due diligence" period than shorten that time if I need to strengthen the offer.

I have run into the problem on several occasions where the realtor will automatically leave out any type of inspection Claus. Their reasoning has always been to me that the less contingencies that are in the contract the more likely the offer is to be accepted. Whether it is a FSBO, REO or other type of sale. They want to tell you that other investors they deal with don’t normally have it in their contracts. Well, if that’s the case, I don’t think they are probably real successful investors

But as the team here teaches, it would be very risky to not have this in the offer contract. If the realtor baulks at the idea, then it might just be time to move on to a new realtor. As the buyer (regardless of your end strategy) you should be able to inspect the property, regardless of its selling process. They most certainly would not try to sell it to anyone else without right to inspection, why should an investor be any different.

It may be that they are VERY successful investors that do all of their due diligence up front. They know if there are any problems and what the costs will be BEFORE they make an offer. They usually are not wholesaling but buying the property to do the fix/flip or buy and hold themselves. If they are wholesaling they have their buyers lined up in ADVANCE. Your agent is totally 100% correct that the fewer contingencies and the HIGHER THE EARNEST MONEY the stronger the offer. If you are ACTUALLY competing against buyers like this in your area, you will have to change your strategy or change areas. It could be you just need an investor friendly agent.

Remember when dealing directly(read NO AGENT INVOLVED) with unlisted, motivated homeowners you can write the contract most anyway you want. $10 earnest, 30 day inspection, assignable, whatever.

Good Luck!
Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC