Sales contract before even seeing the 4plex?

Question

I'm currently evaluating a 4plex opportunity that came through a direct mail campaign.  So far, the initial #'s look good.

The seller is requiring a sales contract before I can step foot on the property.  He insists that most people require a contract in place before bothering the tenants with a viewing, but I've never been asked that before.  I hate to make an offer without seeing the overall condition of the property.

Is this a normal request?

Thanks!
Stephanie

Jon Klaus · Answer

Inspection clause should allow you to back out or adjust your offer based on what you find.

Bryce Y. · Answer

Normal.  Sellers don't want to disturb tenants unnecessarily.  Putting earnest money down and getting it under contract shows you are at least somewhat serious.  Just make sure they understand that if there are significant repairs or deferred maintenance you will ask them to lower the price or back out.

Stephanie P. · Answer

Thank you guys!  Feeling better.  OK, so it's probably normal, but I should have some good contingency clauses in there.

Harry M. · Answer

Stephanie P. - for 2-4 units around here it's completely normal if there are tenants in all units.

Yiv L. · Answer

It's a norm for 2-4 plex multifamily. Seller does not want to disturb the tenants. If you know the address, just quietly drive by. If the condition of the exterior paint and roof are bad, the interiors are most likely terrible. As others mentioned, you can always back out with the inspection clause.

Jon K. · Answer

I wouldn't.

The inside could easily be trashed and/or the seller is hiding something.

While you want the owner to know you're serious, you at least want a required inspection and way for you to back out if it's a horrible dump inside.

Can you at least go look at the outside?

Jerry Puckett · Answer

Hey Steph, glad the campaign is working out. Give me a shout if you need help getting your contract together.

Stephanie P. · Answer

Thanks Jon and Bryce!  That makes sense.

Thomas Quinn · Answer

Like was said already very common on multifamily property with tenants sometimes if there is a empty unit they will show that one for a first showing.

Janell B. · Answer

From my real estate sales experience, that sounds fishy. The only time I've seen this done was when the market was hot back in 2005 and people would put a contract on a house before they even saw it.

It seems like this seller is using a sales tactic which is known as "creating a sense of urgency." Don't fall for it. But if you do decide to put a contract on it without seeing it, throw every contingency in the contract that you can think of. That way, if there is anything remotely wrong with the place, you can get out of it with your escrow deposit. Good luck.

Sales contract before even seeing the 4plex?

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