I think you may have been more lucky than you realize. The foundation was screwed.. I would look at this as .. the bank may have done you a favor. Depending on the foundation repair needs this is a BIG Question mark on a Fix and Flip. Usually turns a fix and flip into a Buy and Hold rental…Unless you are very sure of how much this will cost and you can hold your contractor to the budgeted number, you’re lucky you are out of it. Heres what confuses me… your closing on your offer was supposed to be August 15th….How did time slip from August 15th’s closing to October 1? Once you gave them consideration and it passed the closing I would have just said Deals off… Fix and Flips are about taking Money and Utilizing it NOW not waiting for other people to get their shit together. As a Fix and Flipper Money is your inventory…not the house. And it costs you money to wait on others…The main principle of Time Value of Money is it’s value deteriorates over time. You hold contractors to a time constraint…you can hold the seller to similar as well. But Money has to be used to generate more. Sitting Idle it does nothing but depreciate. If someone is delaying you…cut them off. Use contingencies in your offers to reflect how you will conduct your business and set the expectations of the Seller and their banks. If they except your offer they also accept your contingencies for timely closing. Miss the closing ..sorry not wasting time with you. In Stocks, Bonds and real estate…an investor can never afford to be emotional about any of these. Numbers are your friends when calculated correctly and you are on the right side of them and Time is always an evil specter.

Thanks for the post!!

@Robert Easter: She was scheduled to close on August 15 for $63K but the bank is the one that actually cancelled the contract by asking for more money than they originally asked for from $63K to $78K following numerous appraisals. Once a counter-offer is made it cancels the previous agreement / offer… @Elizabeth Faircloth So what if the bank contacts you a month from now telling you the property is still available (as its the end of the year and end of the quarter – double points for you) and they would like to know if your original offer is still good – would you purchase? Kudos, Mary

October 1st was when the blog was created. Kudos, Mary

I agree with the foundation . Most times I walk from a foundation problem. It is usually not worth the effort. A few stress cracks is understandable in the house if you know how to read them. Banks are the last place to do business with, if possible.

@elizabeth faircloth: The take away for me is to continual marketing. This is great advice. I had 3 projects going on and now am down to 1, but my concern was that I’m doing all these deals with my money and haven’t so far needed private money, and if a deal came how was I going to finance or pay for it. As I’ve learned more about financing and have some good connections and more comfortable with wholesaling I’ve know I need to keep marketing because a deal come with owner financing or you just never know in this business. Again, great advice and thanks for sharing.

Thank you for your post. I’m new to investing and I’m just curious. Can you share your numbers on this deal? ARV, repair cost, etc… What I learned is like @Kevin Polite continue marketing and don’t count your eggs until the basket is full. I mean it’s done when you sign the papers at closing. @Robert Easter is right about money and time being our inventory.

One of the biggest things I have learned dealing with buying and selling anything is to not get emotionally involved and you need to be able to walk away from the deal.

Hold on, I am new at this, but was there not a signed contract? I would think suing for specific performance + costs would be a slam dunk.

Always be marketing!!!! I feel your pain. I stopped marketing for motivated sellers to take care of some “issues” & now I’m a good 7-10 days from some solid leads and I have buyers calling me for inventory.

Liz, the only thing better than your articles are your videos. Terrific job! Thanks for this post.

I enjoyed hearing the advice as a brand new prospective real estate investor, Elizabeth. Thank you! What I valued most is the need to keep marketing while deals are closing. I learned a fourth bit of advice from your video, too: Even investors who’ve been at it for ten years still learn and grow! Great to know. Terry

As another newbie to RE Investing I just want to thank you all for your comments and thank you Elizabeth for the video! This is a great way to learn real-time from Real investors!

I thought I heard you say the bank and the seller agreed to your offer of 63000. If they all agreed, that sounds like you have a contract in place with the banks signature on. Did they come back later and try to rescind their agreement? Once a contact is in place, why not sue them for performance on the contact?

@Elizabeth Faircloth thank you for this article in listing the three things you learned from backing out a Fix & Flip Deal. I can honestly say making sure we have enough deals in our pipeline is vital. In our investing business we deal a lot with short sales. One of the key factors to us being successful in closing deals that are short sales is not having to manage the day-to-day negoitations with the banks. By doing this, this would have allowed you to continue marketing to other motivated sellers to build your pipeline. We have negoitators on our team that handle all of our short sale negoitations and we manage the process with our homeowners. A tool you could have used was your inspection report to argue the rehab cost and the foundation issues with the bank. This is a tool we use to argue our purchase amount whenever the bank comes back with higher amount than what we initally offered. Does it work every time, No! Unfortunately, the investor who has purchased the note from the original note holder is usually trying to Net a certian amount from their investment. Three months is a long time to walk away from a potential deal. What else could you have done? Did you think about working the numbers with your estimated closing costs on the property and reselling it to another Fix & Flip Investor for a slightly higher amount. Now in order to do this, the short sale will have to close without any deed restrictions, allowing you the investor to close on the property and resell it a few hours later or a day or two later to your C Buyer. With this scenario, you could have used 1 or 3 day Transactional Funding as long as your numbers worked out. You may not have made as much as you wanted to, but you could have at least walked away with something from all of the time you put in to the deal. If you ever come across another Short Sale with great numbers, don’t shy away from it because of this one experience. Take it on because it could be a deal that could net you a substantial return on a small investment. Good Luck and happy hunting!!

One thing I would add from my own experience, if this happens to anyone, continue to watch the property afterwards. I had a similar deal that I walked away from, then two more months went by and the bank still didn’t sell it and finally they called asking if I was still interested. I said yes, but my offer isn’t going to be the as much. Ended up getting it for less because they wanted to get rid of it.