I recently started going through the process of buying a SFH for just myself made an offer and it got accepted, gave the sellers Realtor a 1,000 deposit. Process has been held up for about a week now for some paperwork from the town for the septic tank. But I've always liked the idea of owning a duplex and having a renter pay off my mortgage while I live in the other side. I've already done some research on duplexes in my area and found some suitable ones in my area, and am thinking about backing out and going for a duplex. What would you do if you were in my shoes?
Talk to your realtor. Do it as soon as possible.
My perspective, if I were in your shoes, is that your reputation as a buyer and your agent's reputation as a deal closer are WAY more important in the long run than the 1000 you would potentially lose in earnest deposits. If you are going to be investing in real estate long term, your reputation as a serious buyer is priceless and will earn you more than a thousand dollars in the long run.
That said, a mutual release from the agreement might be acceptable from the people from whom you are buying the SFH.
What type of deal are you getting on the sfh? Do you have equity built in? Do you have any replacement properties lined up? I agree with @ChadHovermale establishing a good reputation is priceless.
To echo @Steven Picker my first question is what sort of deal are you getting on the SFH? If it is in of work & could be easily improved, you could do a live in rehab/flip then move to a duplex.
In every contract that I do, I like to have a clause or two that gives me an 'out' that the standard sales contract doesn't cover, such as partner acceptance, written approval that I am satisfied with the inspection, I have also had things come up during the inspection that I would normally have pulled out for, but gotten the seller to take care of, usually with cash back at closing. Since, I deal with residential lending I am limited to 2% seller assistance, so I hold the sellers assistance in an addendum to give to the bank should they balk. All that being said, I have never had to back out of a contract.
I live in a smaller city, and reputation is very important and a bad name spreads really quick.
In your case I would have a chat with your Realtor and see what your options are at this point in your contract. As far as your deposit goes, in the future, you might want to put a line in your contract stating that money goes hard something like 48hrs after inspection, or upon written satisfaction with the inspection.
Best of luck,
In busy multiple offer markets out clauses are very quickly dismissed
Can you get out of the contract and keep EM?? What happens when the earnest money the parties can't agree or does it say one party can receive back the EM without the others consent??
In other words sometimes the wording in a contract even if by contract the buyer has a right to the seller can tie it up in court for months before eventually getting it.
With the duplex you just have an IDEA at this point versus a real property. Do you have great deals for 2,3,4 units to write offers on today?? What about your current living situation?? Do you have to be out by a certain time as that can come into play.
If you are under due diligence and can back out for any reason on the SFR you might could say you have found some other properties and think you are overpaying for this one. If the seller is truly motivated they might drop the price to keep you engaged.
No legal advice given.
Turns out the septic on the house is about 25-30 from the well, 70 from the leech field, USDA and FHA requires that it be at least 50 from the well, and 100 from the leech field. Seller is still working on paperwork from the town saying it's up to code and the water hasn't been tested for years so those are 2 possible outs. Talked to my realtor and he says he's not bothered by me shifting gears on him (that's what he says lol). As far as doing renovations besides needing a new tub in the down stair's bathroom, there's not much work it needs. I could possibly redo the kitchen, and finish the basement but I'm not real confident it doing those by myself.
Based on the initial reports regarding the septic, if you want out, I'd simply ask my agent to write up whatever release form is necessary, sign it, and have it delivered to the seller and see if they balk at it or sign it, release you, and have the EMD released as well. If you aren't sure you want out, at least talk to your lender as if you are using FHA financing, if it doesn't meet their standards, it's doubtful that you'll be getting a loan from them on this property.
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