Backing out of a deal.....

6 Replies

I have an opportunity on a house (first REI opportunity for me) and have been advised by some folks to just "go get it under contract, then take it to the BP Marketplace."

Clearly risk there.

What are the ramifications/costs of not being able to sell it and needing to back out of the deal?

First timer......

Thanks to everyone at BP!

Make sure you have an incredible deal.

Where first timers get into trouble is not knowing how to value a property and their target buyer. In that case you end up putting a property under agreement that is a bad deal or marginal at best.

That is where the new investors get into trouble. 

Also wanted to mention some will say put under contract with little earnest money and leave tons of outs ( weasel clauses ) etc., etc.

It won't matter much if you keep putting bad deal after bad deal under contract and wasting buyers with money's time.

So evaluation is the number one skill to know if you have a deal or not. 

Before you get it under contract make sure you evaluate the repairs on the property and the terms give you some leeway. If this is your first time I'd recommend having your GC walk through the property with you to assess cost of repairs. If nothing else you will learn what to look for.  As Joel said first timers have a difficult time making this assessment.

 My second suggestion is know your  exit strategy; is this a buy and hold or rental property, who are your target buyers, are you flipping or wholesaling. The deal must be a win-win and have terms favorable to the risk you will incur. 

@Brian Gray   What do your Buyers say about it?

"This stuff is Simple but not Easy." A. Einstein

I agree with @James Wise    I think it's kinda sleezy when people put a property under contract, try to wholesale it, but can't find a buyer and use an inspection clause to get out of it.  Not a very honest business practice.  If you don't have the means to close it yourself of have buyers already lined up, then don't put it under contract.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.