I'm working on a vacant land wholesale deal and one of my potential buyers wants a $3,000 boundary survey done. He claims to be very interested, but I hesitate to drop the money on a survey because it doesn't necessarily guarantee the sale. There's a potential $19,000 profit in it so it's not like I won't make anything, but I'm not sure it's worth losing $3,000 to maybe sell it now versus 1-3 months from now. Anyone have any ideas about how to structure the deal so that he gets his survey and I don't lose $3,000 if he decides not to buy?
Not that I am an expert here but can you split the cost with the potential buyer so that he has some skin in the game?
I wonder what the buyer is hoping to figure out that will convince him one way or the other? Or is he just trying to have someone else pay for the cost that he will have to pay for after he buys it?
Sorry for the questions but I am curious about this.
A. Find another buyer.
B. Have him pay for it. If I am correct, when I bought my house, prior to closing, I paid for the survey.
If they are interested, they'll cough up the money.
Did you ask him what interest he has in the survey.
BTW Never heard of such an expensive survey.
Buyer pays, if he's really interested. Is there some doubt/ambiguity on the configuration? No GIS maps available?
Thanks for the responses, folks. Technically, the buyer didn't request the survey, but he wants to know where the lot lines are when he walks the property. A survey is the only way I know to accomplish this with certainty. The neighboring property has a bunch of tires and other trash piled up near, and possibly over, the line, so I can see wanting to know exactly where the boundary is.
@Matthew Deines - I thought about splitting the cost with him. $1500 beats $3000, but I'm still not sure it's worth it with no guarantee.
@David W. - It's a 10 acre parcel that hasn't been platted in 50-60 years. The $3000 is a ballpark estimate from the surveyor. I think you're right though, if he really wants it he'll pay for the survey.
@Wayne Brooks - He has seen a copy of the county GIS map but I guess that wasn't enough for him. However, given certain context clues from our conversation, it's also likely that he isn't very internet savvy, so it may be more difficult for him to get full use out of the GIS map.
I think what Matthew says about splitting the cost is a great idea. Once he has $1500 invested he is far less likely to walk away, and if he does you have a fully surveyed property, which is much easier to market and you got him to pay for half! Another option is to have him sign a purchase contract with a decent down payment regardless of who pays for the survey (which can be spelled out in the contract). That should tell you if he is serious.
Thanks for your thoughts Greg. I actually went with a combination of your suggestions. After talking to the buyer more he told me that he definitely wanted the property, but he had to have the survey. I decided to drop the price by $1500, but I'm requiring him to put down $3000 in earnest money in the contract. Once I have the earnest money I'll use it to order the survey. Then if he backs out I don't lose anything and I gain a survey, and if he buys it I'm only down $1500 on my profit.
Also, I now have another interested buyer. So I may be able to use that to get the price back up to cover the $1500, or maybe even more. I'll have to tread lightly though, I'm not that experienced in managing a bidding war. In fact, I may start a new post on that topic
If done properly, you won't have access to that EM, or is this an assignment fee? Also, are you Sure you can deliver clear title?
@Wayne Brooks :
Those are both good points, Wayne. Thankfully, my attorney thought about those issues as well and helped make sure I was covered. She drafted a different contract specifically for this deal. Part of it states that the earnest money will be paid to me instead of to the closing attorney.
Also, the title history on this property is a bit fishy, so, I'm paying for the title search ahead of time. That way I'll know if the title will clear before signing the contract. It's a bit of risk paying for it up front, but I'll have to pay for it at closing anyways. If the title ends up being impossible to clear then I will have gotten a good education, and only for the small fee of a title search.
Free eBook from BiggerPockets!
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.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing