can i make offers on MLS listed homes?

Question

I have a partner who has the cash for us to fix and flip a home.  im trying to work something out where i can do most of the leg work while he does the financing.  In the past, we have both gone to check out the homes.

so i was wondering if it is possible for me to check them out myself and make an offer.

Basically what i am asking is, if my offer gets accepted but my partner does not like the deal can i back out of it?

whats the worst that happens if i didnt lock any of my funds up? just a bad name? could i be forced to pay any money?

Marc M. · Answer

"Just" a name is everything to some people.  The folks you want to do business with put their name ahead of their money and, in my humble opinion, you should strive for the same.  You don't want to be "that guy" and while there are lots of investors out there, it's a surprsingly small community.

Mike H. · Answer

I would agree with Gilbert. Whats the point of you putting in the offer if the other partner is the one making the decisions? If you see a house you want to put an offer in on, why not have your partner come view it. Then if he ok's it, put your offer in.

If you are just putting in offers and then constantly backing out, eventually, the agents in town are going to start advising the asset managers to disregard your offers. Wouldn't you?

I don't know too many investors that are putting in offers but have a 50/50 chance of getting financing. After about the 3rd deal that you'd have to back out on, you're name would be mud.

I'd really suggest that you get a better arrangement worked out with that partner and figure out a way to get their approval before you put your offers in. Not after they're accepted. That seems really odd to me to begin with.

Gilbert Dominguez · Answer

I would fine deals you really want to do and make them subject to you obtaining finance simple. If your financier is not going to put up the money to buy the property you then can show you were not able to get financing end of story. I would do this as little as possible and talk to your partner to make him or her understand that it is crucial they also look at the property and agree on making the offer, that is it.

If it is their money you should not have the right to decide on your own to make a purchase period. That is my take on it.

George P. · Answer

you will burn bridges fast. very fast.

what you can do is make offers with an inspection contingency. this way you can say you found major issues you were not aware of. at times though, they'd need an inspection report from the inspector.

Tom Mole · Answer

@Danny Woodson, verbal contracts in real estate are worthless. The court COULD enforce them, but they don't. That said, they do you as little good as harm. Don't bother with oral contracts. Get it in writing.

OK, so you get it writing then...boom! You're on the hook to buy just as the seller is on the hook to sell. You can still back out, so you're reasonably safe, but is that all you're worried about? When you make a contract to buy without good faith, most often so is your seller. Is that the kind of business you want to be in?

So, tighten up your business plan. Make deals that you don't have to weasel out of, even if you legally could. Could you maybe have a chat with your backer? As @Colin Smithsuggested, find out exactly what your partner is interested in financing, then make offers on only those deals.

It's prudent to look at your scram strategy (the "get me outta here!" plan), but it should not be a major part of an acquisition program. The attitude is all wrong for success. Plan to succeed, not to fail! Fail if you must, but fail forward. I don't anyone who would be willing to partner with someone who's more focused on getting out of a deal than in capitalizing on the merits of the deal.

Judy Parker · Answer

No one would consider a "verbal" offer as legitimate.  All offers must be in writing, with a good faith deposit.

Danny Woodson · Answer

but as long as i dont sign anything, i am in the clear right? verbal offers are okay?

Mary B. · Answer

Signed contracts are binding in a court of law. Its best that you have contingencies as an out i.e. an Attorney Clause or in your case a Financing Clause(since your partner is your financier and without their approval, there will be no closing).

Kudos,Mary

Colin Smith · Answer

I would try to work out a deal where your investor is going to be able to trust you fully with the offers you are submitting. I would also put an inspection contingency on every offer you submit so you could still back out of a deal if you're not satisfied due to inspection. In most cases (i.e. not HUD) you should be able to get your earnest money back.