I am trying to offer for a MFH.
1. The seller wants a non-financial contingent offer. My agent is asking to go in with a due-diligence contingency and if something happens with loan, we will use that contingency. Is it ok?
2. Did anyone do a drop/swap LLC swap before? What is the advantage(s)/disadvantage(s)?
3. The seller wants to do a 1031 exchange but does not have a property to do it. How are we protected in case he does not find a property and we perform?
4. The loan agent says it costs ~12k for appraisal of a MFH. Is it accurate?
@Sastry Konduri hey there! I think removing a financing contingency on a financed offer is a very risky move if you are not 110% this property will pass financing and that you are eligible to finance this property. No financing contingency means lost deposit when your loan gets denied.
You mention a due diligence period to counter this contingency but for how long? I wouldn’t think a seller would want no financing contingency but allow a 30+ day inspection period.
Also, I would not allow offer to be contingent upon seller’s 1031 unless this is really a phenomenal deal and even at that it makes me uneasy. We’re talking about spending money on inspection and appraisal for the seller to walk away clean and you negative $X if seller decides they cannot find a property.
How about putting property under contract and beginning inspection period when seller is under contract with the property of their choice.
Or perhaps make a time period in which seller must find prospective property like 3-6 months.
Hope I was able to provide some insight. Going to allow someone more knowledgeable to explain the questions I left unanswered.
Happy investing !
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