Please help review counteroffer terms, first investment deal

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Please help review counteroffer terms, first investment deal

Jeff Hsieh
Investor · South San Francisco, CA · Member since 2017 · 15 posts · 4 votes

Hi,

I put in an offer for my first investment real estate deal and received a counter offer. The counter offer price is still good and works with my numbers in terms of cash flow positive, but they had some other terms in the counter offer that I wanted to run by the forum here. 

I would appreciate any feedback and thoughts on whether or not these terms are red flags.

This is in California. Property was built in 2008 and judging from pictures it looks move-in ready.

Terms:

1) Appraisal and home Inspections contingencies to be removed 12 days after acceptance.

2) Property to remain in backup status until all contingencies are removed.

3) Seller's choice for all services: Escrow, Title, NHD, and termite

4) Seller will only provide sections one of termite clearance

5)  Possession to buyers no later than 3 days after close of escrow. (currently owner-occupied)

6) Property sold As-Is, therefore, inspections and final walk through are for buyers information ONLY and NOT to be negotiated items beyond this original offer and counter offer

Thanks very much, any feedback is appreciated!

Best,

Jeff

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Frank Wong
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y

Hi Jeff,

Everything looks pretty good but here are my suggestions.

1. Possession should be at the day of close not 3 days.  If its going to be 3 days have a rent back clause and a deposit from the seller.  You want protection just in case. ( Usually, nothing happens but you need the paperwork done correctly)

2. Make sure your lender can perform within that 12 day period.

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  • Amanda G.
    Rental Property Investor · Augusta, GA · Member since 2017 · 825 posts · 278 votes
    7y

    Hi Jeff,

    I'm not in Cali, but here it would be weird not to get possession at closing. I am not sure what the back up status means, especially since you are buying "as is". I'd ask for clarification. No big deal if they choose the service location, although in my experience the buyer usually chooses the closing attorney/title co. A 12 day inspection period is generous around here.

    Good luck!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Amanda G.:

    Hi Jeff,

    I'm not in Cali, but here it would be weird not to get possession at closing. I am not sure what the back up status means, especially since you are buying "as is". I'd ask for clarification. No big deal if they choose the service location, although in my experience the buyer usually chooses the closing attorney/title co. A 12 day inspection period is generous around here.

    Good luck!

     Amanda,

    West coast is a title closing region .. no attornies are used in vanilla SFR purchases.. and seller generally chooses..

    back up means bumpable we have a field right on MLS that says bumpable.. that means they can still market it while you have open contingencies if they get another offer you will have a short period of time to remove your contingencies and be placed into back up.

    Or he is already in back up posiition

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    1Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Hi Jeff,

    Everything looks pretty good but here are my suggestions.

    1. Possession should be at the day of close not 3 days.  If its going to be 3 days have a rent back clause and a deposit from the seller.  You want protection just in case. ( Usually, nothing happens but you need the paperwork done correctly)

    2. Make sure your lender can perform within that 12 day period.

    2Reply
  • Jeff Hsieh
    OP
    Investor · South San Francisco, CA · Member since 2017 · 15 posts · 4 votes
    7y

    Thanks everyone for your comments, they're all very helpful!

    @Frank Wong - As you suggested, I've responded asking for some sort of rent-back clause and deposit if they want to keep the 3 days in there. Waiting to hear back from them.

    0Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    If you go another round of negotiations, make sure they do the termite inspection and you get the report before the 12 days are up.  Its normal for them to fix the part A only, but you still want to see what it says and what is in the Part B.  And you might want to push into accompanying the termite inspector.  Since the seller is choosing and the typical CA termite inspection only includes what they can see, you do want to ensure they go into the crawl spaces and attics.  Realtors know what inspectors are 'blind' and which actually look

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