Due Diligence Disasters
Greetings BP,
In 2010, I purchased a Quad n GA for $98,000 and I put about $20K in it to fix it up. I've been occupying it and renting out the other three units ($700 per unit) over the past 4 years and now, I'm ready to sell so I can buy more.
Well, the market has taken a fortuitous spike and the property now worth between $230K and $260K. I listed the property originally at $260K. (though admittedly it needed more than a few repairs)
Here's were the story gets interesting, I put it under contract about 1 week after putting it on the market to a cash buyer at $242K, after the due diligence completed by the buyers contractor, they asked for $10K off my price. I balked because they didn't explain why. They didn't explain and didn't counter, they just ended terminated. (hind sight, it needed every bit of the $10K in work that they asked for, so I wish I would have done this deal)
About 3 weeks later, I put it under contract again at $242,000, this time the buyers had a complete inspection, (which I now have a copy of) which discovered the $10K worth of work (new windows was the major part, some insulation, a few reverse polarization plugs, and cosmetic repair in one unit) that needed to be done. I agreed to do the work, however they balked at that and asked me to come down $40K off my price so they could do it. I disagreed and they terminated.
So I promptly hired contractors to handle the $10K worth of work to satisfy the work that needed to be done, admittedly the property looks 10 times better but its still cash flowing with a solid 9% cap rate. I put it under contract at $233K to another owner occupant investor with a FHA Construction Loan. My logic was, there isn't any thing for them to do but in case they pull something out of their buts they have the loan to handle it. But like the previous two time, after due diligence (on the last day at 9:00 pm) they are trying to get me to drop my price to $217K with no clear indication of why. Get this, their reasoning was "the contractor saw things he wanted to do!?"
But they won't provide me with a list of things.... SMH. They didn't even have a real inspection done but an FHA approved inspector, an Appraisal, nor has their been title information requested.
Is their any way to mitigate this Due Diligence dance before it begins? I mean, I feel these people are wasting my time and theirs if they think I will drop my price for no good reason after we agree on a price.