[First Deal] Placing an Offer... NOW WHAT?

Question

I found a Quad that I like. I spoke to the listing agent and she informed me that one of the four units has  a ceiling that needs repair from an old leaky roof. The roof was replaced.

The numbers are good for this prop AS IS. With all four units viable, the numbers are great, so far.

I told her I will be using a VA backed loan and that I'd like to put in an offer to get under contract. She is now going to urgently find someone to get the prop in condition to pass the VA inspection.

Now, I don't know the next steps, legally speaking. I want to be wise and do the right things. I don't even know how to put in an official offer.

Even though I'm going no money down, am I still responsible for bringing any cash for any reason? I'm a bit embarrassed to ask, but how does earnest money work? (She mentioned that and I've only just heard of it).

Does my offer need to include legal contingencies? Do you have resources I could utilize?

I'd love to post my progress here as I hunt my first deal and YOUR guidance is instrumental.

All help is much appreciated...

John Leavelle · Answer

Howdy @Adam Kasix

Apparently you are planning to live in one of the units for a least a year (VA loan).  Have you checked if one of the current tenants leases will be expiring for you to move in.

Ned Carey · Answer

@Adam Kasix the reason I suggested and agent and or attorney is you implied this is your first deal. you are also dealing with some specific issues; repairs and VA financing. A buyers agent is paid for by the seller.

If you feel comfortable moving forward without someone on your side, as @Seth Williams said, then by all means do it. The listing agent will get double commission as she won't have to split with the buyers agent. This tends to motivate the listing agent to make the deal work for you.

Upen Patel · Answer

Hey! @Seth Williams Thank you for the mention.

@Adam Kasix You certainly need a pre-approval letter. Also, since you are looking to use a VA loan, the property has to be in almost perfect condition. There is no rehab or escrow option.

Bob Derwin · Answer

It certainly sounds like you need an agent to represent you and mentor you through the process.

Seth Williams · Answer

@Ned Carey is right, tie it up with an offer and get it under agreement. That being said, I might suggest otherwise than Ned as far as getting an agent. If you have found the property, and know the numbers work, you've already found your property, the listing agent can help you submit an offer if thats allowed in your state ( dual agency isn't allowed in some ) and you may get it 1-2-3 % cheaper. The listing contract she or he has with the actual seller probably locks it in at a 4-6 % commission, and if you go through her directly she or he is going to try and keep both sides of the comish, or you could discuss this with the listing agent and shave 2-3 %. Depends on how it goes and id need to know more. You may have to put 1000 down to bind the offer, and potentially more at P&S, but all this comes back to you at closing since your going VA. Ive structured VA offers like this in the past, but its going to depend on the agent(S) you use. If you need a lender, talk to @Upen Patel, he's licensed in every state!

Good luck!

Ned Carey · Answer

If the VA loan requires the property to be in good shape then you could make an offer contingent upon the seller bringing the house into appropriate compliance by X date.

Better to get it under contract now, then to wait for the repairs. Someone else could buy in the mean time.

If this is a listed property you should have a buyers agent representing your interests. While the listing agent can be helpful she has a duty to her client. Otherwise get an attorney on your side, possibly both.

Adam Kasix · Answer

Thanks very much you guys. I took your counsel and this morning got a buyer's agent. He has already drawn up the purchase agreement with the necessary contingencies in place.

I feel like he is an answer to prayer, as he is very local to me and works primarily with small MF investors. He's definitely the answer I needed at the right time!

The offer is being submitted tonight and I'll do another update with some details.

Thank you

[First Deal] Placing an Offer... NOW WHAT?

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