Contingencies in the offer

1 Reply


So I am dialing up offers to send out to some properties and I want to know as a newbie to the investor world. For instance, I am estimating the rehab costs myself (without contractor experience, except book knowledge), and new to bringing a partner in with my LLC to finance the deal. What are some contingencies to add into the offer?

Your contracts are so important. Before making an offer study the issues you'll be facing and learn the contract provisions that address them, and how. The type of investor you are will dictate the most important provisions to include (or eliminate). Most investors would benefit by creating a contract template, custom tailored to their particular method of business with the assistance of a real estate attorney. I know that is not often economically feasible. 

That said, I would think the most important contingency to include in any real estate contract used by an investor would be the general inspection contingency / study period. Basically this allows the buyer to walk, upon giving notice during the inspection/study period (this could be 15, 30, 60 days or more depending on the property), and obtain a full refund of the EMD. So basically you find a property that you believe fits your model, you run the numbers, you make your offer ... and then during the study period you discover something that just makes the deal untenable. Give notice and you're out. Period.

I have more but perhaps this will get the discussion you wanted started.

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