What happens after offer gets accepted

11 Replies

Hello, I am new and working on getting my first rental property. Wanted to see what anyone else's thoughts are but let's say I found a broken down house, contacted the owner, and got my offer accepted. 

1) Where do I get a legitimate contract to give to him with inspection and financing contingency. Would it make sense to get a realtor involved even when I initially made contact with the homeowner?

2) How do I know there are no concerns with title or other legal issues...?

3) Are there any other big concerns that I may not have mentioned?

I guess these are some of the things keeping me from pursuing a property outside of a major wholesaler or realtor. It seems to me that the guidance and knowledge of realtors are invaluable especially with pursuing the first property..

1) Not a lawyer, but in most states you can find the same forms your real estate agent would use. E.g. in TX, check the forms from TREC. It's not that hard, but if you've never done it and are nervous, it's not a bad idea to hire a realtor to walk you through it.

2) You pay a title company to research the title and get title insurance, same as if you used a realtor.

3) Not really - but like you said, guidance and knowledge are worth a lot. You can either get that from (a lot) of self-education, or just hire a realtor. If the deal isn't good enough to support a reasonable commission, it probably isn't really a deal.

Thank you Aaron. Great info. Do the title company usually research and answer quickly? I would think that the contract would only allow a few days to verify title, inspection, financing, etc?

@Ben M. title searches generally take from a few days to a couple weeks. The timeline is whatever you agree to. A standard timeline is 5 days to apply for financing, 10 - 15 days for inspection, 30 days for financing approval, and clear title at closing.

@Ben M.

Unless you specifically say short close all cash, you would assume the standard time to close, which includes 7-10 inspection and then financing period. This is all spelled out in the sales contract. The financing period includes appraisal, title search (which can take 2 weeks), property survey if there isn't a recent one and the time needed to underwrite the loan and get clear to close. 30 days would be really tight, normally 45 for conventional loan. If you're doing it all cash, you could conceivable do it within 15 days if there aren't any issues.

If you don't have an accepted offer in writing, like with an offer binder or a sales contract, your offer isn't valid. Oral agreements won't hold up in court. Since you're doing this on your own, you'll need to get a sales contract with the offer terms and have the seller sign it.

Would it be the same process with wholesalers? Probably not since they usually expect fast closing? Would the hard money lenders assist with verifying title?

Texas contracts: https://www.trec.texas.gov/forms-and-contracts Free to use by anyone for Texas properties, RE agents must use these.  Read the single-family residential 1-4 contract from start to finish at least 1 time.  Understand it.  

1) get the property under contract, signed by you and seller

2) open title

3) (can/should happen earlier) find financing. Private, commercial, hard, conventional.  However you plan on buying, get started early.

4) inspection/appraisal/survey - ASAP

5) contractors - Either pay a GC who can never get the work fair price for delivering a scope of work for other contractors to bid on or generate the scope yourself.  Then get subs/GCs to bid your scope.

Since you're starting out with limited knowledge of real estate investing, you should seek legal counsel (@Jerel Ehlert ), or at a minimum a very knowledgeable real estate agent. And just because an agent has been in business a long time doesn't mean they're well versed in contracts, contract law, surveys, title issues, etc. This site is full of new investors who tried to go it alone only to find they've missed key parts of the equations that cost them dearly after the fact. 

@Ben M. If you've got an honest seller, you can take a boilerplate contract for your area and have a real estate attorney look over it for a small fee. The key is working with an open and honest seller. Usually, these folks will tell you all you need to know about the property and its condition. Then it's up to you to do your due diligence, buy it and close on it. Regarding title, you'll have to find a good title company to work with. Ask a few experienced real estate investors in your area for referrals through your local real estate investment club. Good luck! 

Originally posted by @Ben M. :

Hello, I am new and working on getting my first rental property. Wanted to see what anyone else's thoughts are but let's say I found a broken down house, contacted the owner, and got my offer accepted. 

1) Where do I get a legitimate contract to give to him with inspection and financing contingency. Would it make sense to get a realtor involved even when I initially made contact with the homeowner?

2) How do I know there are no concerns with title or other legal issues...?

3) Are there any other big concerns that I may not have mentioned?

I guess these are some of the things keeping me from pursuing a property outside of a major wholesaler or realtor. It seems to me that the guidance and knowledge of realtors are invaluable especially with pursuing the first property..

 I am late to the party, but get a realtor, have them walk you thru the steps for buying your first property.

A great investor minded realtor can help you find properties, help you put value on them, can do the leasing, and will have recommendations for things such as vendors, title companies, inspectors etc.