Pulling out of offer if my rehab numbers were off

11 Replies

Hello BP,

This may be a rookie question however I am estimating after repair values based on pictures of several listings.

I was wondering if I place an offer prior to physically viewing the property will I be able to pull out of the deal if After physically viewing the property, I realize that the rehab cost is higher than I had originally estimated.

I would like to be able to make offers prior to viewing properties but not be stuck if my estimates are off. Any way of writing in this type of contingency that allows me to pull out?

Thank you

Paul Papamarkos

Yes that is a standard inspection contingency clause.  It can be as long or as short as you need it to get contractors to the property to help you verify the condition of the property.

Depends how competitive your area is. If the house is getting a lot of offers, they will most likely accept one that has no contingency. Keep in mind agents will shy away from advising their client to accept a sight unseen offer, and if you end up doing this enough time (and backing out) you get a reputation. It is a strategy, however I’m not a fan of it.

Ok I just wanted to minimize my time in going to look at properties.  I figured with this stragety I can estimate rehab costs based on pictures, make an offer but be able to pull out if things looked like they would cost more

Originally posted by @Paul Papamarkos :

Ok I just wanted to minimize my time in going to look at properties.  I figured with this stragety I can estimate rehab costs based on pictures, make an offer but be able to pull out if things looked like they would cost more

Yes, any offer can be written with a ____ day inspection contingency in the contract. Just keep in mind the longer the contingency, the weaker your offer is. Also, you do not want to create a name that shows agents and others you go into escrow and then back out often. While on occasion that needs to happen, you certainly do not want to make a habit of it. Secondly, some agents with MLS listings will not accept offers from a sight unseen party, so keep that in mind. I have made hundreds (if not over a thousand) site unseen offers from looking at MLS photos but once I go under contract, I have only backed out a handful of times and in each case, the seller lied about something, did not disclose something, or similar.

 

Also if buying from a wholesaler, most will not allow inspection contingencies and require non-refundable deposits. You can cancel but will lose your deposit/earnest money.

I assume you are talking about off the MLS. And you are probably looking at distressed properties as everyone is. So a few things.

First, listings of distressed properties will often say they won't accept sight unseen offers. They know if you have requested a showing. I find Realtors simply ignore sight unseen offers that are well below list. Depends on DOM. 

Second, because you are looking at similar types of properties. Maybe all short sales or all REO's, etc. You will find yourself running into the same listing agents over and over. So the first time you pull out a deal with a listing agent...ok. A second time and you are done with that realtor.

@Paul Papamarkos   You can make offers with contingencies as others mentioned, but I would make sure you look at the place before you put in an offer.  You won't get a good idea of problems simply from looking at photos.  If you put in a lot of offers and then back out, you will get a bad reputation not to mention waste people's time.

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