I recently put a house under contract "as is". It was a good deal, and I was the only one knew about it being available. It cost me 30k, and it required 30k in renovations. I figured I could safely sell the house for 80k when all said and done. I have $1,800 into the house already for inspections, and appraisal fees. During one of the inspections it was discovered that the septic system was not to current code, and It would need to be replaced due to age. Estimates I have for this repair are around 20k. The questions... Even though I am buying "as-is", can I request a reduction of price (already under contract). Is there a way to exit this deal without losing the $1,800 I have already put in. Thanks for any advice. (The $1,800 includes the earnest money.)
You can definitely ask the sellers for credit back to complete this repair. They may not want to credit the full $20k, however you can always ask. Your $1,800 is lost, you can ask the sellers to credit that, but I doubt they will say yes. These inspections and appraisal fees are usually necessary and you will have to back out of some deals.
You would rather lose $1,800 than $10,000. It sucks, but that is the cost of this business.
Hope I helped!
Thanks for the advice!
Howdy @Matt G.
I’m sorry to say, but, this was not a good deal (even before the septic issue). You are not accounting for Holding and Closing costs. Therefore, it would not really have been a $20K profit. Maybe $5K to $10K...... Maybe. You need to be using the 70% rule when calculating Flips.
And yes, Earnest money, Inspections, and appraisal fees are all part of doing business. Some times you lose them (especially when there are no contingency’s in the offer). But as @Etienne Martel said loosing $1800 is better than $10,000.
Walk away from this deal.
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