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Jim L.
  • Professional
  • Greater Seattle area, WA
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below-market deals and "undue influence"

Jim L.
  • Professional
  • Greater Seattle area, WA
Posted

A sale contract can be voided, at the seller's discretion, if the seller was "unduly influenced" by the buyer.  As I understand it, "insufficient consideration" (e.g., purchase price well below market value) alone can be considered sufficient evidence of undue influence. 

The forums and many books evidence that making hundreds of well-below-market offers to motivated potential sellers is a popular strategy.  Naturally, some sellers are so motivated that they don't care about the buyer getting instant equity and foregoing a significant difference between the sale price and market value, but surely not all sellers are aware of the market value of their property when they accept a low offer. 

So, aside from clearly informing a seller that your offer is well below what they could get in an open market, is there a way to ethically reduce or eliminate the risk that a seller will later change his mind and seek to void a sale contract by claiming it resulted from undue influence? 

  • Jim L.
  • Most Popular Reply

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    Marian Smith
    • Real Estate Investor
    • Williamson County, TX
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    Marian Smith
    • Real Estate Investor
    • Williamson County, TX
    Replied

    Maybe list all the repairs/rehab costs out at typical retail and add in a gc at to going %. Then add a reasonable profit for taking the risk. If it comes in at ballpark market you are, In a sense, offering them back your job. They can come up with the money and invest it in their property to get to market and hope to sell or just sell to you. Anyone else would come up with similar numbers but might offer less.

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