First Deal Turning Sour

[J. Brian Walters]

Hello Everyone,

I trying to get started in the buy and hold rental property arena.  I had what I thought was a good deal until the seller's started changing things.

Basically I made an offer on two properties, being sold as a package for which I was going to pay cash.  The whole deal was for $27k.  One property was empty and the other one had a tenant.  The seller is supposed to have the tenant vacated and cleanup the property to the same condition as the empty unit.  In speaking with my realtor we agreed on a $1000 escrow. 

Now here is where things start to go south. I'm supposed to go and sign the contracts and my realtor calls me up and said that the seller's agent said they want $2000 escrow per property for $4000 total. Now this is on a $27,000 deal. This irks me but I say ok. I get to the Real Estate office and look at the contract. First thing I notice, it states the properties are being sold "as-is" and buyer is responsible for all CO inspection, etc. The MLS listing did not state that the properties were being sold "as-is" and when I first spoke with my agent it was never brought up regarding the properties being sold in an "as-is" condition.

They also did not have both properties lot and block numbers on the contract.  They only had the lot and block number for one of the units.

Needless to say I did not sign it.  When my realtor got in touch with the selling agent, they said they thought they had discussed all of this with my agent but they had talked about it with another agent who was looking to make an offer.

Now they want me to do the Home Inspection first and then if everything is alright then they will go through with signing the contract.  At this point I'm thinking of just walking away from this one.

What do ya'll think?

[Tom Mole]

@J. Brian Walters, why do you want these properties. I'm sure there must be a compelling reason that you haven't discussed. Why is there anything in the contract that you are unaware of? Have you made a formal offer yet? Remember, in real estate everything is negotiable and nothing is settled until the contract is signed.

Why don't you take a step back. Figure out what you're willing to pay and under what conditions. At what point does this project stop making sense? Has the seller already crossed that line? You need to know what your maximum allowable offer is. Your offer is not just a price, but price AND terms. 

I suspect that you've been talking to the agent who has made you promises. The seller is probably just starting to negotiate and you're thinking the agent is "on your side". Normally, the agent is paid by the seller and so has a fiduciary to get the best deal for the seller. You're on your own, so don't fall into the trap of thinking your agent is your buddy.

Only you know what you need to make this deal work. Once you draw that line, stick to it. Make the offer so that you understand and agree with every part of it. If you can't get the deal you need, be willing to walk. Another deal will come along.

I hope this helps. If you have any questions, feel free to contact me.

All the best.