Am I getting taken advantage of on this deal?

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Am I getting taken advantage of on this deal?

Alex Ritter
Investor · Winston Salem, NC · Member since 2020 · 12 posts · 10 votes

Hey all, I'm looking for some advice on my first deal. I'll try to keep it brief. 

I'm currently nearing the end of my due diligence period on a local rental property I have under contract. After some initial back and forth we signed the purchase agreement on June 18th with DD ending on July 17 and closing on the 24th (which felt reasonable). The inspection was the following week. During which a couple things happened. I found two large cap expenses (roof and hvac) that are going to be fairly immediate issues. I was hesitant at first, but eventually excited because I felt I had a lot of leverage going into negation to drive the price down even more and make what was a great deal a true steal. All in all the inspection was very helpful, but unfortunately it wasn't completed. The water wasn't turned on because of a potential leak the inspector told me he would follow up with that portion of the report once the seller got it fixed. 

That was June 24th and still no progress. After some back and forth between agents we got an update and new time to complete the inspection. It's this Thursday afternoon - the 16th - the day before my DD period is over and I was told we wouldn't get the report until the following morning. The sellers agent told us they were replacing pipes in the unfinished basement (which was needed in some areas). Working with my agents I immediately submitted an addendum to push back DD and closing by 2 weeks and sent to them yesterday. Honestly it will have to be pushed back again, but I at least wanted some breathing room to start the negotiations. At the moment I still haven't gotten a copy of the seller agreeing to the new deadlines let alone anything else.  

Should the seller be this slow to respond? 

Is it a sign to have outstanding issues prevent the completion of the inspection til just before the DD deadline? I'm obviously no expert, but that seems like a red flag. 

Does it sound unreasonable for my agent to tell them they need to agree to the new dates by Wednesday? I'm fully prepared to walk (better to have $1,000 learning experience than a money pit), but the last thing I want to is to be running around on Friday the day of my initial deadline trying to get an extension signed or trying to cancel the contract before I'm locked in.

Sorry for the mouthful, but I would appreciate any thoughts/perspective. 

AR

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  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Alex Ritter

    Seller should not be taking this long to respond. Don't let your due diligence period end without tying up your loose ends. It sounds like it's reasonable to ask for an extension. Not your fault seller didn't get water on until the very end. Have your agent kick out DD again and let them know you'll walk if DD isn't extended. Extremely reasonable. Let the seller's side worry about the seller's feelings and you concentrate on what you need to make the deal work.

    Also if your 1,000 dollar learning remark is about earnest money, you should be getting that back if you walk during due diligence...

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  • Account Closed
    Specialist · OverTheRainbow · Member since 2020 · 607 posts · 909 votes
    6y
    Originally posted by @Alex Ritter:

    Hey all, I'm looking for some advice on my first deal. I'll try to keep it brief. 

    I'm currently nearing the end of my due diligence period on a local rental property I have under contract. After some initial back and forth we signed the purchase agreement on June 18th with DD ending on July 17 and closing on the 24th (which felt reasonable). The inspection was the following week. During which a couple things happened. I found two large cap expenses (roof and hvac) that are going to be fairly immediate issues. I was hesitant at first, but eventually excited because I felt I had a lot of leverage going into negation to drive the price down even more and make what was a great deal a true steal. All in all the inspection was very helpful, but unfortunately it wasn't completed. The water wasn't turned on because of a potential leak the inspector told me he would follow up with that portion of the report once the seller got it fixed. 

    That was June 24th and still no progress. After some back and forth between agents we got an update and new time to complete the inspection. It's this Thursday afternoon - the 16th - the day before my DD period is over and I was told we wouldn't get the report until the following morning. The sellers agent told us they were replacing pipes in the unfinished basement (which was needed in some areas). Working with my agents I immediately submitted an addendum to push back DD and closing by 2 weeks and sent to them yesterday. Honestly it will have to be pushed back again, but I at least wanted some breathing room to start the negotiations. At the moment I still haven't gotten a copy of the seller agreeing to the new deadlines let alone anything else.  

    Should the seller be this slow to respond? 

    Is it a sign to have outstanding issues prevent the completion of the inspection til just before the DD deadline? I'm obviously no expert, but that seems like a red flag. 

    Does it sound unreasonable for my agent to tell them they need to agree to the new dates by Wednesday? I'm fully prepared to walk (better to have $1,000 learning experience than a money pit), but the last thing I want to is to be running around on Friday the day of my initial deadline trying to get an extension signed or trying to cancel the contract before I'm locked in.

    Sorry for the mouthful, but I would appreciate any thoughts/perspective. AR

     You can't go any faster than the seller. They may be elderly, they may be ill, they may be having other problems in their life, they may be short on money to fix things, any number of problems that people may have in life. They may have an emotional attachment to the property, they may consider selling to be a big hassle, maybe they don't like the deal. Until they say "no", it's still a deal. Give the seller some space if you have the time and patience.

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