Costs of failed transactions

[Wesley W.]

Hello All,

Well, I've had two small multi-family deals fall through over the last 12 months (I'm the buyer) over inflexible/unmotivated sellers after very unflattering structural inspection results.

I can't help but feel I am the only party with "skin in the game", and the seller is just - pick one - (mentally ill/a "tire kicker"/doesn't really want to sell his property/etc.).

Allow me to explain.  I'm working with a broker whom I am very happy with.  We do a showing, look at the rough numbers, make an offer - tit/tat - agree on a price, we both sign the contract. BAM - "under contract."

Now we move on to "due diligence", where my attorney asks for a bunch of stuff - tax documents, rent roll, water/sewer bill, copies of leases, etc.  They drag their feet/give a million excuses/send incomplete information/etc.  Meanwhile, title work is being done, and my attorney is sending letters asking for this, reminding for that, etc.

At this point, let's look at the "skin in the game":

ME:  $300 for attorney, $300 for title work

SELLER: $0

Now, after an excruciatingly long delay, we have the docs we've asked for - which are never as good as you were lead to believe - so the deal gets a BIT skinner than what you figured on the pro forma.  It's okay, you budget for that, so you have a margin of error that absorbs the shortfall.

Now it's time for the structural inspection.  It's completed and (GASP!) several major issues surface.  We begin negotiations again with a proposal for credit/remediation, but before that - let's check the score again, shall we?

ME: $300 atty; $300 title search; $500 multifamility inspection = $1100

SELLER: $0

We send a copy of the inspection report and a beginning negotation for some credit, and the seller basically tells us to "go **** in a hat."

We cancel the contract, and I am lighter by $1000-$2000 (depending on the number of units) and I've wasted a few months of time not following up on other potential deals.

This is beyond infuriating.  Can anyone help me mitigate my "skin in the game", since from where I sit there is absolutely no incentive for the seller to compromise if they choose not to.  (You'd think they'd WANT to sell a property they have listed, but I digress...)

This has happened to me TWICE in the last 12 months.  Thank you in advance for your collective wisdom.