Do I give off that newbie smell?

[Ceril S.]

We are neck deep into our second deal (jumping in both feet first) and we are running into a similar issue as with our first deal - sellers not disclosing or withholding info that we asked about verbally from the get go. The first deal was about major repairs being done with permits - seller says yes - Not!  Second deal now claims a rental amount - just got copies of the lease - Not!

Do I give off a newbie smell?  Is it like sharks smelling blood?

I've heard "trust then verify".  Now I think - verify, verify, verify!

[Bill Gulley]

Yes, maybe, it's the smell of money to some. :)

I have found that when talking to a seller, the negative information they reveal is generally true, they give that without asking, they offered that information. The positive that I can't see is not taken. No financial information is taken at face value, I give 50% confidence if they show their books, that may go up after examination but often it's irrelevant to me.

As mentioned, if you put people on the spot, that may lie, so don't go there, find out for yourself. It's how you ask a question too, I don't ask if the water heater was changed and was it done by code, I ask when was the last time the heater was changed? If it was, they tell me, if I know about when, I can see if permits were pulled.

Experience will kick in later on. I know my area so well I skip many things like a water heater, even permits in some areas, I inspect generally, while I test everything, I may not have it inspected unless I have a concern, usually due to performance noted or age.

I look at expenses, but not income so much other than current rents. I don't need them to tell me what I can make as they don't have a clue as to what I might do.

I value the subject with comps, but sometimes I didn't even go there, I knew the neighborhood well enough to be confident of the value and the potential.

I don't search title, the title company does that and all offers are subject to good title, so why waste my time? I get title insurance and I'm covered. I do inspect the title commitment which tells me what was found and I look at Schedule BII closely, what items are not covered.

Newbies may be over doing it prior to contracting, but letting a seasoned seller know that you have a list of concerns says "Newbie". I can generally control any contract with individuals so I'm less concerned with hidden defects, title matters or condition as I have recourse all the way to settlement.

That admitted, dealing with REOs is different as you're buying "as is" without any implied warranty of fitness or guarantee, so more due diligence is required.

In commercial, I rely on experts, engineers not home inspectors, Realtors, attorneys and accountants, all are bonded and insured, if they screw up they can pay for it, it's different than residential but the due diligence is much different too.

When you get more experience you can carry yourself with an attitude that you don't sweat the small stuff, I don't get a seller involved with my due diligence, they don't know what I may look at. They sense that, that I don't have 101 questions, that gives them confidence in me as well as my offer as well as any justification I make as they see me as being at least on par with them if not the expert. A seller that sees you been there and done that will feel much better about an offer and the chances of it closing. If something goes south later on, deal with it then and tell them if you need to walk and why.

Until then, use a list, check everything, it's good training and an education, just don't involve the seller so much. Good luck  :)