Shpuld I Back out of deal? If so, what repercussions ?

[Michael Majer]

Looking for some advice. I am not a seasoned house flipper. I have renovated one property I inherited. This is my first crack at a purchase and flip.

I walked a property and put an offer in with a wholesaler. I didn’t think I’d get the property, but my offer was accepted. I estimated 50k in rehab. My contractor said 70k minimum. Hoping to split that difference. Pittsburgh market. 3 bed 1 bath.

Offer 75k.

Rehab estimate 60k.

ARV 180-185k.

Having some trouble with lending because the margin is so slim. I have put the 2,000 hand money down. But now I am really worried I’m in a bad situation.

How bad will this be if I back out? I don’t want to be blackballed. But I don’t want to screw myself. If I’m unable to get funding, is it common to be forever blackballed by the wholesaler?

Looking for some guidance. Thanks.

[Patricia Steiner]

Questions: 

Why are you making an offer for sport?  Really?  

Why are you spending so much time and energy worrying about whether the wholesaler will like you - or blackball you?  The wholesaler is NOT the major stakeholder here.  The wholesaler has nothing in this deal but air so if the deal doesn't seem right to you, don't do it.  Why ask anybody else their opinion - they won't be renovating it or making the payments on it.  

Make a decision on what is best for you financially and make it now.  It's not worth doing so everybody is happy but you -and to be left with a renovation that doesn't excite you.  Your gut is telling you to bolt. If you don't trust yourself, why trust a bunch of strangers on a forum.

And, please do yourself and everyone else a favor: never make an offer unless you want to do the deal. A lot of chaos was created by that single act.  So, it's win some, learn some...chalk this up to lessons learned and move on.