First house under contract

[Cyle Harris]

Hey everyone! After months of research and marketing for deals, I finally placed my first house under contract. The house was beautiful and needed little work so I took a chance even though their weren't any comps within a quarter mile and the PRD wasn't too favorable. To make a long story short, I'm now having trouble finding a cash buyer. I've had many bites, but once they run the numbers, they instantly become uninterested. Lesson learned, never place a house under contract if the comps don't look right.

[Steven Leigh]

First of all, great work on getting your first house under contract!

Second, oh maaaaaannnnnn I feel your pain. This happened to me with my very first contract too. I knew what price I needed to get, and the seller couldn't go that low because they were already bringing cash to the table. So I put it under contract anyway, partly because I was so eager, and partly because I was trying to help them out. I figured I could make it work at that price even if I barely made anything.

So the big thing is, as you said, LEARN THE LESSON to just walk away if the numbers don't work. You'll avoid getting yourself into a situation where you have to back out of the contract. The added bonus is that once in a while, by walking away from the deal, you might find that the seller trusts you even more as someone who is giving it to them straight, and you may find that they come down to your price to make it work. It's not all the time, but it happens. Or they call you a month later ready to do a deal.

So what do you do now? Rather than go back to the seller and ask for a reduction in price, I would recommend you go back to the seller and say you're going to have to back out of the deal. There were more repairs than you were expecting or there was a lot less demand at that price than you thought there would be, etc. Instead of putting you in a position of asking for a lower price, this often puts the seller in the position of trying to talk you back into it. They may ask you what price you would need to make it work. That would be ideal.

But realistically, you need to be ready to back out if it's not going to work. And tell them you wanted to let them know as soon as possible. Be ready to suggest a realtor, a property manager, and some other options to them as well, so you don't just leave them hanging.

Good luck!