You know what is frustrating?
After 3 Months, and 100 + hours of going through Los Angeles Housing Market analyzing 100's of deals, still coming up short.
Last week, Friday morning to be exact, I found a listing in West Adams that had numbers that seemed ok. The Agent in charge happened to be having an open house that morning, and I decided to go see it.
Location is up and coming, and the property sits a block away from our glorious metro line.
(The house faces it)
When I get inside, the house is packed with stuff, and the owners are in the room as well. So it made it kinda uncomfortable to take pictures. There was one dog in a crate, and supposedly another dog outside. So I couldn't look at the back.
After a quick walk through, the whole place would need to be redone. The only thing that might have been good was the floors, but who would know of sure since they were buried. Still, the property money wise, had the potential to be a good deal.
Anyway, I brought an offer with me, asking for over Listing Price, but under what she has been offered. I had the inspection contingency in place, and a 10 day Escrow Close. Cash Deal through 20% of my funds and 80% Hard Money Loan. The last offer supposedly fell through at Escrow, because the buyer couldn't bring money to the table.
I verbally told the Agent it was hard money, but I made the mistake of putting down CASH OFFER on the agreement. So there was some confusion when she came back to us asking for proof of funds from the investors. Typically a letter of intent will suffice, and the investor group doesn't give out copies of their bank account. Once that was settled, and the freak out of the Agent settled down, my offer with changed lingo was amended. She did request the sellers could stay in the house 10 days past escrow for free, so I put in the stipulation that 10K should be held in the escrow account until they full vacate. That way, I didn't have to deal with them personally to get "rent" money after the 10 days had expired, nor would I have to go out of pocket for eviction costs. I kept the inspection contingency intact on the contract, knowing that this would be my first flip, and incase something majorly horrendous came up (Roof, Foundation, and Termite infestation with a touch of poltergeist for example), I could plan out hot to proceed or remove myself from the project.
Seller's Counter removed inspection contingency again, removed the escrow hold back, and upped the down payment.
I gave her three options:
#1 - One that had their full counter agreed too, but at a 15K cut back.
#2 - One that had a reduced Listing Price of 10K off my offer, but included a 1500.00 payment going to the buyers so I could have the full inspection contingency included in my offer. As well as a 5% Down payment (rather then the 10% she had countered with)
#3 - My Full Offer, but I had put the Down Payment to 3% of asking, and added in 6K into the Escrow account, and had escrow close on the day the sellers vacated the property.(Who wants to be responsible for others??)
Mind you I told the Agent the night before these offers would be to her by 9am. (They were sent out by 8:30am) I didn't hear back until 1pm, and was told she was going to be in a meeting from 2 - 4pm, and she wanted to close at 5pm.
The Counter was this: 20 Day Close of Escrow (but allow the tenants to stay 3 days after COE for Free), Full offer Price with 3% Down Payment, inspection Contingency (but only foundation issues would allow me to cancel the contract.)
And that was the sticking point. I realized after talking with several people (A friend who happens to be an architect, my Broker, and another investor) it was crazy to buy something like this, at that price point, without having the ability to do a full inspection and withdraw the offer. (And mind you, I said I could get this all done within a week, if not a few days)
I also realized I had never seen the back yard due to the dog, and that all of this transpired rather quickly.
I emailed the agent, and asked for a few documents, asked if I could see the property again (including the back yard and around the house), and that I wasn't feeling good about not have the full inspection contingency inside my offer.
To be clear, I wasn't going to ask for money back. However, I was going to make sure my plan was solid. And I need the data in order to do that...
The reply back from the Agent: "I told You no Games".
WTF.
This is not games. This is making sure I am investing properly and doing my due diligence.
I have repeatedly asked for the Inspection Clause in all of my offers except for the one counter offer at 15K off my initial offer price. My gut was ringing out, and I wasn't able to put my finger on it until that moment.
An Agent who forces a Buyer to purchase, or uses pressure tactics to force entry into an agreement is not a good Agent. This offer had literally been happening for 72 hours at this point. (Clients were at a wedding over the weekend, so really it was Friday & Monday.)
You have to be able to walk away from a deal when something isn't right. This might be right for another person, but it's not for me.
Maybe if I had gone in at a lower rate, I wouldn't have cared too much about the inspection contingency. However, I was tight on cash flow, and didn't trust my numbers enough yet to bring in another investor.
The "Stop Playing Games" note was insulting. I will not lie, it had irked me. And having the immediate follow up to that be "We have to open escrow today" after only 2 business days, with no real contingency in the contract, and the chance I'd lose 14K.. **** THAT LADY.
I don't even know why I am posting this. It bothers me on so many levels since I am not that type of person. And I take any business with money very seriously.
Anyway.. what would you have done?
Where would you have changed course?
Upwards and Onwards.
md
