Info to get BEFORE making offer? - Posted by Jim C

Real Estate Investing
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Posted by Rob FL on December 30, 2000 at 08:17:05:

Basically it means that if for some reason you have to default under the contract that all the seller gets is the earnest money deposit and nothing more. Here is the clause I use from my own contract addendum:

"If Buyer fails to perform according to the Contract within the time set forth therein, Seller may retain as liquidated damages and not as a penalty all of the deposit(s) specified in paragraphs II. (a) and (b) of Contract, it being agreed that this is Seller’s exclusive remedy; whereupon, Buyer and Seller shall be relieved of all obligations under the Contract. "

I always leave the earnest money deposit in the form of cash. (Actually it is a check.) I never use a promissory note. I mean, after all, a promissory note to me means you don’t have the cash. If for some reason you default on the contract, then what? Do you really have the money? If you don’t, what will you do? Tell the seller you don’t have any money and the promissory note is worthless? I don’t do business that way. There are many times when the seller is desparate (and no Realtor is involved) that I bind the contract with a $1 deposit. But in reality, if you don’t have a couple hundred bucks to use for a deposit, you are kidding yourself in my opinion. I mean, after all this is a business. Always remember the 11th Commandment “Thou shalt not kid thyself.”

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Info to get BEFORE making offer? - Posted by Jim C

Posted by Jim C on December 29, 2000 at 10:55:07:

I know this sounds like a “newbie” type question, but what information needs to be gathered before I make an offer on a house (other than comparable sales in the area)?

Will I need to have an inspection done on the house even if my intentions are to quickly flip it, or even just assign the contract? Or should I just let the other investor take care of that?

I just don’t want to make an offer and find out that there was something that I missed that I was supposed to find out about the house.

Thanks a lot!!!

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Make sure you get the property addresss . . . - Posted by JoeKaiser

Posted by JoeKaiser on December 29, 2000 at 12:10:47:

. . . and that’s about it.

I’m convinced it makes little sense to gather information about a property until AFTER you’re got a signed off agreement in hand. As a result, we never do any research about a property ahead of time.

All I want to determine is the seller’s motivation, not the color of the kitchen or how many fruit trees the guy’s got. Frankly, I don’t want to know about the comps or the condition or any of those other PROPERTY details.

My objective is to make the best deal possible, and you can do that too by sitting down with the seller and talking about nothing more than the price of tea in China. Trust me, you’ll eventually get around to talking about the house and everything that goes with it, but in the meantime (and it is in the meantime that matters), if you’re paying attention, you’ll get a feeling for both the seller’s needs and more importantly, his “bottom line.”

It’s kind of subtle and if you’re just showing up with an already filled out, fill-in-the-blank form, you’ll never get there, but at some point around the twenty minute mark you and the seller reach this simpatico thing where not only are you on the same page, but he now likes and trusts you. That’s where you need to be BEFORE you get into the serious stuff.

Believe me, it’s much easier to get what you’re looking for if the seller likes and trusts you. I like to try to get into the seller’s head and figure out where he needs to go, but, if you’ll just approach this from the “friendly” prospective and establish a relationship early on, an amazing thing happens from the otherside as well . . . the seller sometimes begins to see himself in YOUR shoes.

When I first started out and was a tad younger, male sellers would often comment about how much I reminded them of themselves when they were younger and just starting out in the business. As a result, occassionally a seller would practically take pity on me and make it as easy as possible for me to get into the property. Obviously, it doesn’t happen often like that, but if you’re doing things right with the seller on your side, getting the property into your name almost becomes a team effort.

So, don’t worry too much about what you know or don’t know about the property. Thats way they make weasel clauses. Instead, concentrate on learning about the seller. That’s how you make good things happen.

Joe

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Re: Info to get BEFORE making offer? - Posted by Shenesa

Posted by Shenesa on December 29, 2000 at 11:16:37:

Place a clause in the contract stating “This offer is contingent upon inspection of property” etc. etc.

If you are going to assign the property, let the other investor take care of that. Remember, use OPM (Other Peoples Money)

Just my .02!

Happy New Year

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Re: Make sure you get the property addresss . . . - Posted by Rob FL

Posted by Rob FL on December 29, 2000 at 15:57:15:

In the general scenarios you are talking about, I assume that you are only dealing with sellers that have contacted you (instead of the other way around) and indicated motivation in some way. Correct?

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What is your favorite weasel clause?(NT) - Posted by Ray

Posted by Ray on December 29, 2000 at 12:26:31:

nt

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Re: What is your favorite weasel clause?(NT) - Posted by Rob FL

Posted by Rob FL on December 29, 2000 at 15:48:19:

In my opinion the only 3 “weasel” clauses you need are for a simple SFH closing are:

  1. Subject to buyer obtaining financing (if that is the case).

  2. Subject to an inspection approved by buyer.

  3. Earnest money deposit can be retained as liquidated damages. Specific performance or other damages are not allowed.

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buddycat@hotmail.com (NT) - Posted by Todd

Posted by Todd on December 29, 2000 at 15:08:31:

(NT)

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Re: What is your favorite weasel clause?(NT) - Posted by FREE SPIRIT

Posted by FREE SPIRIT on December 29, 2000 at 23:19:20:

Hi, I’m not sure I follow you on that last one about the earnest money can be retained for liquidated damages. Could you explain that one to me?

What % of the time do you think you can avoid leaving a earnest money deposit in the form of actual cash?
Do you ever offer a promissory note instead of cash as earnest money?

Free Spirit

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Re:ToddAlanS@aol.ocm(NT) - Posted by Ray

Posted by Ray on December 29, 2000 at 22:48:01:

NT