Posted by Brent_IL on March 21, 2002 at 09:33:07:
The majority of contingency clauses don’t affect the quality of the deal. They buy time for due diligence, getting your financial ducks in order, and escape, if you screw up.
A “good” deal is a house that you can buy at a price that allows you to make an adequate profit for the time and money that you have invested.
Craig posted an excellent summation last month. You’ll have to search for the URL, but one part I copied says “Posted by CH on February 24, 2002 at 13:32:58:”
Get a Realtor to run sold comps on the after-repair value of the house. His listing estimate will be high.
Get estimates on the repairs from qualified contractors or tradesman. Carefully consider using a general contractor.
Assume the fix-up will take twice as long as you expect and budget your total holding costs.
Subtract all your costs plus profit expectations plus a huge allowance for cost overruns from 80% of the ARV and make your offer. I adjusted the ARV by ten percent for puffing and ~ ten percent for costs of resale if it’s necessary.
If this is what you want to do, I would strongly suggest that you wait, put the financing money back in your pocket, and spend some time researching the archives. The things you can learn are invaluable. The home repairs section at the public library is another valuable resource. In recent months, I’ve learned a lot by asking questions at Home Depot, Mennard’s, and Len’s, the local Ace hardware store. An accurate estimate of the repair costs and the time they will take is crucial.
When you make an offer, use a purchase contract that you understand completely. Skilled real estate lawyers are a good thing. Their guidance is most useful before you sign anything.