Flip Tip Summary
If you’re loading your real estate offers with contingencies as escape hatches, you’ll likely missing out on deals to others that are not doing this. Sam Sadat of the Los Angeles Real Estate Investors Club tells is more in this FlipNerd.com Flip Tip. Check it out!
Flip Tip Transcript:
Mike Hambright: Hey, it’s Mike Hambright from FlipNerd.com and we have a quick VIP flip tape to share with you from Sam Sadot [SP] who is going to share a tip on making offers with no contingencies. Go ahead Sam.
Sam: Thanks Mike. Folks, I live in southern California. For a lot of buyers, particularly home buyers, first-time home buyers, second time home buyers, it’s been so difficult for them to get their offers accepted. There are multiple offers, many of them all cash, mind you most of the all cash ones are not all cash because they have figured out the way which I’m going to teach you know how to do that. The way that I’m going to basically approach this is to teach you a strategy that is going to work for you. Yeah, there might be a bit of risk involved, but if you do it properly you’ll eliminate all of this.
Here’s what I suggest you do. If you are not successful in getting your offer accepted and I don’t know, you might be living someplace else other than southern California, but if you’re running into this issue as well, here’s what you could do. Consider the possibility of removing your contingencies, appraisal contingency and the loan contingency. Oh, snap, if I do that, I might just lose my deposit. Yeah, it’s possible that you’ll lose your deposit, but not if you follow my advice.
Before you do that you make sure you go through one, two, three different lenders, one bank and two brokers, top notch brokers. Make sure that your loan is pre-approved; okay make sure all three of them have pre-approved your loan because if they do, you know that you’re going to get a loan. So that being said, it’s very easy to remove your loan contingency and not get in trouble.
Appraisal contingency, a lot of the sellers don’t want to deal with that either, so make sure the value of the property is there. If the value is there and you have a little bit of extra money just in case it sells over the asking price that you can make up that difference, okay? Because remember, lenders will only loan you money either on the appraise value or the purchase price, whichever is lower, okay? So that being said, if their property won’t appraise and there’s sort of like a difference in price that you need to come up with, you’ll have that little bit of money to cover that.
But I’ll tell you also another secret. The funny part about appraising is I’ve talked to so many appraisers and every one of them tells me the same thing. If you have a market that is stable and you have a willing buyer and a willing seller, their appraisers go out of their way to appraise the property at value, at the purchase price. So you have very little concern with that even if the property’s asking price or list price is 550 and it went up, and it got overbid and now it’s selling, at 575, I can virtually guarantee you that it’s going to come up at 575. So you don’t have to worry about that either, but give a little bit of money just in case, make sure your loan is totally pre-approved and consider waiving your contingencies at removing debt. That will definitely boost your chances of getting that property.
Mike Hambright: Thank you for joining us for another FlipNerd Flip Tip.
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Mike: Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.