I’ve closed several deals and have intensively researched and followed many other investors’ transactions to avoid those hard lessons that are learned by experience. They’re inevitable; but I’d like them to be as few and as minimally damaging as possible.
Here’s one for you that I never really processed before now: Do not submit your wholesale contract to the title company before you have your buyer. Maybe it’s obvious to everyone. And there are exceptions; but mine wasn’t one of them.
Two weeks ago I put a house under contract. The ARV was $105-115k. The as-is value was about $80k. And I had it under contract for $53k. A great deal, right?
The unique facet of this deal was that it was currently rented to long-term tenants for slightly below market rent, and the sale of the property was absolutely contingent upon the tenants being able to stay for 3 more years.
So yeah. I had a difficult time finding a buyer. And in the end, the seller was so nervous about the quality of the buyer that she backed out. (I’m sure there are negotiating and deal-structuring lessons in there for me as well, but I just haven’t realized them yet.)
But as soon as I got it under contract, I submitted the paperwork to my closing agent. It was a great deal…it would close quickly, and I wanted to have the title work ready, since in my experience title companies can get backed up around the holidays.
My mistake. I’ve always waited until I had a buyer under contract (or an assignment contract signed) before submitting the paperwork, and I should have done that this time too. Now I have no deal, and a $350 invoice for the title examination.
Boo. But, hey, now this doesn’t have to happen to you!