Making offers and due diligence

Hey all,

So far I have invested along with others who know what they are doing. It has mostly been third party investing. ( I have put money in with an associate that knows the real estate investors.) I have also studied a great deal with the goal of moving into real estate myself.

This is the obstacle that I am running into. I see what I think is a good deal, and call and ask for information on it. It has been my limited experience that sellers are never completely honest about the expenses, and/or don’t figure all of the expenses into their calculation ( I am looking at mostly multifamily ). Therefore, I don’t want to make an offer until I have all the details. By the time I am comfortable with what I want to offer, the deal is gone.

So the question is this. Are people buying without looking at the details, or should I be immediately getting it under contract and then negotiating changes in price as the truth comes out? How do you handle the issues that come up during due diligence if you have already offered a certain price?

One solution that I thought of is to offer a price based on cap rate and then as the expense numbers come out during due diligence and change, then the price would change too?



to simplify the above

I am doing this

See a possible deal → get all the details down —> make an offer —too late

should I be doing this

see a deal → make an offer → renegotiate as details come up

It seems like I need too much info to be comfortable enough to make and offer, but all of that info is relevant to what I will want to pay.



I am new to this all. So having said that - know that I don’t know sh*t.


I would ask, how many times have you run into the scenario you describe? If it’s 2 or 3 times, well then, cut yourself some slack - you’re new to it like me.


If you’ve run into this problem 20 times in the past two months and have missed out on 10 potential good deals, don’t worry about it, more deals will come and when the time is right, you’re patience will pay off. And if the first deal isn’t a gem, don’t worry. Just don’t make any devastating mistakes that will put you in a situation without outs.

It is my understanding that once you’ve agreed on an offer, both parties are bound by that.

TIP: Try and set up a meeting with the seller (through the realtor if one is involved) and request to go over all basic financials.

And also in the contract, make it “subject to” the buyer (you) verifying all income and expense data. If the numbers don’t jive with what they provided when you made the offer - then you have some leverage.

This is what I am coming to realize is what must normally be done. The real price gets negotiated after the contract. I am starting to get my fingers around that idea.

Thanks for the reply,