I keep hearing many “gurus” talk about putting in numerous back-out clauses to the contracts they submit. I’m sure everybody has heard about Kiyosaki advocating the use of his cat as his “attorney” :rolleyes (Don’t get me started on whether of not Bob actually does the things he preaches). The theory basically goes as this: You submit a bunch of contracts on properties, but with plenty of back-out clauses. Once that is done, then you start figuring out how you’re going to actually follow thru with the contract - If you follow thru with any of them at all. I’m sure its a great way to build future business relations by racking up the tally of people one pisses of by bailing on the contracts one submits. :bs
Anyways, I was wondering how many people actually implement this technique. How well does this theory carry over into real-world practicality. I guess it would be easiest to express in a ratio. What’s everybody’s count of contracts that you submit as compared to how many contracts that you back out of?
I only write contracts on properties I fully intend to buy. The only back-out clause is an inspection clause. Normally, I try to negotiate a price reduction to take care of major items. I don’t ‘nickel and dime’ sellers with minor stuff…
What's everybody's count of contracts that you submit as compared to how many contracts that you back out of?
I NEVER back out of a contract. If I sign a contract, I buy it!
I also don’t submit silly low ball offers on a bunch of retail properties. I only submit offers when the seller is already desperate and the price is in the right range.
I agree, I don’t sit around putting tons of offers in either, almost all of my properties that I’ve bought have come from my phone ringing, either from my advertising or a referral. I look for desperate sellers or problem properties.
I don’t make offers on properties that I don’t fully intend to buy.
My contingiencies have only to do with the representation of the condition of the property: septic inspection, well inspection, structural inspection, title report, and survey.
I very rarely have any financial contingiencies, but if I am borrowing money, then there would be a contingiency about funding.
I have a pretty good idea about the condition of a property before I offer, and my offer is based upon the existing condition, so I very rarely do any re-negotiating after I receive my inspection reports. I will only back out of the inspections reveal soemthing that isn’t fixable.
I love your Subject Line “My Cat said No” so I wondered if you had a talking cat.
I am not high volume myself and now I am doing mostly buy and hold properties since there is a “Sale” going on right now on some great properties.
If you are writting maybe 50 to 100 offers a month, you may have a few more “Back Out Clauses” than most. Robert, wanted you to tie up the property if you thought it was a good deal fast (So you would not loose it to someone else) but leave yourslef protected IF you found something wrong wth it that could not be worked out.
I buy a lot of “Out of State Properties” so my main clause is an Inspection one.
For the record when I write an offer I intend to purchase that property.