I have a question about the price in the contract you have the home owner sign. I was talking to another investor that said he puts in PAID OFF PRICE in where the dollar amount goes on the contract and then submits an attached sheet with his offer to the bank. He says that way the only thing he needs to change is the attached sheet to the bank to make the 2nd offer. Any thoughts on that, I am not sure that would be legal or not.
Sounds odd to me too. While consideration is not required to form a contract, an agreement must be definite. For example, an agreement to buy a property at “a price to be agreed on” would not be binding because it would lack definitiveness. Sounds to me like the property owner would have grounds for getting out of this agreement. You should talk to a lawyer about this but I don’t think that I would want anything to do with this.
I too have been putting “agreeded loan payoff” on the price line of contracts. And then outline my offer price on the net sheet. This way you can make different offer amount without having to go back and forth to the seller. This had been working ok until yesterday when a lender said I needed to submit a contract with a number on it. Luckily the seller was easy to get ahold of. Some investors reccomend getting a limited POA signed from the get go thus allowing them to sign off on the contract w/o the seller.
I would say go ahead and use PAID OFF PRICE. In my experience this will get you to the point where the lender has a number they are looking for. You can then verbally try to get them to see it your way. Tell them you would like to settle this but not at that price(if that is the case). Point out how you have come to your offer price. Most of the times you are not talking to the decision makers, but they do have a certain amount of flexibility to work with. If you can get a commited number from them verbally and in writing then goto the seller with the good news and get a new signed contract with that number. The lender will send you their own contract anyway.
Right now I am working one where they told me they needed to net 188k. My offer was 165k net. While on the phone with LM he verbally stated to me that if we could meet half way that would work. Was he telling the truth? I dont know because I am holding out for 170k. The comps support my offer. We’ll see…
Others please chime in for the original poster.
Bovine: So under your scenario do you ever put a price on the contract for the home owners to sign? Or just go off the net sheet? Then after you come to a price does the title company just go off the net sheet also?
Keith
I just submit my first offer price on the actual contract. If there are counteroffers, I use a one page amendment to contract to include the new offer. If I need to, I just have the homeowner sign that one page ahead of time & I make a copy so I won’t have to go back & forth. In case some wonder about that, I submit all contracts & amendments to both the bank & Title Company. The Title Company sends the Seller copies of all executed contracts.