Hey everyone. I’m looking to make an offer through a realtor for the 1st time, & I’m wondering whats the best weasel clause to use when submitting offers through a realtor? Are the standard “subject to partner approval” and “subject to inspection” ok or should I try another? Are those even useable on realtor contracts?
I would say “investors out” not weasel clause. Ask the realtor for the contract ahead of time and learn the ins and outs of it. All of our contracts allow a 10 day inspection period which you can use as an out.
Most REO companies have their own addendum that they will send if your offer gets accepted. This is an extension of your offer but often times will supercede the origanal offer, so eventhough you are covered in your original offer, be sure that any addendums that you sign dont change the terms of the original contract.
Eric Medemar
They’re still “weasel clauses”!
The partner clause and the inspection clause are the two most popular…as is , “Contingent upon approval of financing at X% for a period of XXyears”…
You can make a contract contingent on anything as long as you and the seller agree to it and sign the contract…be creative.
Keith
I agree they are “weasel clauses” but words like weasel clause dont play well with potential sellers and when you tell other people about what your doing it further demeans the already bad reputation that investors recieve from the uneducated public. Being a realtor myself I have had investors try to add the weasel clause to a contract that already has one. By adding a clause to a contract that already has one will usually set off alarm on the sellers side that this guy is going to try to “weasel out”.
If you are offering on REO properties and your offer is up against other offers without weasel clauses, then yours will often lose regardless of the amount of money your are offering, I have seen this happen personally. I have had buyers who insisted on using their “weasel clause” and they offered $15k more on a property than the winning bidder did and they still lost.
Weasel clauses are a great way to have an out on properties just be sure that you use them at the best times and that you do your homework on the original contract that you are signing so you dont end up looking like your uneducated by weasel clausing on contracts that already have you covered.
Eric Medemar
“Weasel clause” is an accepted REI term – I wouldn’t use it with sellers! It’s there to protect me – the seller has the rest of the 99.99% of the contract to protect him/her!
If you haven’t noticed, most RE contracts HEAVILY favor the seller!
(For $JCL$ – that’s because the forms are made by the Realtors and the Realtors get paid by the sellers! – ROFLMAO!)
Keith
I did notice that I have been inolved over 200 transactions as a realtor and an investor, contracts are seem to always be skewed in to favor the seller. Alot of investors get to tangled up in their “weasel clauses”. The thing about weasel clauses is you only need one. Many investors that I work with often want to ad a mortgage clause, a friend go through clause, a inspection clause and countless other clauses. What I try to bring them to realize is that if they have a 10 day or 5 day inspection clause already on a contract why not just use that. When push comes to shove regardless of what clauses you use the only one any good is the last one that expires, and the more that you ad the worse your contract looks, so why not just ad one if it is not already there and make that one go as long as you need.
I have had buyers who come with their own contracts, the problem is most realtors are not overly smart (including me) and when they get a contract that they dont understand often times instead of saying that it needs explaining they will just tell the seller that they got a low offer and wont even go over the details. I dont say this because I think I know it all, it is just what I have seen happen.
Eric Medemar
p.s. M.A.S.A
p.s.s I love endless banter because, I keep on learning from the big dogs here.
Thanks guys! I’ve been really unsure about that & I didnt want to mess thaat up & get stuck. So just so I have a clear understanding, when using the inspection “out” I’m basiclly telling the seller I can get as many “inspections” as I want in that 10 day period & in the event that I dont get one that is satisfactory, I dont have to close right?
How should one determine when during the time until cloe the 10 day window should be? First 10, last 10, or doest it matter? Thanks again!
Correct. If you have a properly worded contingeny clause, you can negate the contract during the 10-day period.
The clause should say something to the effect of, “This contract is contingent upon satisfactory inspection results performed by an inspector of the buyer’s choice. Any unsatisfactory items found may be cause for the cancellation of this contract and is solely at the buyer’s discretion/judgement” – or something to that effect. Your “out” becomes your discretion/judgement. If your inspection reveals that the floors are dirty and you want out of the contract, you can say that the dirty floors are a deal breaker.
Keith
Thanks a million Keith!
You’re welcome…
Keith
Keith,
Using your example of the inspection clause, when you decide to opt out based on an inspection that has uncovered faults with the property, do you need to provide proof to the seller as to why you are opting out? Or does the “at the buyer’s sole discretion” mean that you dont really have to provide inspection results as proof and the seller has to accept your decision? Thanks.
I haven’t had to negate a sale for an inpsection but you can negate it without providing a copy of the inpsection results…if they want a copy, I could sell them one. It cost me money to get the inspection, the results are mine. Most people don’t want a copy because they have been made formally aware of deficient items and they are then required to disclose them!
Keith
Inspection does not mean by a company or anybody for that matter. I have had buyers that wanted to back out because they lost their financing so we just said that there was a crack in the foundation (Almost all foundations have cracks). If they had wanted a report, I could have just taken a picture and sent it over.
Eric Medemar