As a student of real estate investing I learn something new with every day and with every transaction. I’ve juggled about 6 properties in various stages of rehab and all have had issues where they fell out of escrow. I’m going to list as many as I can remember:
- Termites found on property – buyer told lender about it – lender refused to fund
- Appraisal came in too low – tried to fight it but buyers said it was taking too long – they left
- Inspection report showed too many problems – scared buyers away even though all issues were fixed
- VA appraiser mentioned structural problems with an approved addition – no time to fight the code compliance office, draw up law suits, etc. Rejected and put back on the market
- Lender found a judgement on the buyer – (How come the pre-qual came clean to begin with?)
- Buyer never paid the earnest money deposit (in escrow 3 weeks)- cancelled
- Official document of non-US citizen had a misspelling on her name – we chose to wait the 6 weeks for the specific federal form and should close on that one next week
- Cash buyer changed his mind within the 17 day inspection period
Lessons learned:
- Cash buyers don’t need 17 days for inspections – counter with a shorter inspection period for all future cash buyers
- Inspect the property before listing it…solve all issues before buyer’s see it.
- Avoid VA loans if possible
- Confirm receipt of earnest money deposits early in the process
- Provide list of repairs made to rehab – make sure lenders appraiser has it
There are a lot more lessons learned with this round of purchases – I just can’t share all of them here. All I can say is there are never 2 real estate investing transactions are alike…And never stop learning. Take what you’ve learned and tweak your approach. Remember to push through the challenges, lick your wounds, and be smarter for the next project.
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