Can you make an offer to buy a property sight unseen? Yes, you can and sometimes you should. Can you can do it with confidence? Yes, you can do that too. All you need are a few contract contingencies placed in your offer. These contract contingencies will protect you and your hard earned money if the property turns out to be a dud. What are these contract contingencies? Read on to find out.
Buying Sight Unseen?
You might be wondering who would be bold enough to make an offer on a property sight unseen. Well, a lot of people are and would do so. In today’s hot real estate market, many properties will have multiple offers just hours after they hit the realtor’s listing system if the are priced right. With competition like that, there is just no way you can see and inspect these properties before they are snapped up by another buyer.
The key these days to acquiring properties is making offers, often sight unseen. But, that does not mean you should leave your or your money hanging out there unprotected. There are ways to protect yourself with contingency clauses in your offer to purchase contract.
Inspection
The first of these clauses is what is known as an inspection clause. Such a clause allows you, or someone you designate, to inspect the property before you close. There are many ways to word this clause. The most common is simply “This offer is subject to and approval of an inspection of the property.” With such a contingency clause in place, if upon inspection, the property is not quite what you thought, or needs significantly more repairs than you anticipated, you can get out of or renegotiate the contract.
Financing
The second contingency clause to protect yourself refers to financing. Again, something simple such as “This offer is subject to adequate financing” will often suffice. What is adequate? That is up to you to decide. Such a clause is key because you can never be 100% sure of financing, even if it is your own money. What if you or your private lender get in an auto accident? Funds may be needed elsewhere if such an event occurs. You just never know so protect yourself with such a clause.
The Weasel
Finally, you should include what is often referred to as a “weasel clause.” A clause such as this gives you the ultimate out if you need it. What is it? Something along the lines of “This contract is subject to review and approval of my business partner.” Who is your business partner? Whomever you want. All you have to do is tell the seller your business partner did not approve and you are out.
These clauses are to be used to protect you. You should never make an offer on a property that you do not intend to close on. Doing so is bad business, underhanded and it wastes everyone’s time. Today’s hot real estate market however demands that we investors take some risk and perhaps make offers before we even see the property. But, this exuberance does not mean that you have to make offers where you are not protected and have no way to get out of if something major pops up later on
Now go and make offers with confidence. These contract clauses will allow you to know what you are getting into. They will also allow you a way out if you need it.
Kevin Perk is the founder and publisher of Smarterlandlording.com. He is the author of Advice From Experience To New Real Estate Investors. Subscribe to Smarterlandlording here. Contact Kevin here.
