Wednesday, July 27, 2016

Deal Killers and Due Diligence

by Osman Parvez
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This morning, I helped my buyers terminate a contract on a condo. When we wrote the offer, they absolutely loved the property and were willing to pay far more than asking. By the end of our due diligence, they knew it just wouldn't work. 

What happened? We found significant repair issues that frankly should have been addressed by the seller prior to listing the home. We might have been able to resolve these problems through negotiation but HOA mismanagement and the fact that one of the neighbors is making a stink about a potential adverse possession claim, created a much trickier situation. 

Friendly reminder: There are more than 20 ways a buyer can terminate a contract in Colorado. These contract exit points exist to protect the buyer. Buyers (and their agents) should have a thorough understanding of the risks before they reduce or remove protections to increase offer competitiveness.  
Remember, intelligent real estate decisions are based on a deep understanding of market conditions and thorough due diligence. Not every property is worth a bidding war. Not every deal closes. If you find an unresolvable issue, it's better to exit.   

Even in Boulder, a surprising number of properties will go under contract and then return to market. Here are 7 properties that are back on market this month (several of which have found new buyers). If you're considering buying a property that was once under contract, don't take the listing agent's word on the cause for termination. Ask for the Termination Notice as part of your due diligence documents request. It's simple, easy to do, and can protect you from future unforseen headaches and risks. 

Note: My due diligence checklist includes over 20 areas for buyers to consider. Guidance for due diligence is part of the service I provide to my client buyers. If your agent shrugs when you ask about how they will help you with due diligence, get a better Realtor

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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

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