Making sure your real estate investing deals close begins by fully understanding where things can go sideways. When you are dealing with dynamic parts of any project – staying on top of people, systems and murphy's law – it can be exhausting when you are in the middle of a deal. As a real estate investor you need to be constantly asking your self this critical question: “what can go wrong between now and a successful closing?”
To be a successful real estate investor you need to close deals – period. To do this you must be aware of “weak points in your deals” and be ready to handle and prevents any issues that might arise BEFORE they actual happen. For example, buyers can often use a technical issue – like the inspection – as a real excuse to get out of the sale especially if they are experiencing cold feet. Take away the element of surprise with disclosures or your own pre-inspection.
How Do Real Estate Investing Deals & Transactions Fall Apart?
It's up to you to keep things on track. There are many reasons real estate deals & transactions falls apart. I've boiled it down to 5 common critical components & issues that most real estate investors face at one time or another when a deal is in je0pardy.
Deal Breaker #1 – Inspections & Repairs
| How Deals Go Wrong | Investor Solutions |
| Unexpected Findings | Investor/Seller gets pre-inspection |
| Unable to read/understand report | Assist buyer with reading report |
| Costs & who pays | Pre-negotiated limits or credits or disclaimers |
| Timetable for repairs | Get written estimates from contracts |
| Doubt about integrity of home | Communicate, prepare and reassure your buyer |
Deal Breaker #2 – Appraisals
| How Deals Go Wrong | Investor Solutions |
| Won't support the price | Provide Appraiser with research |
| Won't support the loan | Help find additional buyer funds/credits |
| Doesn't match the comps | Appeal the appraisal |
Deal Breaker #3 – Loan Approval & Funding
| How Deals Go Wrong | Investor Solutions |
| Application delays | Buyers should get pre-approved |
| Documentation problems | Assist buyer with paperwork |
| Buyer credit issues/changes | Assist buyer with credit counseling |
| Lender failure to approve | Reapply with corrections |
| Lender failure to fund | Have a back-up lender to suggest |
| Property title/ownership not clear | Make sure your contract/title gives you right to sell |
Deal Breaker #4 – Deadlines
| How Deals Go Wrong | Investor Solutions |
| Inspections, Repairs, Showings | Confirm appointments and status |
| Closing date | Choose flexible times/location |
| Occupancy | Firm dates, limits in contract |
| Approvals/documentation | Manage the closing checklist |
Deal Breaker #5 – Miscellaneous Contingencies
| How Deals Go Wrong | Investor Solutions |
| Estate, relocation and short sale approvals | Know who, how & timetable |
| Clouded title | Preliminary title search |
| Bad agent advice/communications | Clarify messages & intentions |
| Inattention to details | Own the process & communicate |
Saving the Deal
If you dot your I's and cross your T's there won't be many surprises that would hinder you from achieving a successful real estate deal closing. If you are always aware of potential problems and deal breakers you'll catch things early before they put the closing at risk. Proactive actions, early response and staying up top of your checklist will keep the wheels on track of all your real estate deals regardless if your an investor buyer or investor seller.
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