Step 1: Get an Agreement on Paper

    Early in my rehab career, after I finished a project and was back on the prowl for the next, I circled back to a property that was still on the market after a span of several years. This place was on the rough side, ideal for me and ripe to be snatched up at a great price. It was a multi-unit property, an old home with garages that had been converted into apartments, and the owner had collected rent while waiting for the right buyer. I thought I was the one.

    This second time, I was ready to pull the trigger. However, an investor who was close with the realtor emerged and reached a swift agreement with the seller. These ole’ boys were more established and experienced than me, and it stung a little. Afterwards, the real estate agent made an effort to smooth things over by saying, "Thanks for being a gentleman about this." This felt odd. Perhaps he felt guilty or had concerns about legal exposure.

    This one that got away made me aware that if people realized a serious buyer was ready to close on a property, it could stir up interest from folks who had previously been uninterested. So, I began pursuing my properties more intently, which included getting something on paper as soon as possible to prevent others from derailing my efforts. And... I’ve never had a property bought out from under me again.

    When a property owner is represented by a real estate agent, this representative will help you document the process and agreement, the back and forth between buyer and seller. However, with an as-is property that’s for-sale by the owner, there’s a good chance there won’t be a realtor in the picture.

    If the sellers are suddenly nervous because you involve a lawyer too soon, then that apprehension could cause your deal to fall apart. The first step is to just get something basic on paper. Even though my state requires a real estate attorney to make ownership official, the initial agreement that I’ve always used has been a simple document that I wrote up without a lawyer.

    For this agreement to buy, fancy or overly legal wording is unnecessary. It just needs to be straightforward with dates, the sale price, and details that identify the property such as address and local property identification number. If anything conveys, like appliances or other things on site that aren’t attached, they should also be listed briefly to eliminate confusion. As you probably expect, the bottom of the page has a line for buyer and seller to sign and date. Like other agreements, if it’s on paper, then weeks down the road neither party can try to recall a verbal agreement when someone begins a heated exchange with, “Hold up! I thought we said…” 

    Even if you get this signed document in the hands of the closing attorney immediately, it still probably wouldn't stop the seller if they really wanted to bail on the deal. Yet it's worth mentioning that once my sellers have signed my one-page agreement, we’ve always cruised forward without issue. 

    Get the details on paper first, and then start working toward the closing.