Investor Contract Detail
HX: Relatively new to investing. Have used commercial lenders in past to purchase investment property and also use a realtor to do our contract for us.
This time: we would try the "OPM" routine. We also did not find this REO foreclosure through a realtor so decided to submit the contract based on many books, a 3-day workshop instruction, audio instructions. Wow, did I ever feel good about implementing everything I'd learned through multiple sources.
HELP: I explained to the REO that I was using a hard money lender; however, I also knew I had a pre-qual letter for $325,000 if I went the commercial route. I specifically asked the REO if I should put CASH deal or lender--REO instructed me to put CASH deal since it was not a conventional loan. Explained my money sources would require 2 weeks so entered a closing date 4 weeks out to allow f/contract acceptance and funding.
During first week of Oct. seller countered and wanted 10/15 closing. Explained not possible. Was informed by REO title report wouldn't be ready by 15th anyway but the seller had rec'd 2 more bids. REO was to call back to see if seller would agree to moving closing to 10/31 in order for us to get hard money funds. After repeated calls, REO returned my call on 10/20 to say seller accepts our contract but wants closing by 10/31. Went back to lender now I finally had a contract signed by seller. Lender tells me today, 10/29, that funds will be available next week but not on Friday.
I have until 2:00 pm central time on Friday to get check and signed docs turned in or I lose $1000 earnest money.
Before throwing in the towel, do I have any other recourse? REO tells me the seller is hardball and the REO will most likely have a hard time with this seller. However, I would like to at least attempt to submit an amendment to the contract to see if we can delay by a few days to get the funds for the deal. By the way, we have been watching this property for well over 120 days sit on the foreclosure list.
Do I have any other options other than to chalk this up as a $1000 lesson on trying to write a contract without a real estate agent? 
If you have a set contract and you are not able to put up your end of the bargin, you don't have anything to do but make a deal with the seller. Offer them an extra $3000 or more to wait til next week. Other people may be able to have other ideas.
Talk with the REO again and request the extension, if you can PROVE via document that the check will be issued via fax from the hard money source, this level of cooperation may help to plead your case. The REO also knows that the property will go to sale and the seller will completely out of the loop. If you loose the $1K make another offer and absorb your earnest money
Good luck,
Eric & Rosa
[addsig]
Who or what is this "REO" that you're referring to? Maybe I'm just a little confused, but REO stands for real estate owned, which means owned by the bank/lender. That means that the seller is the REO. So I'm a little confused as to why the REO needs to call the seller?
That said, most standard contracts are worded as "reasonable time allowed." That means that IF the closing is setup for the 10th and you can't close to the 11th, then it's still okay. Also, most contracts have some form of additional time provision. Like an above post mentioned, a certain fee/cost, etc to get an extra week or 2.
Roger
REO is real estate owned. This bank/lender uses a realty company to attempt to sell the property. I communicate directly with the realty co.who works with the asset manager of the bank/lender. The only reason I brought up REO is to designate that I am working with a realty co. on this transaction, not as a HUD or VA foreclosure.
There is an addendum to the contract that states if we do not close 10/31, there is a $100 fee for each day we do not close. The realty co. states that this $100 fee does not apply in this case because we stated it is a CASH deal rather than a financed deal.
Thank you for responding.
In the cash deal as opposed to a finance contingency deal, they may be right.
The one error that I can see is that you said there was no real estate agent involved, and there is. Unfortunately, s/he is working for the seller. The only recourse that I can see is that the agent is the one who suggested to you to make the offer a cash offer. Since s/he was working for the seller, that would an unethical practice. If you can argue that point effectively with the broker in charge, you at least may be able to get your deposit back.
Roger