Skip to Content

5 Reasons to Back Out of a Real Estate Deal

Suited Man Contemplating Real Estate DealAs a Newport Beach rental property investor, you are without a doubt on the lookout for another rental property to buy. However, there are situations when it will be necessary to back out of a real estate deal. Knowing when to keep moving forward and when to walk away is one of the most significant ways to ensure you’re choosing rental homes that will offer a good return on your investment. The most successful rental property investors go into every deal with a list of deal-breakers already in mind. We’ll double-check some of the top reasons to back out of a real estate deal in what follows.

The Appraisal is Too Low

Few things can cause a real estate deal to end abruptly quicker than an appraisal that is too low. As you gather information regarding the property and crunch the numbers, you should decide exactly how much you want to put down and finance. If the appraisal isn’t high enough to back the full amount of loan you need, walk away.

The Monthly Payments are Too High

Every now and then, the financing you need to buy a new rental property doesn’t quite add up the way you need it. If you can’t get the rate you need, even after working with more than one lender, it’s best to move on. A monthly mortgage payment that will put a strain on your cash flows may be a recipe for disaster.

The Inspection Reveals Major Problems

Regarding financial issues, property condition is one of the top reasons to back out of a real estate deal. Most properties will need some repairs and improvements as you get them ready to rent. But suppose your property inspection reveals major issues that will require expensive repairs. In that case, your best option is to pass it up unless you feel confident that you have the cash and a great contractor who can handle the repairs, a property with big complications usually isn’t worth the effort.

Inaccurate Information in the Listing

Though most real estate agents try to conduct their business with integrity, there are a few out there that don’t. Some may try to unload a problem property by putting false or misleading information in the listing or failing to disclose important information. If you sense any shady dealings are in the works, your best move is to walk away from the deal. There may be other things the sellers and their agents are making the effort to hide that will spell expensive trouble for you down the road.

Previous Work Done Without Permits

Buying a remodeled property can lead to finding some excellent real estate deals. But if you discover that the previous owner made significant changes to the property, such as an addition or building a deck, be sure that they can prove they had the permits to do so. If the local building authority comes back and decides those changes violate permit regulations, you will wind up paying the fines. If you can’t find permits for any work accomplished, it might be better to move on.

You Feel Pressured to Make an Offer

In competitive markets, you may have to move quickly when you find the right property. But you should never buy a property simply because you feel pressured to do so. Whether that pressure is coming from a real estate agent or from a desire to meet your own investing goals, buying under pressure can lead to making poor decisions that may end up costing you in a big way. If you feel like you haven’t had time to do your due diligence on a property, the best thing to do is resist the urge to buy it anyway.

Are you in the market for your next Newport Beach rental property? Real Property Management Agile can help! We work with real estate investors at all levels, helping you find great off-market deals. Contact us today!

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details