Skip to Content

6 Reasons to Back Out of a Real Estate Deal

A man sits on the porch of a house contemplating a real estate deal.Are you an investor looking for your next major rental property investment? Identifying the right time to back out of a real estate deal is essential for investment success. Skilled rental property investors maintain a clear set of deal-breakers before finalizing any deal.

Together, let’s examine the main reasons for withdrawing from a real estate transaction. This information will help you choose rental homes with strong investment returns. So, let’s dive in!

The Appraisal is Too Low

In real estate, it’s essential to avoid the setback of a low appraisal. A low appraisal can disrupt proceedings and potentially unravel a deal. To avoid this, thoroughly research the property and decide precisely how much to invest and borrow.

Exiting the deal is a better option if the appraisal is too low to justify the needed loan amount. Keep in mind, there are plenty more properties on the market. This decision is financially prudent and helps avoid undue risk.

The Monthly Payments are Too High

Financing often doesn’t go according to plan. After looking at various options, the ideal rate for your needs may still elude you.

In these instances, the best course is to press on and seek out better options. Selecting a too-high monthly mortgage payment may lead to complications later on. Therefore, making thoughtful decisions that respect your budget is key.

The Inspection Reveals Major Problems

The condition of the property is a critical element that impacts your investment. It’s standard to make some repairs and improvements before renting, but severe issues uncovered during inspections can scuttle a deal.

Only consider investing in such a property if you possess adequate funding and a reliable contractor to perform the repairs. More often than not, properties with serious issues are more burden than benefit.

Inaccurate Information in the Listing

Most real estate agents are reliable and honest, yet some exceptions exist. Some agents might attempt deception by giving out false or incomplete details about their listings.

Whenever a deal doesn’t feel right, it’s wise to exit. Be aware that unnoticed concerns could eventually result in significant financial loss. It’s important to be observant and identify any suspicious activities.

Previous Work Done Without Permits

Looking at remodeled properties could unveil a fantastic real estate deal. However, you should be cognizant of a few key points before deciding.

Verify that the previous owner secured the required permits if they made major modifications, such as adding a room or constructing a deck. Lack of permits could mean you’ll be on the hook for fines if the local building inspectors uncover unauthorized changes.

Consequently, always make sure to recheck the permits before sealing the deal on the property. If the permits are unaccounted for, it’s safer to keep searching for a suitable property.

You Feel Pressured to Make an Offer

In competitive real estate markets, swift action is required to secure a property that fits your needs. Nevertheless, it’s important to steer clear of rushed decisions when under pressure.

Whether under pressure from agents or driven by personal investment goals, detailed scrutiny before buying can yield better decisions and significant financial benefits. Therefore, if you need more time for in-depth research and analysis, it’s prudent to resist the urge to make a purchase.

Investing time to carefully make decisions can shield you from potential financial and emotional hardships later.

Looking for your next rental property in Oak Park? Real Property Management Advantage can help! We assist real estate investors of all skill levels, specializing in securing top-notch off-market deals. Get in touch with us online, or call 248-554-1010 today!


Originally Published on December 4, 2020

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