Don't Include Closing Extensions on Contracts
Recently on Ramey Blankenship’s podcast called Gorilla State Investing, he asked me about closing extensions. He said he remembered one of his offers included a clause that said he would pay for extensions to closing and that my feedback to him was that it made him look like he didn’t have the ability to close. My reasoning behind this is it's all competition-driven. The broker is going to provide the seller with a list of offers and the terms of each offer side by side so they can be compared. Now, put your seller hat on. Extensions to a seller automatically mean for instance if you have a 30-day due diligence and a 30-day close, and then you include two options to extend closing 30-days all that says to the seller is a 30-day due diligence and a 90-day close. That's all the seller thinks because you're already setting it up that way. I recommend staying away from any extensions whatsoever when you're in multiple offer situations. It just raises a red flag. It says to the seller that you don't have lender or vendor relationships to get the due diligence done on time. It also says to the seller that you’re going to spend a good bit of your time trying to raise the capital to close. These are all the things that a seller has in their head because all they see is black and white in a document and they're going to let their minds think the worst. They don’t know all the potentially very valid reasons you included those extensions. You can explain all you want, but if they’re looking at eight other offers that don't have extensions. Who better to get the right information from than the broker who sees all the offers and does all the deals? Buyers aren’t privy to that information, but the brokers do.
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