I consider myself to be a pretty competent and successful house flipper these days, but that doesn’t mean that I don’t make mistakes, and sometimes those mistakes are more costly than others. If nothing else, hopefully my mistakes can help my readers avoid making the same mistakes themselves.
Here’s my latest mistake that is costing me about $1500…
I mentioned previously that The Waffle House was originally under contract by an investor I was representing (I was his buyer’s agent). He backed out of the deal, and in an effort to maintain a good relationship with the listing agent and the bank, I decided to take the deal myself (it’s not a bad deal, but won’t be overly profitable).
When I offered to take over the deal, the listing agent went to the asset manager (the guy at the bank who deals with selling REO properties) and the asset manager provided a new addendum to the contract with my name instead of my investor’s name. At first glance, it was exactly the same as the one that my investor client had received, and I had read that one word for word to ensure that there was nothing out of the ordinary. I made the mistake of assuming that this new one was the same as the previous one, with the exception of me being the buyer (all other terms of the contract were the same).
Because I made that assumption, I didn’t reread the new contract addendum carefully and I missed the line that the asset manager that essentially said, “Because the buyer is a licensed real estate agent, the buyer agrees not to take an commission on the purchase of the property.” Because my wife and I were representing ourselves for this purchase, I expected that I’d receive a 3% commission from the bank; but this addition to the contract meant that we wouldn’t be receiving any commission on the purchase!
So, I basically flushed $1500 down the toilet by not reading the new contract addendum carefully enough. While it was a bit shady of the asset manager to throw that change into the contract, it was 100% my fault for not catching it…hopefully others can learn from my mistake here. Always read your contracts!