Experienced real estate investors know that you make your deal when you buy. If you pay too much or have not done your due diligence research, that's tough, because you're stuck with the deal after the close.
A buyer still has some wiggle room during the time the deal is under contract. There are a few time worn “weasel" clauses used by some investors. They will read something like, “Purchase is contingent upon approval of buyer's attorney. " Or a more legitimate clause would be, “Purchase is contingent upon a home inspection report submitted by a licensed home inspector and approved by the buyer before the close. Inspection to be paid for by the buyer. "
To be safe you want to be the one who pays the home inspector, so the inspector has no doubt about whom he/she is working for.
If the inspection indicates a need for substantial repairs the buyer can reopen negotiations with the seller. If they can't come to an agreement the buyer can simply disapprove of the inspection report and there is no deal.
Of course, there are many other things that could legitimately void a deal. How do you officially cancel a deal? Something like the following statement could be submitted to the escrow officer:
1. The undersigned party hereby instructs Escrow Agent that Escrow Number _ hereby is canceled as a result of a Material Breach by the _(buyer or seller).
2. The Material Breach is defined in lines _ of the purchase agreement as follows: _.
3. The Earnest Money is to be disbursed as follows: _.
4. The undersigned hereby affirms that I am not in breach under the terms of the purchase agreement.
_ (Buyer's Signature)
The contracting of any deal is important and it must be carefully considered and executed. Experienced real estate agents may be capable of doing it, but it is always wise to at least have contracts reviewed by an attorney who specializes in real estate. They are “wiggle room" experts.
Mark Walters coaches real estate investers with free online videos at http://www.CashFlowInstitute.com