Moses Kagan on Real Estate

Managing risk

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The more deals I do, the more I realize the importance of managing risk.

Buying a property is kind of like a teenage seduction. Each side shows a little skin, then waits to show more until the other side shows some. First the buyer offers a price. Then the seller counters. Then the buyer accepts. Then the buyer puts money in. Then the seller shows the buyer the property. And on and on.

At key points in the deal, either the buyer or the seller is going to take risk (of losing their deposit, having their property tied-up indefinitely, of wasting money on inspections on a deal that will never close, etc.).

Who will take the risk? It depends on who wants the deal more. But it also depends on how good the brokers are.

The more deals I do and the more time I spend learning the in’s and out’s of the standard contract residential income property purchase agreement, the more opportunities I see to make sure the risk is on the other party, not me or my clients.

My mother always wanted me to go to law school and I never did (sorry, Mom!). But, now, through my deals, I feel like I’m becoming a real expert on this one, tiny little agreement. And it’s kind of cool.


Written by mjkagan

09/11/2012 at 4:09 am

Posted in Brokerage, Buying

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