152 - What the Heck Is Retrading?

Cash Flow Guys | Real Estate Investing & Cashflow Ideas - Inspired by Robert Kiyosaki / Rich Dad Poor Dad

Wikipedia defines a retrade as the practice of renegotiating the purchase price of real property by the buyer after initially agreeing to purchase at a higher price. Typically this occurs after the buyer gets the property under contract and during the period that it is performing due diligence. The buyer may raise a due diligence issue and demand a purchase price adjustment to a lower re-trade price.

The seller can be left in a bad situation where it must either accept the lower price or lose the sale and re-market the property. Moreover, loss of the sale can affect an entire chain of related transactions (such as when the sale is a down-leg in a tax-deferred "1031" exchange), thereby increasing even further the pressure upon the seller to accept the lower price in order to salvage the related transactions and avoid a ripple effect.

Here’s the deal, as a buyer, you have a RIGHT to renegotiate a contract when the details of what was presented to you change. Let's keep in mind that doesn’t mean you need to nickel dime the seller, after all, you aren’t buying a “new” property.

In the past, a few unscrupulous people abused the ability to renegotiate, by intentionally going under contract at a price they knew they would not buy at, in favor of renegotiating later. This, ladies and gents is not a good idea, and frankly, its unethical.

When buying a property, it is important to perform your due diligence to be sure what you are buying is as you expect prior to arriving at the closing table. During this process, you will have all of the important systems and structures inspected, and the books audited by you or a member of your team for accuracy and alignment with the figures you were provided when making your offer. Don’t be shocked if you find discrepancies, however how you deal with the differences can (and should) make or break your deal.

We deep dive into this topic during the Mailbox Money Course so that our students can buy safe and know how to look out for their investors. If you want to learn more about that, please visit http://MailboxMoneyMastermind.com