JV on 11 acres of raw land, partner's cash buyer list turned out to be all rehabbers

Did you see the list, or a description of the list? I'm starting to think those are two completely different documents.

I'd push back on the framing. Your partner's list composition is a real problem, and the 71k offer might also have been the number. Eleven acres with an unproven three lot split is priced off finished lot value less development cost less the carry through plat approval, and buyers discount hard for approval risk they can't date. If finished lots in that submarket were worth 65k each and site work plus soft costs ran 30k a lot, your 88k is only defensible with a plat already in motion. So what was finished lot value, and how many months does your county actually take from application to preliminary approval? If the answer to the second one is nine months, the deal was priced wrong at signing and no buyer list saves it.

The part that would have stopped me is earnest going hard at day 10 on an asset that nobody had priced yet.

Going hard means the 2,500 stops being refundable even if the deal falls apart, right? And @arbor, the seller keeps it either way, so your partner had nothing at stake at all for those seven weeks? I'm rereading the whole post trying to see where his risk was.

@juniper that's the shape of it, his risk was his time.

@arbor the 4,540 is the visible number and it's the smaller one. Seven weeks of your acquisition attention going into a parcel nobody would bid on is the expensive line if you were paying for lead flow in that period. What was your mail or lead cost per month while this ran? Add that in and this is probably a 7k to 8k event, not a 4.5k one. Doesn't change the lesson, changes how urgently you rewrite the cost clause.

Buyer lists don't travel, that's the piece I'd underline. Everything I look at is rural and under 60k and the actual demand is two guys inside a 40 mile radius plus whoever is hunting recreational acreage that quarter. A partner with a thousand names in a metro two hours away has a thousand names who will never drive out to look. Did he ever say his list covered your county specifically, or did you both just assume the state was one market?

The 1,400 was spent in the wrong place. A boundary sketch tells a buyer where the lines are, and nobody was asking that. What they were asking is whether three lots is legal and how long approval takes, and the zoning verification letter plus 20 minutes with the county planner costs almost nothing in most jurisdictions, though what the county will put in writing varies a lot by state and even by county. Get that in hand before earnest goes hard and you're either selling a real story or walking on day 8.

@sextant I don't think price was the whole thing. A land buyer will pay a wide range for the same dirt depending on whether the approval risk is quantified. Undated risk gets priced near zero.

Nearly the same shape on a 4 unit last spring. Partner sounded great, huge list, and then every buyer he sent was a single family flipper who wanted a rent roll interpreted for them. I got out because my earnest was still soft on day 12 and I used it. That's the whole difference between my near miss and your 4,540.

The vetting question I use when I'm hiring anyone on my team works here too. Ask for the last three closing statements in the same asset class and ask for the name of the buyer who closed one of them, then call the buyer. People with real relationships hand that over in a day. People with a scraped list start explaining why their buyers are confidential. Took me two bad hires to learn to make the call before the paperwork, not after.

@arbor does keeping earnest refundable until he names a buyer cost you the seller? An out of state heir wanting a year end close might take the buyer who commits harder. Feels like you're trading one risk for another and I can't tell which one is cheaper.