When a wholesale contract closes in 21 days but the end buyer wants 60 days of diligence

Question

Take a 22 acre rural parcel at the edge of a growing metro under contract at 18,000 dollars, standard purchase agreement, and/or assigns, 21 day close, 500 dollar earnest, 10 day inspection period already expired. Say the end buyer, a small builder, will pay 27,000, a 9,000 dollar assignment fee, but wants 60 days to run a perc test and get a well quote before committing, and the local health department is running six to eight weeks out on soil evaluation. That timeline doesn't fit inside a 21 day close. The options are to ask the seller for a 60 day extension and risk reopening price, double close and hold the parcel while the buyer tests, or restructure the deal as an option instead of an assignment. A seller who is an out of state heir, motivated but skittish about the price already offered, tends to be more open to an extension framed around a firmer closing date than to hearing the deal might fall apart. Double closing on a parcel like this needs roughly 18,500 dollars for a day or two plus two sets of closing costs, and transactional funding on small land deals is often either unavailable or priced steeply. An option structure, where the builder pays a smaller nonrefundable fee to lock the right to buy while he completes his testing, often threads this better than either extending the underlying contract or funding a double close.

Rena Expert · Accepted Answer

The extension is the cheapest fix and the double close is the expensive one, so work the extension first. Prepare an amendment with a new closing date and nothing else changed, get it signed before the current date passes, and have your closing agent hold it. Once the original date lapses without an amendment your equitable interest is arguable, and a seller who's had second thoughts will treat the contract as dead.

But the structure you actually want here is the builder taking assignment now with his own inspection contingency, not you carrying his diligence. Assign at $27,000 with $2,000 or $3,000 of the fee non-refundable on assignment and the balance at closing, and let him negotiate the perc timeline directly with the seller. That moves the health department risk to the party who cares about the answer and gets you paid partially regardless of the soil result. He'll push back. His pushback tells you whether he believes the parcel passes.

On the numbers, a $9,000 spread on an $18,000 buy invites exactly what flint said. If the deal is assignment-only and he sees your figure, either agree the fee openly up front or plan on a double close and price the second set of closing costs, transfer taxes where the state charges them, and any recording fees into your spread before you decide. Transactional funding at $18,500 for two days often costs a flat fee plus points that eat a fifth of your margin, and some funders won't touch land at all.

The risk you haven't named is the estate. An out of state heir who's been paying taxes for nine years may or may not have completed probate, and if he can't convey clean title no timeline helps you. Pull the title commitment now, before you spend anything on the extension conversation.

joe_delgado5 · Answer

Ask for the extension. A skittish seller nine years into paying taxes on inherited dirt is not going to blow up a signed contract over 40 extra days, and if he does you learn that cheap. What I'd avoid is telling him a builder is doing soil work, because that's the sentence that makes him think the parcel is worth more than he thought. Extension because your closing agent needs time on an estate title chain is true and boring.

Also your fee is a third of the purchase price. That gets renegotiated the moment the builder sees the settlement statement.

When a wholesale contract closes in 21 days but the end buyer wants 60 days of diligence

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