BiggerPockets

Hi BP Members,

I am a newbie to the site. Im currently looking to purchase my first home and I just wanted to get an opinion or two from some experienced investors on an offer I want to present.

Okay so I saw a 3 bed 1 bath house listed on realtor.com with an asking price of $15,000. I called the agents number and she told me this property is a short sale. Its been on the market for 5 months now, so do you think $10k cash is a reasonable offer or would I be wasting my time trying to get it for that low?

I myself think its a reasonable offer because of how long the house has been on the market, but then again im not experienced in investing so I feel I could very well be wrong.

So in you guys' experience, do lienholders generally accept offers that are 65-70% of their list price after being listed for 5 months?

Some property is worth less than it costs to repair. This could be the case with the property. This is why most banks to a Phase I to see if it is even worth them taking it back or just letting it go to the city for back taxes so they they can avoid being in the chain of title.

Wait and see what it needs and then report back... It is too early to talk about an offer. In general, it is best to offer what you think it is worth to you. You will likely look at tons of houses before you buy one. Good luck.

"leveraged" = "took out loans"

Just Don,

When I asked her were the mechanical systems working, the agent said she paid to have the house winterized around the time winter started. She said that was the last time she was there and the appliances were still there.

Steve,

I still don't understand what she was saying the client did. Does she mean her client put 30k down and her mortgage loan was for 90k?

No, bought for $30K, refi'd for $90K is how I interpret that. It could even mean that the refi was for $120K (but I highly doubt that).

Ok, Please pardon me for this extremely naive question, but what is a refinance exactly?

I hear about people refinancing their homes all the time but I never really understood what the process is and why/how is it beneficial.

Sorry guys, I warned you I was a newbie lol

TyWes,

When you come across terminology that you don't understand, please look it up in the BP glossary first! It can be found under "Real Estate Tools" menu that you see to the right of this thread. Or you can use the link below (but the one in the menu will be present on every forum page, so learn to get to that):

http://www.biggerpockets.com/glossary.html

Of course, refinance dosn't show up there, but then that's what wikipedia.org is for :wink:

TyWes,

Here is a rule that you should use as an investor, "NEVER, EVER trust a realtor to tell you what is wrong with a property." This is for multiple reasons.

1) Most realtors today do not have the knowledge to identify the problems with a property. If it is not disclosed to them by the Seller, they are not required to inform you. (This may or may not be true in your state.)

2) The Realtor that listed the property is working for the Seller, not you. As such, they have an obligation to get the highest price they can negotiate for the Seller/Lender.

3) You are the one purchasing the property, so it is your responsibility to make sure that the repairs needed in addition to the amount you offer still provides you a positive investment opportunity.

Never use a wrench to do the job of a hammer. In other words, the realtor is not the expert in repairs. You should be using the proper resources to meet the job. A contractor/inspector/plumber/electrician should be used to identify the problems with the house.

Always get an estimate. My company always gets three estimates. They can all come from the same person, but we use three so that we can send the high estimate in to the Lender for short sale approval, use the lowest to potential buyers, and the middle for our true repair estimates.

Now, that is not to say that we have our inspector do anything unethical. We ask for what it would cost to do XX repairs and we ask for 3 different estimates, so we know that the price will not come in higher than XXX or lower than YYY without some unforeseen repair.

If it so happens that the high estimate can reasonably be used to justify the repairs, then it is perfectly acceptable to show that to the lender. The same with the low estimate. If it is a reasonable estimate, then we show that to our buyers. If we were to decide to rent it out, then we use the middle estimate to dictate our expenses.

Ty,
The realtor sees you coming. Sorry to any realtor's on here, please understand I am not saying all of you.

Realtors only get paid if they make a sale, don't believe the hype.

Winterized means squat, I bought a house that had been winterized, went to turn on the water and needless to say, the pipes had frozen and burst because the house had been vacant for ONE YEAR before it was winterized. Lucky for me, I have an awesome plumber, all of the plumbing was on one level and it only cost me $1050 to replumb it, it would've been more but I got an estimate first. I learned that lesson on my first flip, don't do big plumbing jobs without an estimate!

Needless to say, I have become a great (if I do say so myself) home inspector by learning from my mistakes.

If the house has been winterized, they will not turn on the water for you to check, you will have to pay a plumber for an air test or take your chances since it is very low priced.

Where are you located? Maybe someone is close and can look at it with you.

Good luck,
Linda