This week I was able to get a potential fix and flip under contract off of the MLS.
I always get excited whenever I see a great deal come up on the MLS and I get even more excited when we get it under contract.
I feel I have a huge advantage over other investors when I see great deals come up on the MLS because I am a Realtor, which I discuss here. If you are a Realtor or even if you are just an investor there is a program out there that will help you get more deals and save you time. Many of you may already be using this program, but if you are not or your agent is not, you need to start. I’ll explain what that one program is in a moment, but first a story of why it matters…
This property that we got under contract was listed on the MLS in the afternoon on a Monday afternoon. I am not sure exactly what time the property was listed, but I check the MLS at least every hour. As soon as I saw the town this home was located in and the list price I knew I needed to see the home asap. It was vacant, so I had my assistant set up the showing and I got in my car to drive 30 miles to the property. The home is an estate sale and they priced it extremely well as they must want it sold quick. I rarely if ever see homes listed in this town for under $100,000 and this home was $75,000. The home was older and only 660 square feet, but there is still high demand for any houses under $150,000 in this area. I knew as long as it was not a tear down, there may be potential.
I didn’t even notice this, but luckily my assistant did. The home was in a 100 year flood plain according to the MLS listing. I thought this was weird since the home is in the middle of the town, but that has happened before. I had them call my insurance agent to see what flood insurance would cost since I have heard so many horror stories lately. I was still prepared to make an offer on the home and I told my assistant to get an offer ready for me and I will figure out a price when I see the home. The house was not bad at all when I arrived and it even had an updated kitchen!
There was a new furnace, hardwood floors and it was very small. It had a damp basement floor, which is not a huge turn off to me depending on the cause of the wetness. This was a 100 year old house and it had a dirt floor in the cellar with a recently installed sump pump. The sump pit was dry, which was a great sign.
Even with the dampness I made an offer of $70,000 on the home and it took me about 5 seconds to do it from my car while I was sitting in front of the house. We recently purchased Docu-sign which is an electronic signature program. My assistant filled out the contract on his computer, emailed to me and I opened it on my Iphone. Two clicks later, the contract was signed and sent to the listing agent. I was able to send an offer in less than two hours after the home was listed and the home was 35 minutes from me and the home may have been on MLS an hour before I saw it. This is powerful stuff when you are dealing with homes on the MLS.
I did not have my offer accepted that night, in fact I was informed the next day the sellers could not look at my offer until 5 pm that day. I was then informed they received another offer. They did not ask for highest and best, but I know better than to hope. I raised my offer to $77,187 in hopes that would be just high enough to beat out the other offer who probably thought they were pretty quick themselves. That price would still leave plenty of room for profit. Before I get too far, my assistant mentioned to me that home is not in a flood plain. Really? He looked at the county maps and there is a flood plain close by, but this home is not in it. If this turns out to be true that will be a huge bonus!
You already know this since I told you in the first paragraph, but they accepted my offer! I received their seller disclosure which said the basement had flooded from the recent flooding in Colorado, but just about everyone’s basement flooded so that is not a big deal to me. I will definitely get the water situation checked out more thoroughly before my inspection period is up, but I don’t anticipate a big enough issue to make me back out.
Back to the real reason I wrote this article. I was able to submit an offer extremely quickly thanks to be able to use electronic signatures. I did not get my offer accepted before another offer came in, but I think it gives you an advantage to be first. Many buyers feel an obligation to the first offer if it is decent, even though they have no legal obligation to it. I have had offers accepted the same day I submitted them on other houses I have bought. Electronic signatures are particularly useful on short sales when the sellers will accept the first offer they can get. I am an agent and that allows me to be very quick when writing offers, but electronic signatures can help investors who are not agents as well.
If you aren’t an agent you have to set up a time to see properties with your agent and then wait for your agent to write an offer and then set up another time to meet your agent to sign the offer. This can take a lot of time, unless even if you have a scanner and email. That extra step to make sure you are home or in your office to print off the contract,sign it and scan it back takes time. If your scanner is anything like mine it usually turns into a pain in the butt to get the thing to scan right. With electronic signatures you can eliminate all of that hassle and wasted time. You can sign the contract at dinner on your phone once your agent sends it to you. If you have to raise your offer in a highest and best situation, you can use electronic signatures. For almost any document you can use electronic signatures.
What if I can’t use electronic signatures?
There are a few REO sellers who won’t accept electronic signatures and HUD will not accept them either. However, I am an REO agent and I can tell you that 90% of the time I can still submit offer with electronic signatures even if the seller won’t accept them. The reason is I submit offers online and the seller never sees the contract. If your contract is accepted and you have to send in the documents to the seller, then yes those will have to be wet signatures. With HUD you can submit a bid without sending them a thing, so that does not affect the offer time either.
The real advantage with electronic signatures in getting deals, is getting contracts into the seller as fast as possible. If you can save hours off the offer time, it may get your offer signed before someone else can submit an offer.
Photo: Sebastien Wiertz