Advice on next steps in a confusing situation
Hello! I generally get good feedback on here and this is a situation that is a bit odd so I figure this is the spot for it.
Got our first investment house under contract! Did a really low ball offer, had the owners counter and met in a decent starting spot. Considering, per BP Podcast, that being under contract is dating and not marriage here is the situation.
We went under contract and got an extended closing date for November because the current owners have had the home rented to the same tennant for 30 years with zero rent increases; and the renter leaves in Nov. The current owners are elderly and trying to get rid of the hassle as it needs quite a bit of work.
Going in, we knew there would be work which we were prepared to do, and figured we would further negotiate the price as needed. The inspection report reveals significant structural damage and the normal odds and ends on a 30+ year old home. Where I would like feedback is on our process.
I am considering everything we are doing information gathering as I have scheduled 2 contractors to give me estimates on the repairs and what it will take to get this thing in reasonable condition. I am planning to get estimates for the structural issues and ask for that plus overages plus more off for the condition of the home which was not apparent upon first glance or a walkthrough.
Additionally, I am considering getting a private appraisal because this home is quite hard to value. The realtor we use is also the listing agent so I know his main role is to represent us both; but after getting the inspection report and continuing to research I still feel as if we are a bit high.
A. What would you do in a similar situation?
B. What am I missing? We did not pay any DD fee so our total out of pocket is just a few hundred for the inspection. Things have been taking a bit longer than anticipated because lining up contractors have been tough and the owners will only allow us on the property for a 2 hour window 1 time per week as the renter works nights.
My thinking is that we just keep gathering info and that even though this has drug out a few weeks longer than anticipated so far, that that time actually works in our favor as they are going to have this hassle with any other buyer as well?
Anyway thoughts on those questions and if a private appraisal is a good idea or one you have used before?
A. In a similar situation, it would be a good idea to gather as much information as possible before making any decisions. Getting estimates from contractors and a private appraisal can help you determine the true value of the property and the cost of repairs. It's important to negotiate with the seller and their agent based on this information, taking into account the condition of the property and the cost of repairs.
B. It's important to keep in mind that the longer the process drags out, the more it may impact your ability to close the deal. It's also important to make sure you have a clear understanding of the terms of the contract and any deadlines or contingencies. You may want to consider hiring an attorney to help you navigate the negotiation and closing process.
In terms of getting a private appraisal, it can be a good idea if you feel that the property is hard to value or if you want an independent assessment of the property's value. However, keep in mind that this will likely be an additional expense, so weigh the potential benefits against the cost. Additionally, make sure you select a reputable appraiser with experience in the local market.
Quote from @Ed Dunbar:
The realtor we use is also the listing agent so I know his main role is to represent us both...
False. The REALTOR represents the Seller. They are treating you like a customer, which means they do not look out for your best interests. They can keep certain things secret, they do not have to give you advice on negotiation strategies, etc. They are simply shuffling paperwork for you while doing their best work for the seller.
You have a ridiculous amount of time to investigate. I would definitely pay $300 or whatever to have an independent appraisal done and have contractors estimate the cost of repairs. You'll know rather quickly whether this is a good opportunity or not.
#1 Market Trends & Data Contributor
Quote from @Ed Dunbar:
Hello! I generally get good feedback on here and this is a situation that is a bit odd so I figure this is the spot for it.
Got our first investment house under contract! Did a really low ball offer, had the owners counter and met in a decent starting spot. Considering, per BP Podcast, that being under contract is dating and not marriage here is the situation.
We went under contract and got an extended closing date for November because the current owners have had the home rented to the same tennant for 30 years with zero rent increases; and the renter leaves in Nov. The current owners are elderly and trying to get rid of the hassle as it needs quite a bit of work.
Going in, we knew there would be work which we were prepared to do, and figured we would further negotiate the price as needed. The inspection report reveals significant structural damage and the normal odds and ends on a 30+ year old home. Where I would like feedback is on our process.
I am considering everything we are doing information gathering as I have scheduled 2 contractors to give me estimates on the repairs and what it will take to get this thing in reasonable condition. I am planning to get estimates for the structural issues and ask for that plus overages plus more off for the condition of the home which was not apparent upon first glance or a walkthrough.
Additionally, I am considering getting a private appraisal because this home is quite hard to value. The realtor we use is also the listing agent so I know his main role is to represent us both; but after getting the inspection report and continuing to research I still feel as if we are a bit high.
A. What would you do in a similar situation?
B. What am I missing? We did not pay any DD fee so our total out of pocket is just a few hundred for the inspection. Things have been taking a bit longer than anticipated because lining up contractors have been tough and the owners will only allow us on the property for a 2 hour window 1 time per week as the renter works nights.
My thinking is that we just keep gathering info and that even though this has drug out a few weeks longer than anticipated so far, that that time actually works in our favor as they are going to have this hassle with any other buyer as well?
Anyway thoughts on those questions and if a private appraisal is a good idea or one you have used before?
If this is your fist investment property, you take a too high risk because you already know the house needs significant structural issues.
Thanks for the feedback! I think hearing all that it is a no-brainer to just get the appraisal as insurance against a bad move. I think its going to turn out well but I am cautious with large investments so I really appreciate everyone's input. Something about just typing it out with other people who do this made it more clear.
Also, this is not our first renovation; just the first one of this particular situation. Ill keep gathering info and plugging along. I see why they say this is work! I enjoy it a lot but its definately not easy when I work 2 other jobs!
#1 Market Trends & Data Contributor
Quote from @Ed Dunbar:
Quote from @Carlos Ptriawan:Probably should have been more clear. This will be our 4th home we have live-in renovated/flipped. The home we are in now will be a good cash flowing rental, and we will be moving into the one I referred to as the "investment property" and renovating it over a couple of years. This will be our first house with structural issues so I am trying to gather as much info and feedback as I can.
Quote from @Ed Dunbar:
Hello! I generally get good feedback on here and this is a situation that is a bit odd so I figure this is the spot for it.
Got our first investment house under contract! Did a really low ball offer, had the owners counter and met in a decent starting spot. Considering, per BP Podcast, that being under contract is dating and not marriage here is the situation.
We went under contract and got an extended closing date for November because the current owners have had the home rented to the same tennant for 30 years with zero rent increases; and the renter leaves in Nov. The current owners are elderly and trying to get rid of the hassle as it needs quite a bit of work.
Going in, we knew there would be work which we were prepared to do, and figured we would further negotiate the price as needed. The inspection report reveals significant structural damage and the normal odds and ends on a 30+ year old home. Where I would like feedback is on our process.
I am considering everything we are doing information gathering as I have scheduled 2 contractors to give me estimates on the repairs and what it will take to get this thing in reasonable condition. I am planning to get estimates for the structural issues and ask for that plus overages plus more off for the condition of the home which was not apparent upon first glance or a walkthrough.
Additionally, I am considering getting a private appraisal because this home is quite hard to value. The realtor we use is also the listing agent so I know his main role is to represent us both; but after getting the inspection report and continuing to research I still feel as if we are a bit high.
A. What would you do in a similar situation?
B. What am I missing? We did not pay any DD fee so our total out of pocket is just a few hundred for the inspection. Things have been taking a bit longer than anticipated because lining up contractors have been tough and the owners will only allow us on the property for a 2 hour window 1 time per week as the renter works nights.
My thinking is that we just keep gathering info and that even though this has drug out a few weeks longer than anticipated so far, that that time actually works in our favor as they are going to have this hassle with any other buyer as well?
Anyway thoughts on those questions and if a private appraisal is a good idea or one you have used before?
If this is your fist investment property, you take a too high risk because you already know the house needs significant structural issues.
Side note: After being on the phone/email/text/ research/scheduling etc.... Now I see why they say this is work....
talk to a few structural engineer specialists, sometimes to fix a structural issue is cheap, sometimes is not, and it also varies by location. This is the time when conducting DD you have to 100% rely upon specialists and not make your own decision.
Quote from @Nathan Gesner:
Quote from @Ed Dunbar:
The realtor we use is also the listing agent so I know his main role is to represent us both...
False. The REALTOR represents the Seller. They are treating you like a customer, which means they do not look out for your best interests. They can keep certain things secret, they do not have to give you advice on negotiation strategies, etc. They are simply shuffling paperwork for you while doing their best work for the seller.
You have a ridiculous amount of time to investigate. I would definitely pay $300 or whatever to have an independent appraisal done and have contractors estimate the cost of repairs. You'll know rather quickly whether this is a good opportunity or not.
yep, totally agree. I think your outside perspective sealed the deal. Appraisal it is.
#1 Insurance Contributor
- Insurance Agent
- Norwalk, CT
Ed,
I would echo Carlos's advice. You need a structural engineer in to determine what will be needed. Then you can get contractor estimates.
I would be a good Idea to discuss the project with your Insurance agent. Many companies shy away from Reno that involves structural. There are Insurance companies that will do it. Usually a higher rate and more paperwork. I suggested discussing with your agent so you can determine:
1. can they get you coverage for the Renovation Builders Risk
2. If so, at what cost
3. what paperwork will be needed (plans, insurance cert from builder, etc..)
If the agent cant handle the project you may need to look elsewhere and starting that process now is better than scrambling at the end.
Quote from @Nathan Gesner:
Quote from @Ed Dunbar:
The realtor we use is also the listing agent so I know his main role is to represent us both...
False. The REALTOR represents the Seller. They are treating you like a customer, which means they do not look out for your best interests. They can keep certain things secret, they do not have to give you advice on negotiation strategies, etc. They are simply shuffling paperwork for you while doing their best work for the seller.
You have a ridiculous amount of time to investigate. I would definitely pay $300 or whatever to have an independent appraisal done and have contractors estimate the cost of repairs. You'll know rather quickly whether this is a good opportunity or not.
This is not necessarily the case at all, no. Like at all. Without knowing where this is taking place or what the contract details are, we cannot know that the agent is working for the seller solely.
Quote from @Dan DiFilippo:
The REALTOR is the listing agent. Do you think he listed the property with the seller as his customer? Or that the seller allowed him to switch to an intermediary to equally represent the buyer? Those are rare situations.
Quote from @Nathan Gesner:
Quote from @Dan DiFilippo:
The REALTOR is the listing agent. Do you think he listed the property with the seller as his customer? Or that the seller allowed him to switch to an intermediary to equally represent the buyer? Those are rare situations.
I guess you just don't know. Or perhaps it's the case that it rarely happens in your market. Again, though, I don't have any indication of where this sale is taking place and there are plenty of markets, including mine, where dual representation is common in this kind of circumstance. To immediately assume that it's impossible is just absurd. I don't know why you'd do it.