Hey everyone! My wife and I have been renting a home in Los Angeles from a family member who recently passed away. We now have been given the opportunity to purchase the old home off-market, if we'd like. The house was built in 1951 and most of it hasn't been updated since the early 80's. Since the family is not using an agent to sell we won't be either, so we don't have comps. We want this to be a live-in flip. Before we make an offer we are paying for a home inspection. What else would you recommend that we do to determine the home value and to determine what we offer? Any other things we should be wary of? (If we do purchase we will be using an escrow company.)
I buy and sell solo all the time, but it took knowledge and experience to be able to do it effectively.
I'd probably hire an agent to comp it and write up the offer. Most FSBOs not only don't know what the home is worth, but have no clue how to make physically make an offer with the legal and proper disclosures.
@David Featherstone you can run your own comps. Look at what was recently sold in the last 3-6 months within a 3-10 mile radius (expand or contract the radius based on number of hits. The closer to the target property, the better). Look at similar sq ft, beds, baths, etc.
Or, go to an agent and tell them you'll pay $100 for them to run comps. Tell them it's a FSBO, so they won't be involved in the purchase, but you'd like to compensate them for their time.
I would also secure Title Insurance....you never know what has gone against a title over 30 years!
If it's a FSBO and you know the owner (i.e. he/she will sell to you at a fair market price, without bidding), you can hire an agent to take you through the process. What's nice is that this is a guaranteed sale, so you may be able to negotiate a deal with the agent. That way, you can sleep soundly at night knowing you did everything legally.
Why are you hiring an inspector? You lived in the house for X number of years. That's the best inspection you could ever have.
@Jon Kelly , thanks for the recommendation! While I might end up paying an agent to run comps, I do want to learn to do it myself for future deals. When running comps on this house would I also look for recently sold houses in a similar condition to try to figure out a purchase price, or would I estimate the purchase price by look for a recently sold houses that were fixed up and have similar specs and then subtracting the cost of repairs needed?
Yes!! @Jennifer Swope , thanks for the reminder. I’ve heard that mentioned on the podcast a couple of times.
@Jaron Walling , you would think right! Hahah. This house has been through a few earthquakes and has cracking on the stucco, some of the drywall, and foundation.also some of the plumbing is old. While I do have a good idea of the condition of the interior, I would like to make sure that there is nothing wrong structurally or with any of the systems. Just for my own peace of mind and to use any major issue in determining my offer price.
@David Featherstone Pull both - similar condition and newly renovated.
Similar condition is used to determine the purchase price.
Newly renovated will be used for ARV (after repair value). Others may do it differently, but I only use ARV for information I send to lenders, estimating future appraisal, and my own valuation of the property. I don't use the ARV to determine the purchase price.
@David Featherstone - Congrats man... this could be a great opportunity! I just picked up my first house hack - a duplex in South Bay. You potentially have a few options on the purchase, from traditional finance to seller finance. Where in LA is the property located? I'm happy to connect and walk through finding (correct) comps and acquisition strategies.
@David Featherstone You dont need to pay an agent to run comps. PM me the address and ill do it for free. will take me minutes.
South Bay has some good rental properties that make sense financially.
Yep. @Charles Cooper Found a great duplex in San Pedro. It's a house hack for the next couple years. Then will move out and keep it as a full rental.
Awesome! I have one in escrow in San Pedro. Your starting to see more and more investors/ first time home buyers flocking to San Pedro. It offers the best value for your money in South Bay LA market. Congrats man!
Totally agreed @Charles Cooper ! Really happy to get into San P right now. Actually going to be on the lookout for other properties in the area.
@Rory Coyle . Congrats on the duplex! My wife and I were also looking in San Pedro. We were having a hard time finding anything though. Where did you find your duplex? Was on the MLS?