About 2 months ago I met a guy named Rob B through the forums here on Biggerpockets and we have began working together. I am his realtor and he is my client and since we met on BP I thought I would update the community on our experience so far working together.
We began with a preliminary meeting at our office here in CT so we could basically feel each other out. Me getting a sense for what his goals were and Rob probably making sure I was the kind of guy he wanted to do business with. This was a meeting where no contracts or anything were signed, strictly people talking real estate.
After our meeting I set up an auto email through the MLS for Rob based on the specific towns, price, and types of houses he was interested in buying.Within a couple days Rob got back to me with a list of houses he was interested in seeing.
We went out on a Saturday and viewed about 7 multi families in the town of Middletown, CT, a market I am familiar with.Rob knows this market very well too and really did his due diligence upfront on the properties we were planning on looking at. After that day Rob zeroed in on a 2-family that he wanted to go see a second time. This place has a new roof, newer furnaces, and the interior had been updated. Most importantly the numbers worked for his investment strategy.Rob is planning on occupying a multi-family and taking advantage of his first time homebuyer loan and renting out the other units. Very good strategy when you are starting out as others have talked about on the forums.
Back to the 2nd showing of the 2-family Rob was interested in. I arrived at the house 10-15 minutes before the listing appointment and saw that there was frozen water on the deck. I thought to myself how weird that was because to that point it had not snowed really at all up here. So as I enter the back door I hear this really strange noise.As I turn the corner on the up/down 2-family the noise gets louder and then BAM. Water is EVERYWHERE. Due to the cold weather the upstairs unit had a busted pipe and the house was saturated with water. It had probably been gushing for 2 days minimum.It was incredible to witness and as an investor myself I couldn’t help but feel bad for the owner of that house. Obviously now that house was crossed off the list, on to the next one.
In the coming weeks Rob became interested in another 2 family in the same town. We have had 2 showings on the property and submitted an offer today. Out of respect for all of those involved in the negotiations I will hold off on specifics, but will update this thread on how the negotiations go.
Rob is extremely organized and detail oriented and has been a pleasure to work with throughout this process. As a relatively experienced investor it is easy for me to see that Rob “gets it” and I truly think he is putting himself in a position for success. Oh yeah, and if he wasn’t I would be right there with his best interests at heart to let him know. When I wear my realtor hat that’s my job and a responsibility I take seriously.
Like I mentioned earlier I will update this thread as the negotiations move along.
The seller countered Rob's initial offer today and we then countered back.
The sellers counter was 5% lower than their list price so we feel as though the sellers are willing to negotiate at least which is a good thing.
Sometimes there are situations where based on the sellers counter you can tell they are not really willing to budge. This does not seem so far like one of those situations.
We will see how things play out from here and I will keep everyone updated.
This is a great story to hear from bigger pockets members working together and good luck to both of you.
Thank you @Michael Lovell
Interested to see what their counter comes back at today and we will take it from there.
Just an update on negotiations. The seller stood pat on their counter at 5% below the list price.
Today we submitted our counter to them standing pat. I explained to the other realtor (in writing so she could show her sellers) that our offer was reflective of the deferred maintenance & remodeling (approx 25k worth) needed to make optimal living conditions in the houses.
Who knows if the explanation with the offer will get them down, but it was definitely a point worth bringing up. Right now we are 15k apart in the negotiations, we will find out if the seller wants to play ball when we hear their counter to our latest offer.
The seller and Rob have agreed on a purchase price. Ultimately the seller came down from where they were to make the deal happen. We were able to get the seller down to a price that Rob feels very comfortable at.
We have sent the signed contract back to the seller and once we get it back fully executed the due diligence/inspection period will start. We have a 20 day inspection period written in the contract and that is primarily due to the weather up here as well as the fact that Rob will be getting a first time home buyer loan.
During the due diligence/inspection period we will have the inspection done and make any repair requests. We will also get the lease from the seller for the tenant to confirm the amount of rent they pay, the fact that the tenant pays their own utilities, and to just be generally aware of anything else the lease entails.
What will also be included in the due diligence period is the confirming of the size of the lot associated with the property. The town assessor has verified the land associated with the property, but Rob (at his own cost) has decided to have an independent land survey done as well.
I will be sure to keep everyone updated as we continue on our journey to the closing table.
Good luck! Hope it's a smooth transaction.
Thanks @Eric Munson .
We have everything working in our favor for a smooth transaction in that the sellers agent/broker is very good and we (Rob & I) have our ducks in a row moving forward as well. The biggest step in the process as I am sure you know is the inspection phase. So in the next 20 days we should have a better idea where we stand.
Rob has signed the contract and we are just waiting to get it back from the seller at this point and then the inspection/due diligence period will begin.
The plan is to get the fully executed contract to Rob's mortgage broker ASAP after we receive it back from the seller, as the process with a FHA loan here in CT tends to take longer so we want to get the ball rolling on that as soon as we can.
Also, we will have Rob's home inspector ready to go as well which is obviously a crucial part of the process as well.
In the meantime Rob will also be making a decision on the attorney he will be hiring as well.
Just a quick update. The seller plans on getting the contract back to us on Thursday. It was great of the sellers agent to give us a heads up on that. Sometimes the communication between agents lacks, but this realtor is on top of her game which definitely helps a transaction move along.
We received the signed contract from the sellers back today. Now it is on to the inspection/due diligence phase which is in the contract as 20 days.
The inspection is all set for this Monday March 2nd. After the inspection is done and we receive it back from the inspector, Rob and I will confer on what we would like to request from the seller.
I'll check back in early next week after the inspection.
We had the inspection earlier today. Rob's inspector is getting the inspection back to him by EB today and we will then confer on what inspection requests he will make to the seller.
Detailed synopsis! @Michael Noto Nice to observe local activity going on. Good luck with the deal
Thanks @Griffin Fehrs
We received the inspection report back from the inspector the same day (Monday) and I have to say the inspector did a very good job both during the inspection explaining things and being thorough in his report.
Rob went through the inspection report as did I and we came up with a list of inspection requests for the seller.
Most of them are plumbing related and/or things the owners had to see coming. I don't think Rob asked for anything unreasonable, but we will see what the sellers think and come back to us with what they are willing to remedy and what they aren't willing to budge on.
The inspection/due diligence period ends on this upcoming Monday so it gives us some time.
We agreed on a dollar amount that the seller will credit Rob at closing based on the findings in the inspection report. There was only a couple things in the inspection that we did not see coming.
Tomorrow morning is the appraisal.
Another great thread! It's great to see so much detail on the deals you are working on and it's good to know someone so knowledgeable is also local. I'll be following this one. :)
Thanks for following along @Kim Giannola . I have a pretty interesting update coming up here soon regarding this deal.
So we received the appraisal back and the house appraised for less than the agreed on purchase price, a pretty decent amount less. We knew that this issue would potentially come up because the multi-family is very unique for the area.
It is 2 different houses on an acre lot that is zoned multi-family. The comps for a house like that in the area are non-existent. No other sold multi-family as far back as I looked was 2 houses on the same lot and no other multi-family had more than .20 acres never mind 1 full acre. The appraiser did the best he could and came up with his number.
The current owners are in a tough spot because they are bound by that appraisal for 90 days. My client is being patient as a drop down in price to the appraised value would benefit him greatly.
As an agent I made sure to run this possibility by him in advance because I knew the appraiser was going to have a tough time finding comps. Certainly not the appraisers fault, really tough place to appraise.
Where do we go from here? Sort of in the sellers hands now. I will keep everyone posted.
No clue why I put 2 "different houses" in the last post. Just meant they are 2 separate single family houses on the same lot that is zoned a 2-family.
Hope it works out.
That is a pretty unique property!
I checked out a similar property on East Main St. in Middletown. It had a 3 BR single family house in front with an attached garage, and a duplex in the back (2 BR 1 BA each). The reason I didn't go for it was that it the duplex was built on the edge of a deep slope down into water. Quite literally it was about 2 feet from the edge and the slope was dangerous. It also had bad foundation problems.
I've got my fingers crossed for your buyer.
wow this is a very in-detailed description process of buying a house. I am glad I read this, thank you
Hi Michael, wondering if you can help us out with finding an investment house in ct?
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!