Flipper/Rehabber · Easton, PA · Member since 2013 · 224 posts · 36 votes
So the house is till a mess and still have quite a bit to do but already have a potential buyer who was wondering if they might be able to pick finishes, etc...so what to do? They haven't been in the house but were told by the previous listing agent a bit about it and that it was being rehabbed.My husband wants to just tell them to come to the open house in 2 months and make an offer BUT I wonder if we should talk to them a bit more about this possibility before? Thoughts/experiences?
Sure, why not talk to them now? I've done it that way a number of times and buyers were pleased to be able to pick their finishes. Just make sure they are either cash or pre-approved for financing at a lender.....not necessarily through a broker. If you can write the contract now and have it pre-sold...it doesn't get any better than that! Happy Investing!
Why have to guess about what finishes would appeal to a theoretical future buyer, when you might get an offer based on them picking and paying for their own? I agree with you. Tell your husband he is just going to have to spend a couple of hours neatening up the worksite.
You would have to deal with this as a builder would. Contract price needs to be agreed upon, they can choose upgrades, if they PAY for them, from a base you intend to install.
Without a contract, builder base level finishes agreement, earnest money, etc. I would keep moving forward. DO NOT STOP or DELAY your rehab putting all your eggs in this basket. They are the ones that need to act quick in order to control the finish, but they need to pony up a contract, and funds!
I agree with what you are saying..I think we will talk to them some more. We were thinking we might be able to get multiple offers when we were done though because it is a very desirable area hence waiting till we list but if they can give us what we want and we would be able to save on staging and maybe a few other things...it does make it very tempting to explore this option a little more...
You would have to deal with this as a builder would. Contract price needs to be agreed upon, they can choose upgrades, if they PAY for them, from a base you intend to install.
Without a contract, builder base level finishes agreement, earnest money, etc. I would keep moving forward. DO NOT STOP or DELAY your rehab putting all your eggs in this basket. They are the ones that need to act quick in order to control the finish, but they need to pony up a contract, and funds!
I completely agree. They need to get pre-approved and have them get a construction loan and you get draws along the way.
A bird in the hand is always good, but if you go this route you've just picked up a customer which has its own set of challenges. My experience is that customers in 90% of scenarios will bring you headaches and lower margins.
If you do go this route just make sure to get sizable non refundable deposits, especially if they pick unusual finishes.
If you move forward, I would suggest that with every decision you make, you say to yourself, "If these buyers back out for whatever reason, am I okay with this particular decision?" If the answer is "yes," move forward. If the answer is "no," don't move forward.
I've heard plenty of horror stories about allowing buyers to pick finishes, and then not close for whatever reason. Get a large enough non-refundable deposit to cover anything custom you might do, and ensure anything custom you do, you'd be happy to do anyway.
Having built about 40 new construction spec homes I have ran into this situation often. J Scott hit it on the head when he said " Non Refundable Deposit"