10 days to auction, wholesale deal Help needed

[Kody Smith]

Hi everyone,

Situation:

A foreclosure seller called me back today to finally make a deal.  He informed me that the auction would happen in 10 days, so he needs to sell right away.

ARV: 2.5M - 2.6M
Repair estimate: 180k

school zone: 9/10 rating a very popular school zone for the area.

he owes 700k in areers! but there is equity in the property.

he wants to get 2.2M for it in an ideal world.

My situation:

i'm invested in other properties for fix and flip, so I can not flip this one myself... though I wish i could. (any lenders welcome to help me figure this one out!)

question:

1. How can i delay or stop this auction, so that I can get the property marketed for a higher price?
2. are any of you open to closing a deal like this (happy to share all details and make a connection)
3. Can his attorney delay the auction?  I heard bankruptcy laws recently changed... i'm not sure. 

[Joe Homs]

@Kody Smith 

1. How can i delay or stop this auction, so that I can get the property marketed for a higher price? (Prepare a purchase agreement, have the seller call the bank and tell them it's in escrow.  They should postpone it for 30 days.
2. are any of you open to closing a deal like this (happy to share all details and make a connection) Does not sound like there is enough money in the deal.  Is the seller just willing to walk away with some minor moving money?
3. Can his attorney delay the auction? I heard bankruptcy laws recently changed... i'm not sure.  An attorney can do anything for money.  Yes, he can still file bankruptcy, but that is only for a 30 day period (last resort.)

Good Investing...

[Kody Smith]

Quote from @Joe Homs:

@Kody Smith 

1. How can i delay or stop this auction, so that I can get the property marketed for a higher price? (Prepare a purchase agreement, have the seller call the bank and tell them it's in escrow.  They should postpone it for 30 days.
2. are any of you open to closing a deal like this (happy to share all details and make a connection) Does not sound like there is enough money in the deal.  Is the seller just willing to walk away with some minor moving money?
3. Can his attorney delay the auction? I heard bankruptcy laws recently changed... i'm not sure.  An attorney can do anything for money.  Yes, he can still file bankruptcy, but that is only for a 30 day period (last resort.)

Good Investing...

 Thank you for your prompt response!

1. i'm discussing this option with him via txt to see what he is willing to do.
2. we can likely get the property for as low 2M to make it more reasonable. I'll talk to him more tomorrow.

[Chris Seveney]

@Kody Smith

Just went through this with a 2.8M property that thought needed $200k in repairs and it went for $1.8M at auction

People are going to lowball this at auction and that close will wait and probably pick it up for around $1.4M

[Bob Stevens]

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

[Kody Smith]

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

[Kody Smith]

Quote from @Chris Seveney:

@Kody Smith

Just went through this with a 2.8M property that thought needed $200k in repairs and it went for $1.8M at auction

People are going to lowball this at auction and that close will wait and probably pick it up for around $1.4M

 well i guess ill offer him 1.9M~ and if he does not take it, ill attend the auction. 

[Bob Stevens]

Quote from @Kody Smith:

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

I thought I had guts, I would never pay 1.9 mill for a prop I HOPE to sell for 2.4, 

PLEASE keep us in the loop, would love to know how it ends up

Good luck 

[Joe S.]

Quote from @Bob Stevens:

Quote from @Kody Smith:

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

I thought I had guts, I would never pay 1.9 mill for a prop I HOPE to sell for 2.4, 

PLEASE keep us in the loop, would love to know how it ends up

Good luck 

What Bob said… ^^^^
Also why are you using 85%?? 

[Bob Stevens]

Quote from @Joe S.:

Quote from @Bob Stevens:

Quote from @Kody Smith:

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

I thought I had guts, I would never pay 1.9 mill for a prop I HOPE to sell for 2.4, 

PLEASE keep us in the loop, would love to know how it ends up

Good luck 

What Bob said… ^^^^
Also why are you using 85%?? 

 I'm as confused as you, this is NOT a deal at 2 mill or 1.9 mill, WAY to tight, HUGE risk. I would pay MAX, 1.5 if it really does net 2.4.

[Chad U.]

Quote from @Kody Smith:

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

If you're still using "rules" to bid on properties , especially in this price range, you're destined for a loss.  

[Bob Stevens]

Quote from @Chad U.:

Quote from @Kody Smith:

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

If you're still using "rules" to bid on properties , especially in this price range, you're destined for a loss.  

 Whew glad I am not the only one that knows this is NOT a good deal, Massive risk 

[Chris Seveney]

Quote from @Kody Smith:

Hi everyone,

Situation:

A foreclosure seller called me back today to finally make a deal.  He informed me that the auction would happen in 10 days, so he needs to sell right away.

ARV: 2.5M - 2.6M
Repair estimate: 180k

school zone: 9/10 rating a very popular school zone for the area.

he owes 700k in areers! but there is equity in the property.

he wants to get 2.2M for it in an ideal world.

My situation:

i'm invested in other properties for fix and flip, so I can not flip this one myself... though I wish i could. (any lenders welcome to help me figure this one out!)

question:

1. How can i delay or stop this auction, so that I can get the property marketed for a higher price?
2. are any of you open to closing a deal like this (happy to share all details and make a connection)
3. Can his attorney delay the auction?  I heard bankruptcy laws recently changed... i'm not sure. 

 1. You cannot delay auction. Borrower can reinstate the loan but that is $700k in arrears so doubt that is happening.

2. I would consider it around $1.4M max but would need a lot more info- if not then let it go to auction and see what it gets 

3. His attorney can have him file BK, but thats about it.

Otherwise buy it at auction. then you own it and get clear title.

[Kody Smith]

to be clear on my journey here. 

i am new to wholesale. this was my first cold call to a seller. the ARV is 2.5 to 2.6.

i have some rental properties that i cash flow on currently.

in my recent history of buying properties to flip, i keep getting outbid on off market deals.  

everyones input here is helpful, and thank you all for your contribution. 

i did find a buyer at 1.9M, but the seller is stalling. i do not think this deal will happen.

[Kody Smith]

Quote from @Joe S.:

Quote from @Bob Stevens:

Quote from @Kody Smith:

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

I thought I had guts, I would never pay 1.9 mill for a prop I HOPE to sell for 2.4, 

PLEASE keep us in the loop, would love to know how it ends up

Good luck 

What Bob said… ^^^^
Also why are you using 85%?? 

i am using 85% because of how competitive things are here in san jose ca. i tried to use 70% on several deals, but other flippers pay way more.

example, i bid on a home that was what i thought an ARV of 2M... i offered 1.4M, someone bought it for 1.65M.  it sold for 2.2M.

the property was a huge project also... leaking roof, mold, plumbing, lots of termites, 1970s everything.  the repair cost i estimated to be $200k... so i did not go for it past 1.4.  the home ended up selling for 2.2M

[Jaron Walling]

Quote from @Kody Smith:

Quote from @Joe S.:

Quote from @Bob Stevens:

Quote from @Kody Smith:

Quote from @Bob Stevens:

why would you buy a prop for 2.2 mill that maybe will sell for 2.5?

i may have misspoke. the seller wants 2.2M but that is not what i offered him or agreed to.

i think for this area 1.925M to 2.025 is the range.

i am using 85% instead of 70% rule in this calculation.

I thought I had guts, I would never pay 1.9 mill for a prop I HOPE to sell for 2.4, 

PLEASE keep us in the loop, would love to know how it ends up

Good luck 

What Bob said… ^^^^
Also why are you using 85%?? 

i am using 85% because of how competitive things are here in san jose ca. i tried to use 70% on several deals, but other flippers pay way more.

example, i bid on a home that was what i thought an ARV of 2M... i offered 1.4M, someone bought it for 1.65M.  it sold for 2.2M.

the property was a huge project also... leaking roof, mold, plumbing, lots of termites, 1970s everything.  the repair cost i estimated to be $200k... so i did not go for it past 1.4.  the home ended up selling for 2.2M

Don't compare yourself to other more experienced investors. That mindset can really slow you down. I did the same thing before buying my first deal and learning how to remodel property. You didn't mention the time frame but if that opportunity was a few years ago they had upward pricing pressure (hence $200k high sales price) and lower interest rates bringing in more offers. That's not the case in 2024 and a lot of deals are skinny, or full of risk. Over price your flip and you sit on market for months, break even, or worse case take a loss. 

If the seller is stuck at $1.9M that's there problem not yours. Like others mentioned already it's not a good deal at $1.9M (needs to be lower) and if it goes to auction reality will set in pretty quickly for seller.