Seller will not let me see the house before offer

12 Replies

Got a call off my direct mail campaign from a lady who is thinking about selling her rental and wants me to make an offer but she said I cannot see the house.  She is renting it to a family member and does not want them thinking she is kicking them out.  

The house is 1,500 sq.ft. 4 bed, 2 bath, built in 1974. To my knowledge she has not done any updates other than paint, carpet and tile. She said the roof is 9-10 years old. So, I would assume it is going to need a full cosmetic update. I estimate the ARV at $136,000 and she said that they have $30,000 left on the mortgage.

One GC I spoke with said that on a 1,500 sq.ft. house for paint inside and out, new flooring and fixtures it would be $12,000 - $15,000, if you went with granite and stainless steel appliances that would go up to $16,000 - $20,000.  

My question is, how would you make the offer or estimate rehab costs on a house you cannot see?  

Thanks.

Hi John-

That is a common request from a landlord with a rental property, whether it is occupied by a family member or regular tenant.

Make the offer using the numbers from your GC so that at least some repairs are built in to the price. Then make sure that your offer is contingent on a physical inspection prior to closing to firm up those numbers. I have bought and sold occupied rentals and usually tell the tenant that the inspection is for the insurance company so the tenant does not start to panic.

If she isn't going to allow you in to the property at all before closing, then you can either make a lowball offer or move on (staying in contact to see if she gets more motivated).

Good luck!

Also, have you driven by the house? You can tell a lot about how well the interior is likely to be maintained based on what the outside of the house looks like!

@John Hixon

I wouldn't buy a house I couldn't see, but I might be tempted to write up an offer as long as I had a very big out in case something popped up I didn't like before closing. However, if this lady is demanding that you not only offer, but close on this property without seeing it, I would drop this like a bad habit. You have no idea what could be lurking inside the house that could cost you a ton of money later. 

Also, does the lady have a signed lease with her tenant? If so, then you can't just kick the tenant out after buying the house. You inherit the lease. Might be worth asking to see if she's just using that as an excuse to hide something from you or that's a legitimate concern. Anyway it goes, don't buy unless you can thoroughly inspect that house. 

How long is left on the lease?  Are you planning on flipping it or holding as a rental?  If you're going to hold it, why would you need to do any updates?

I require the same when selling/buying apt bldgs. At least a letter of intent agreed upon before we inconvenience and scare a bunch of tenants.  I'd offer what she needs for the place, what and how works for you, with an inspection contingency.  I do mine in a Letter Of Intent.  Broad stroke concepts that would work for me.  We go under contract and open escrow with earnest money after viewing the place.  Family member tenants tend to be living in the worst property condition in my experience. Expect a heavy smoker and lots of pets.  Hope this helps @John Hixon !

Originally posted by @John Hixon :

Got a call off my direct mail campaign from a lady who is thinking about selling her rental and wants me to make an offer but she said I cannot see the house.  She is renting it to a family member and does not want them thinking she is kicking them out.  

The house is 1,500 sq.ft. 4 bed, 2 bath, built in 1974. To my knowledge she has not done any updates other than paint, carpet and tile. She said the roof is 9-10 years old. So, I would assume it is going to need a full cosmetic update. I estimate the ARV at $136,000 and she said that they have $30,000 left on the mortgage.

One GC I spoke with said that on a 1,500 sq.ft. house for paint inside and out, new flooring and fixtures it would be $12,000 - $15,000, if you went with granite and stainless steel appliances that would go up to $16,000 - $20,000.  

My question is, how would you make the offer or estimate rehab costs on a house you cannot see?  

Thanks.

It is very risky to make a serious investment decision without seeing the property. You aren't sure if the seller is trying to mask some issue with the property. The tenant also may have some legitimate privacy concerns and rights in the matter. If you absolutely just have to make an offer, it has to be a conditional offer contingent on any array of surprises that may spring at you sometime later. Getting a recent inspection report from the seller may help with some sort of ballpark estimate of repair cost.

So.  I never look at the property until after I get an accepted offer anyway.

Make the offer subject to seeing the property and approving of it.

I've found that when I don't look at a house before making an offer, it seems to turn out better for me.  I'm not sure why.

Write your offer with a clear inspection contingency and if it looks like things are going to require more than the ballpark your contractor gave you, you may be able to renegotiate a lower price to take the increased expense into account.

136,000 x.65=89,050-20,000=

$69,050

John obviously your intent with the property matters here. Are you wanting to wholesale it? Or Flip it? I personally will go up to 72% of the ARV - Repairs but I know people that will buy at that margin. Personally, I would make your offer with a 10 day inspection period. Make sure it's worded that within that 10 days you have the right to terminate the contract without consequences and are entitled to a full refund of any EMD without exceptions.

Originally posted by @David Pazdernik :

Make the offer subject to seeing the property and approving of it.

 All offers are made that way.  It's already in the language of the PA paperwork.  It's called the inspection period.

Tell the seller to show you the property , She can use the excuse that you are an insurance inspector because they are changing companies , or you are a inspecting the heating system for a service policy , or you are a painter and giving an estimate to paint the house . 

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