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Robbie McCarthy
Pro Member
  • Flipper/Rehabber
  • Ardmore, pa
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13
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Selling your Flip property before project completion

Robbie McCarthy
Pro Member
  • Flipper/Rehabber
  • Ardmore, pa
Posted Dec 18 2018, 07:10

Hi BP'ers,

I'd like to gain some views and advice on a current situation:

Flip twin in desirable neighborhood purchased by auction on 11/11. Purchased $239k (all costs). Target selling price $465k. Target profit $70k. Very realistic based on comps. Target completion 2nd week Feb 19.

Current situation: Full Demo done.  All bathrooms and kitchen, flooring, trim etc. ALL removed. Currently framing out and prepping for installations of bathrooms and kitchen, flooring etc. New HVAC system in and framed.

Spent $20k. Budget balance $90k. to complete as per plan.

Issue/Potential:  A buyer has already shown interest and wants to go to contract. BUT requesting changes to planned rehab. including; no third floor bathroom, no laundry in basement and no deck, in exchange for hardwood flooring throughout, first floor laundry room, 2nd floor master, vs third floor master with bath. 80% looks net neutral.  Note: I have been clear that anything outside of project scope with no offset would result in upcharge.

Ideally I would like to sell as is and leave them to complete with the GC.  Offered  to sell at $365k to maintain my profit margin, minus a % for a fast close. BUT they do not have cash to buy and can't mortgage the property as is and do not want to go through two processes i.e. loan to complete then refi once done.

Leaving me with the option to contract with them and make changes in line with their preferences to bring to a close.

It feels risky to me. Even with a 10-15% deposit on an agreed sales price of $465, there are a million ways they could come back and challenge sales price prior to closing, I'm concerned about having their hands in the mix as I try and mange the project for quality AND profit. I'm concerned the custom changes we will make to tailor it to these buyers specific needs will damage the overall potential value of the property to 90% of buyers if there is an issue as we move forward with these buyers. Plus im in the middle of a buyer and the GC - who thankfully  I have a great relationship with. But what is my role here?

Anyone been in this situation?

Can I lock them in legally to purchase at the agreed price in a more robust way than simply going under contract so I can reduce/remove the risk of damaging the potential value of the asset to other buyers through the customization?

Thoughts ideas gratefully received.

Thanks

Robbie

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