Since I work in selling residential Real Estate, I call on expired leads. Last September (2014) I called an expired lead that happen to be the wrong number. Instead of just hanging up, I asked the lady, "Well since I have you on the phone, do you know anyone looking to buy or sell a home?" Shockingly she said, "As a matter-of-fact I do. My landlord wants to sell but I do not want to move." She went further into detail about how she wanted to buy it from him but didn't have all cash to make the purchase. I then asked her how much he was asking and she said $35,000. I then said, "If I can find a way for you to stay in the home even if the landlord sells, would you be open to that?" She said, "Yes but I'm not giving you his information until I meet you."
I said no problem. We met later that week and when I got to the property she explained that there were two homes on one lot. I said, "So the seller wants to sell both homes for $35,000?" She said yes. She was paying $600 a month for her 2b/1b and the second home was rented for $650 as a 3b/2b. CHING CHING BABY!!! Come to find out, neither one of the tenants had a lease in place ;-(. This means it would be tough for me to prove the tenants have been paying on time for the new buyer (not good).
We spoke off and on for the next week on how they can stay in the home even after a sale takes place by putting a lease agreement together with the owner. After that, she gave me the owners name and number. I called the owner, and I asked him, "You want $35,000 for the homes, correct?" He replied, "Well that was the price I was giving the tenant." I said "Ok, would you still honor that price if I brought you a cash offer this week?" He said yes.
I did my homework and found that the ARV (after repair value) of the homes would be $130,000. However both homes needed a great deal of work. I sent the offer to the tenant (because she knew him and his wife personally) to give to the owner. The reason I did this is because I could not get him back on the phone for three days straight. I found out later that he had a girlfriend on drugs that started to drag him into the mix. I finally got the contract executed in the beginning of November and found out where he worked just in case I needed anything else.
We set closing for December 30th 2014. This would give me time to do a title search and to find the end buyer. The seller told he the homes were owned free and clear. Easy deal right, WRONG!!! Title came back and he owed $1,300 on a small mortgage, $800 unpaid water bill, and a IRS tax lien. I asked him about it and he says, "Oh yeah the IRS tax lien is like $23K, and the other charges I was going to pay once we closed. BUT if I don't walk away with $20K I'm not doing the deal." WHAT!!! so $35,000 - $23,000 - $800 - $2000 = $9,200. That means I would have to increase my offer by $10,800. NOT HAPPENING, because I already started marketing the home for sale at $58,000. I came back to the seller and said, "Listen I know you are in a tight spot but all I can do is $42K but you will have to pay for all the closing cost." He said ok.
Title spent the next month looking into the file and found that the ex-wife would need to sign at closing and he only owed $13,500 to the IRS. (Next time I'll wait to hear back from title before increasing my offer). I found my end buyer and we agreed on a sale price of $54,000. We had to extend both closings to the middle of January 2015 because we were not going to close on time due to the ex-wife not wanting to sign at closing even though she doesn't get anything from the properties but was on title.
Now I have to talk to the ex-wife and find out why she would not sign off on the sell. She said, "He owes me a lot of money from back when we were married." I said, "Okay without getting into specifics, how much does he owe you?" She says, " He owes me $4,000 and I'm not signing until he pays me." Uuuhhhh!!! Why lord, why!!! I go back to the seller and told him what his ex-wife said, and explained that he could pay her on the HUD at closing." He paused for a second and said, "If I have to give that woman a dime, the DEAL IS OFF! I ALREADY GAVE HER A FREE AND CLEAR HOME IN THE DIVORCE!!"
I'm 4 months into this deal, I'm already in pain, now it's time to collect a reward for this hard work. I spoke to title and found out that both the seller and his ex-wife have the IRS tax lien on them. Meaning both have to pay the IRS every year a late penalty fee. I immediately called the ex-wife and explained how the seller is giving you more than $4,000 because he is paying the entire IRS tax bill that will clear your name as well. She said, "If he's not paying the $4,000 I'm not signing at closing."
I didn't know what to do at this point with only 2 week from closing. 3 days before closing the ex-wife calls me and says, "You know Dennis I prayed about it and I just want to be done with him and the IRS completely. However, I do not have a way to get to the title company." I said, "I will pick you up myself if you are going to sign."
3 days later, we closed!!! Seller paid all closing cost on the A to B contract and I slit the closing cost on the B to C contract. I would have liked to assign the contract but with this seller, it was better to double close. As a result I took a smaller profit of about $8,900.
Better than nothing....so be HAPPY!!
Ye,s I was James :-) !!! lol It was a great learning experience as well.
@Dennis Williams Wow, that was a lot of work for $8,900! But it would've been a LOT worse if you did all that work and the deal fell though and you ended up with nothing but a funny story. Congrats on powering through to the end. The last mile is always the hardest.
Well done @Dennis Williams ! I've had to deal with people having IRS liens that weren't disclosed. It can feel like a real gut punch when the title report comes back and you find that out!
I think your story is a great example of staying focused and being committed to a successful outcome.
don't forget the value of the experience... Great story and congrats!
@Dennis Williams Great persistence. The goal is to have leads identical to this one x5 EVERY month.
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