Hello BiggerPockets Members!
I think I may have found our first potential fix and flip deal. The woman who owns the home is moving into a nursing home and her kids live out of state. One of the sons asked a friend of mine if she knew anyone who might be interested in buying the house and she told us about it. She gave me the sons number tonight and I'll be calling him to discuss the property. I know it's in great shape, the curbside appeal is awesome, and it's in a very desirable neighborhood -- it's just extremely old/outdated on the inside.
So my questions are these:
-How do I negotiate a good price? What's the best way to approach the son about this? Or do I wait to discuss price until I've had my contractor go through and give me an estimate of what repairs/updates will cost?
-What paperwork do I need? I have a general purchase agreement, should that suffice?
-I have cash so should I close in 7 days or do I need to close sooner than that?
-Can I put a low amount of earnest money down, like $1? Does the amount really matter in a situation like this?
-What else is good to know going into a phone call like this??
I really appreciate any advice/input you're willing to give!!
Here are some thoughts @Veronica Parkinson
Find out what they want for the house. Do a quick search online to determine if they are in the ballpark with their value. You should put in an offer subject to a home inspection and title search.
There is no reason to close in 7 days. 30 days should be fine.
Put down $1000 deposit to be held in escrow by either an attorney or title company depending on your states requirements.
You need to convince them that by closing quickly and selling w/o a RE agent they are saving money. Show them how much and explain how you will buy as-is. No headaches for them to maintain it.
@Rob Beland Thank you so much for your feedback. I will do $1000 in escrow and close in a longer time frame.
Once we agree on a price, what sort of paperwork will I need? Can I use a routine Utah purchase agreement like the one I found here: http://www.realestate.utah.gov/forms/REPC_2008.pdf
What are my next steps when it comes to the title company? What information will they need from me and/or from the seller and what sort of fees am I looking at?
Do you typically negotiate for a lower price than what's contracted for after the inspection and after the contractor estimates the repairs?
I'm just a bit naive about how the entire process works and in what order. I realize that after my initial deal (whether it be this one or a different one) that I'll know substantially more, but that with this opportunity it may be the right time to jump in and really learn by first-hand experience! I don't think I'll ever feel 100% ready for my first deal, but I'm trying not to let that limit me right now!
That is the state approved purchase contract. Yes, it's the one to use.
The title company will tell you everything they need when you get to that step.
Try to get the price right the first time. You want to make it clean and simple for them. Negotiating after you are under contract can create ill will.
Don't overthink this before talking to them. My advice is always ask what they want and try to accommodate their needs. They might not want a fast close because they need time to remove the personal property. They might not want a cash purchase because they have not thought about tax/estate implications. They may even want an installment payment to subsidize grandma's expenses. Just talk to them and listen.
If you want, PM me and I can run some MLS comps for you.
William is spot on. Determine your costs before making an offer so it's solid, only renegotiate if you find big items like structural repairs, etc. I too was worried about closing but it's surprisingly simple, just hand the contract to the title company and they take it from there. Good luck