I've been reaching out directly to potential sellers in San Antonio and I've finally had a decent conversation with a gentlemen who has invited me to look at this property. I've been targeting my direct mail receipts with the expectation to wholesale their property and during my conversation with this particular gentlemen, he mentioned his current property manager is also a realtor and has recently listed his property on the MLS at full value. During our conversation he admitted that his property has quite a bit of work required, he had it quoted a few years ago at $55k (roof, foundation repair, sprinkler repair, paint int / ext. & siding repair were the biggest and this may be a low estimate when I hear foundation) and the best offer he's received was a seller financed option at 80% of ARV, but he wasn't interested in this, he wanted the money to move on and he doesn't expect a full market value.
So this bring me to my question, since this property is on the MLS already, is there any point in pursuing this opportunity as a wholesale, even if he doesn't expect to get full value? If I feel I I can get his agreement to a 60% of ARV all cash, would a double close be an option as a wholesale? Even if this is an option, is this a feasible strategy in the San Antonio market? I'm curious to hear if anyone has input on this scenario, I'd hate to be wasting the seller time by walking the property.
I would go look at the property anyway.
First - its good practice to look at properties and talk with owners.
second - The quote that the seller got could have been from a high priced general contractor. The repairs may be 30k instead of 50k. You may be able to do a little of the work and hire some people to get it done even cheaper.
Third - By the time you see it with the seller, he may really like you and agree to your price.Connection is very important when purchasing a home. How you talk and get along with the seller may persuade him to sell you at the lower price.
Like what Rick said, I would still go look at it and try to get it even if it is listed. He makes 3 good points.
There are a couple big wholesale companies here in town and they offer on pretty much every MLS listing that has potential to be a wholesale deal and I see them get contracts all the time.
If the deal is a deal and you buy it (contract it) right, an investor will still pick it up from you as you did the legwork to find the property and negotiate it to the right price.
I will reiterate what @Rick Pozos & @Ryan McLeaird said, but also want to state that just because a property is listed on the MLS doesn't mean it can't be a deal. While the MLS is primarily retail listings at market value (or above), there are deals to be found. I once offered a $100K off list price on a listing that had been on the market almost 2 years. They countered back at $90K below asking price. In this situation the owner was stuck at his price for 2 years, then he passed. His daughter inherited the property, and just wanted it gone. Often, you can glean a lot from a quick conversation with the listing agent.
Best of luck with this deal!
Thanks for the encouragement and advice! I agree with everything you guys mentioned, so I'll keep the walk-through appointment.
My initial expectation was to find a property and setup a contract with the seller, but when I learned of the MLS listing it was a little curveball I wasn't anticipating. In this scenario, since the property is already on the MLS, I would need a real estate agent (or utilize the listing agent) to place an offer on the property. If I choose the keep property as an investment, it's pretty much done at this point, but if I decide to wholesale, my only option is to purchase and then resale to an REI? Would I be able to sale my interest in the contract if the contract doesn't prohibit this?
Thanks for your help with the rookie questions!
Originally posted by @Enrique Villarreal :
but if I decide to wholesale, my only option is to purchase and then resale to an REI? Would I be able to sale my interest in the contract if the contract doesn't prohibit this?
I don't want to discourage you but If you buy off MLS, pay the brokerage fees, pay the closing costs, then turn around and "wholesale" it with a markup, what value are you adding to the investor? Wouldn't it be better if you're wholesaling a property that you found before it hit MLS and you were able to negotiate a price that leaves margin for both yourself and the investor?
Also, if the listing agent is paying attention and sees the “and/or assigns” added to the buyer’s name, sometimes this will raise a red flag and they may not want to contract with you.
Would you be interested in closing on this one yourself instead?
Thanks for your thoughts on this approach, I completely agree with you, if I'm adding no value to the opportunity, it wouldn't make sense to pursue. And honestly this was my thought once I learned this seller already had his home on the MLS.
However what is having me reconsider is the advice from this and other threads that suggest if I am able to work with the seller to come to a price that is agreeable for the seller, myself and a potential investor, then there would be value I pursuing. Would you agree? I very may end up walking away, and if that’s the case, I’m okay with this too.