Wholesale Deal...Help analyzing

14 Replies

I have a property under contract. I thought it was a good deal and the numbers were decent, however it's not selling. Here's the specs

4 bedroom / 3 bath. The seller added another room on the back so it's got a bonus room. 

1774 sq ft. 

Built in 1963

Asking 75k

ARV: Between 120k and 130k

Repairs: Furnace needs checked. Seller got a $1500. estimate on it. The electric panel needs updated and some outlets fixed, and the hardwoods throughout need redone. 

She owes 50k on her mortgage and wants some moving money so we don't have much room to play around but I was almost sure that the 75k pp was a decent deal. 

Can someone let me know what it seems like I'm missing? The pics are good. They show a normal good looking house. No major repairs. I can provide additional info if I've left anything out.

My guess is your asking price is too high.

In my market, even if the house looks decent, rehabbers will generally be updating the kitchen and bathrooms, refinishing the floors, painting, etc. 

If the buyers in your market have similar plans, the numbers look too tight at a $75k purchase price.

So when I do analysis, I should automatically add in kitchen and bath since most rehabbers do that? Unless everything is already brand new, that is. 

Nicole, $25K is quite a bit of moving money... Keep working with her. You mentioned "not much room to play" bit in my eyes there is quite a bit of play.  I know can be uncomfortable and its nice to get the seller a piece of the pie, but often if it comes down to selling vs. not selling they'll settle for much less than initially discussed.  .

If you don't mind me asking how much of the asking price is your assignment fee?

My advice is never start from the place of what the Seller is asking or how much they owe. Always start from what the house is worth to you. You have to know your top price before you can even start negotiating.

What I mean is this...suppose the top price you can pay for the property is $55k. Does it really matter how much she wants for moving money? You can't pay it. So ether she comes down to your price or you are not a solution for her. If she is motivated and has no other offers, she'll accept. If she has a better solution or time to wait...she will. So what? You don't want a house under contract for which you paid too much.

I have a Deal analyzer that I use and I would be willing ot share. Just write to me at [email protected]

@Collin Goodwin  I thought the same thing and even got a mortgage statement from her. She's very behind on her mortgage and I'm very surprised she hasn't been foreclosed on already. But she says that 65k is the very lowest that she can go.

@Jerron Horn  My assignment fee is 5k with this one. I tried to renegotiate but she said that 65k is the lowest she can go. I never changed the contract because I don't think dropping the price 5k (I'd market it for 70k instead of 75k) is going to make a difference. 

I don't think she's motivated enough, really. It does take her at least 4 days to get back to me every time I try to communicate with her. I think she's just trying to get as much money as possible. Seeing the state of her mortgage statement, though, she needs to cut that crap out. 

The asking price seems a bit high. What are the total cost of repairs? You need a contractor to help you figure that out. What are the comps in that area? You have plenty of wiiggle room. Offering relocation assistance is great but 25k is extremely high. At the current price your assignment fee wil not be much. Like Collin said renegociate the price. At the end of the day either they will sell it or not. If they do not want to come down on the price, walk away. There are other deals to be made.

Start by understanding your target market. I also have a deal analyzer that I use. Your right she is looking for the best price. That is her choice. I had a deal like that a few months ago. I walked away. The seller listed his property on the MLS and after six months called me back.

I have a colleague that's happened to a few times. A seller won't get motivated until they explore other options and see that their way isn't working. This particular seller has done that before, actually. She walked away from me and then came back about 2 months later saying she was happy with my original offer. Which was too high I see. 

Originally posted by @Nicole Starnes :

So when I do analysis, I should automatically add in kitchen and bath since most rehabbers do that? Unless everything is already brand new, that is. 

That's probably a safe bet, but I would check with your buyers. 

I was just using new kitchen/bathrooms as an example of how a buyer might be budgeting for more repairs than you initially estimated.

@Nicole Starnes It might be time to step up, and just buy it yourself (for $65k) and then become involved in the other things that make being an REI interesting: arranging for and/or carrying out some rehab; then renting it out for it's positive cash flow (which should easily be generated, because that's why it was a great deal to begin with, right)? Then, flip it when other Investors come knocking on your door, on your terms!

As I always say: Find your Buyer, or fund your buy! Cheers...

@Brent Coombs , I would buy it but I don't have the cash or credit so I feel like starting out wholesaling would be the best way. If  you have an idea of how I can with as little risk as possible, definitely let me know because that's what I eventually want to do. 

@Nicole Starnes You didn't do yourself any favors by suggesting here that you "think she's just trying to get as much money as possible. Seeing the state of her mortgage statement, though, she needs to cut that crap out". 

Because as the seller - SHE decides! Why shouldn't she try to get as much as possible?

Have you been following the current 2 trending threads on Wholesaling? All those "brokering without a License" penalties may well apply to you if you are already marketing the property without having Title to it, and if you don't have an RE License. Yes, trying to scare you (and any relevant readers) a little bit.

My best suggestion would be to somehow find a private lender that agrees with your investment analysis, enough to front the full purchase price on closing - maybe to be found somewhere on BiggerPockets? But if the timing and/or the deal itself is NOT on your side, you probably know what you will be forced to do - which is exactly why "Wholesalers" have a tarnished reputation in the first place! [No legal advice given]...

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here