Real Estate Wholesaling Questions & Answers

User Stats

2
Posts
0
Votes

Unsure as how to go forward with seller

Posted Jun 14 2022, 17:29

I found a property off-market in the Montopolis area and am about to go to see it with the owner on Friday. The original owner passed at 97 a few years ago and now is handled by a son who is the executor of the will. The executor has 2 next-door similar lots; one with a 50's tear down with no foundation (has a 2-room extension built 30 years ago with foundation) and a vacant lot the same size with an old concrete driveway. 

They are asking for 405k each, which is just over some sold comparables for a teardown on a lot that size (I have access to MLS); they say they have turned down offers before and last received an offer of 350k less than 6 months ago that they didn't go through.

The highest I think is doable for us is 380k and selling the contract for maybe 385ish. This will be my first time so I am not necessarily looking for the highest margin. Newly built properties on that lot are selling for ~700k range so I think that would be an appropriate price for a flipper

I am unsure as to whether I should offer on the teardown or empty lot. As I want to be able to have a strong case to lower the asked price and incentivize a buyer. 

Any and all critique is welcome. I am a 20 y/o agent that works hourly for Redfin and am just trying to wholesale during the summer before my senior year of college. Thank you.

Austin, Texas

User Stats

2,116
Posts
2,758
Votes
Nick C.
  • Specialist
  • Tampa, FL
2,758
Votes |
2,116
Posts
Nick C.
  • Specialist
  • Tampa, FL
Replied Jun 15 2022, 08:19

Those properties that sold for 700k, how many square feet are they? Buying a lot for 385k leaves about 300k for the new build, closing costs, realtor fees, and hopefully a profit. $120/sq foot building cost doesn’t get you much around here, it could be different in your area. 
Sellers are going to need to readjust their expectations. For 2 years prices have been rising astronomically. Tell him 350k 6 months ago was a deal he should have taken. Prices maxed out then and will decrease as interest rates rise. Who knows what the rates will be by the time the new builds are done, 10%? 15%?? The new builds may not get 700, maybe 600 or less…

User Stats

2
Posts
0
Votes
Replied Jun 15 2022, 15:57

I figured that since posting. The properties that sold for 700k were around 1100-1500 sq ft. Would either be unprofitable or barely break even. He is an older guy and originally told me he wanted to sell the vacant lot for 500,000 which is ridiculous and shows me he is kind of out of touch with the property's value. 

In the showing this Friday I'm just going to hope that the lot with the structure has somewhat decent bones since I think then it would be viable to sell to a renovator (renovations in the area are selling for 550ish). From my initial view when driving for dollars the foundation and outside brick structure seem to be in good shape, but there is clear wood rot along the fascia board and the roof looks rough. 

I appreciate your response Nick!

I'll update this thread whether I am able to get a contract.