First potential deal

25 Replies

Hey BP,

So I received my first lead today from a very small probate mailing. I sent out 6 letters to estate executors and got one back already! That's a 17% response rate! Not bad so far...

Anyways, I'm visiting the property and the executor this weekend, and assuming it's a good deal, how do I proceed? I've drafted a P&S Agreement and an Assignment Contract based on the few I've reviewed. Nothing fancy, 1 page each. The decedent had a reverse mortgage on it, and has an outstanding balance built up of $150,000 or so. The property supposedly needs $25,000 and would be worth $250,000 - $300,000 based on comps I've looked at.

I guess what I'm asking is, is there anything I've overlooked or that I should be aware of when touring the property? The obvious high ticket items like roof, siding, HVAC systems, water heaters, etc, but what else?

Also, when negotiating with the executor, my assumption is that he won't go any lower than what the mortgage balance is, correct? Would there be a better way to handle this or should I base my figures on $150,000 + repairs, assuming he'll let it got for that price? He did mention she doesn't have anything else in the estate and this is all that remains for assets and liabilities. Is it fair to guess that in order to save himself the trouble, he'd unload for the mortgage balance?

Sorry for rambling and the unclear train of thought, but my mind is racing with the possibility of making some solid cash on my first wholesale deal.



I would have a contractor take a look at it.  Not from VT but I have already lined up some in CT who are more than willing to take a look at properties for me since I am not an expert on estimating repair costs.  

Do you have buyers lined up already?  Something I would consider.  

Best of luck, hope you get it to work.  I am still waiting on my first deal, marketing to pre-foreclosures.  

Hey @Scott Gombar ,

Two of my brothers are general contractors and I plan on having them check it out after my initial inspection. Fortunately, between my siblings, we have a majority of the construction industry covered. Everything from GC's to master electricians, to plumbers. One perk of a big family I plan on taking full advantage of!

I don't currently have any buyers interested yet, but I know of 2 or 3 people with deep pockets that currently invest in real estate in the area. I've never worked with any of them directly, but know them through my personal life or my day job.

Best of luck to you in your endeavors! Good things come to those who work hard for them!

I live pretty darn far from Vermont but I'd approach the same - from the asset side. Determine after repaired value of the property and subtract your profit, holding costs and repairs. That's your buy/no-buy criteria. 

There needs to be a way for the proposed executor to pass title to you, as buyer. I presume you will use a title company and they will advise you what they require in order to insure the transfer, whether by deed or pursuant to court order. 

It would be a great deal if it only needed 25k in repairs and it's worth let's say 275k.

275k X .7=192.5k-25k repairs=167.5k(this is what you want to get when you sell) -10k (assignment fee) =157.5k MAX OFFER. 

There is a little meat on the bone, get it on a 30 day inspection period, and market the hell out of it and you should have it sold by the 30 days is up.

Always remember to put your out clauses in the contract in case you can't find a buyer (:

Best of luck! I'd like to know what the end result was!


@Rick H. Thank you for the info. I probably should have mentioned that was the process I plan on using as well. I have a strong understanding of the analysis side of creating the deal, but the logistical side, I lack confidence. I plan on using my attorney to do a title search on it prior to going under contract. As for how the deed would transfer, I haven't the slightest clue. Is there some resources online I could use to determine the probate process in VT?

@Jaccob Heath Thank you too for the info. I agree with your numbers but would even be willing to take a lower assignment fee if needed to seal the deal. My goal is $5,000 on the low side, $10,000 on the high. Let's hope it works out and I'll be sure to keep you posted.

I'd always try for a 5k fee. That way no one gets upset (:

@Jay Mitiguy  one brief point - don't worry about doing the title search before you put it under contract. Your contract should specify that the property will be passed to you with clear title, and then the title search would be a part of the process leading up to closing. That's not considered a weasel clause by any means, just a completely normal part of a transaction.

I agree with Karin! The title company handles the title and if the title is clouded, they should be able to get it cleared. If the title can't be cleared for a few months, simply let your buyer know and ask him if he wants his deposit to ride or if he wants out.

Remember, if he were to just back out for any reason, you keep the deposit he wrote out to the title company. But I'd the deal simply can't close, it's good business to return the deposit. (:

Best of Luck my friend

also, where did you get your list of names to send out letters to? Just wondering lol

I have a 2-page purchase contract and an assignment contract that I am happy to share - has all the clauses & outs discussed above.  If you need those docs to get started wholesaling - HIT ME UP!

Really though, hit Dev up, he is awesome!

@Karin DiMauro  Hey Karin - Great advice! My contract has an out based on the title being clean, but I wasn't sure when that process took place. So assuming the numbers work, I should put this place under contract this weekend when I visit it, then worry about the details regarding the title and such? 

@Jaccob Heath  WHen you say I'd keep the deposit  the buyer writes out to the title company, what exactly do you mean? For example, I put it under contract, I find a buyer who is willing to buy the assignment contract, at that point, the title search is still my responsibility? Or does it become the contract buyer upon his deposit of purchasing the contract? Sorry if it seems like a dumb question, just looking for clarification.

@Dev Horn  Hey Dev. Thank you for the offer. I'd love to take a look at them to see if I've missed anything in mine. 

Dev.  I would be interested in taking a look at your purchase contract and assignment,  too if you are willing to share.   I'm new to wholesaling myself.  Thanks!!

@Jay Mitiguy  - yes, as far as title is concerned, you don't worry about that until later. Do your due diligence on numbers and preliminary walk-throughs of the property, and go ahead and negotiate your purchase price. After you give the executed contract (i.e., signed by buyer and seller) to your attorney or title company - I don't know which way it's handled in VT - then they'll get to work on the title search.

You could of course also do a little homework at the town hall yourself: check that there are no back taxes owed, what kind of permits may have been pulled (if any), scope out the field card, the assessor's map of the property, check well and septic records if applicable, that kind of thing. You can also check whether there are any outstanding liens, though that kind of info will officially be handled by title company/closing attorney.

@Jaccob Heath Sorry I forgot to answer your question on where I get my list from. The county I live in keeps paper files on probate cases and they are public information. Periodically I go down and have them pull files for me to review. I have a spreadsheet I plug my findings into and it's tied to my letter using mail merge. So now that everything is set up, the process is automated with the exception of the data mining. Other than the fact that it's time consuming, I actually enjoy that piece of it.

@Karin DiMauro That's great information. In Vermont, we use attorneys for title searches to the best of my knowledge. I do know that the owner hasn't paid their taxes since 11/13. I'm assuming she became ill around that time hence the reason they weren't paid and it's now in probate. What exactly is a field card? I've never heard that term before. 

@Jay Mitiguy  the field card is essentially an info sheet on the property, typically found in the assessor's office. It tells you details like square footage, acreage, the year the house was built, the assessed value of the property and whether any other structures/'improvements' are there (which can be interesting - for example, on the field card for a single-family we are currently rehabbing, the field card lists an inground pool ... and there is no pool. So I need to have that corrected.). It will also usually provide sales history, along with volume and page number. It also usually includes a sketch of the house, along with dimensions.

@ Dev
I went to ur profile to contact u and it states u have hidden ur contact details? I am interested in speaking w u. Can u advise how to reach u?

@Dena Price  That seems odd!  I don't hide here in BP!  =)

You'll see my contact details below - feel free to call or email me.

I've sent those sample contracts to a few of you guys, together with free access to our Wholesale Accelerator course (online; videos).  If I missed you just PM me in BP or email me with YOUR EMAIL ADDRESS and I'll send you that stuff.

A quick update on the status of this deal - 

I met with the estate admin last weekend and inspected the property. The structure is in great shape, but it has a unique layout and outdated finishes which will require about $85,000 in estimated repairs. The ARV is still $300,000 and the reverse mortgage balance, back taxes, and interest accrued are around $160,000. Knowing the 70% rule this would mean I cannot offer more than $210,000 - minus repairs and my assignment fee, which brings the contract price down to $120,000 roughly. The other rub, is that the beneficiaries of the estate are hoping to get some extra cash above the balance owed, thereby bringing the offer price for me to bring to the bank down to $100,000ish

The admin is in the process of adding me as an authorized representative to speak with the bank holding the reverse mortgage. My question at this point is whether or not anyone has had any luck negotiating a "short sale" on a reverse mortgage? If so, how did you go about it? I do not have the property under contract yet, as this whole deal is contingent upon my negotiating skills with the bank, if that's even possible. Any advice would be greatly appreciated!

@Karin DiMauro   That's great to know. Assuming this deal isn't dead in the water, I plan on going to the town office tomorrow to get that information.

@Jay Mitiguy  what is your time worth and what do you want to learn from this? I doubt you will be successful but you don't know unless you try. If it was me, I would look for other deals that are much easier. I did some research on reverse mortgages and they are usually owned by big banks that are extremely difficult to deal with.

@Bill S.   I'd like to think my time is valuable, but given that I'm new to RE investing, I need to trade time for knowledge I suppose. I've been the kind of person who learns by doing and I'm thinking this might be one of those times where I need to belly up to the bar, spend some time on the phone with the bank and see what comes of it. At the very least, I've hopefully learned something new out of the process. Thank you for the insight, and I'll let you know how it goes!

@Dev Horn  Hello! I'd also like information and contracts that you would be willing to send my way. I'm new to wholesaling and any and all info is helpful when first starting out :) I will pm you as well.  

Originally posted by @Richard Johnson:

Dev Horn hey there. I would love to have the info you have for wholesaling. I can't seem to pm you however. My email is r***** Thank you so much!

 Got it, Richard - just sent that info to you!

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