Hey guys! I have a question about a property that a lady wants to sell...I am not sure if it is a deal or not as I am extremely green! She has a 3-2 1600sqft home in a nice neighborhood...i used to live there... she owes 72,000 on her mortgage and she is current on her payments..they are currently looking at another property so she does not want to list or do repairs or anything because she wants out quickly. the roof is seven years old and there are no foundation issues. She said she is willing to take 105-110 but she may go down and the houses in that area go for about 125000-135000. I am trying to wholesale this house with an assignment fee between 2500 and 5000 I have not pulled comps yet...and I have made no number offer either. I am pulling comps..but am not sure what to do!! Please help and any suggestions would be great!! Thanks in advance
I'm not a wholesaler but I would think you definitely need to pull comps as well as determine the rehab cost and ARV (after repair value, which is the appraised value after all rehab work has been done). For rehab costs I would put together two different sets of numbers: one for a flip and one for a rental. For the flip you would want to factor in higher end finishes since it will be for a homeowner. For the rental you don't need as high end finishes so that should lower the rehab cost. Also, for the rental you'll want to figure out what a 3/2 is renting for in that area so you can present it a perspective landlord. Once you have those numbers, then you can factor in your assignment fee and price accordingly.
Do you homework. Maybe the repairs are so bad the house isn't even worth 72K. If you get an high estimate on repairs then armed with that plus good comps should give you evidence to show her why you are offering what you offer.
It sounds like she is a very motivated seller so you can probably put in an aggressive (aka low) offer. If she refuses, that gives you some room to negotiate.
Do you know why she needs so much more than just payoff her mortg? I think if she wants out quickly, she must be willing to take even lower. How much is her low base? Can you offer her 95? Check the comps and if come are 95 or lower, you might have bargaining chip...
The 65% rent is what most people start worth and work up from there. Basically you want to offer 65% -repairs-your fee. 65% of the mean would be 84.5k - repairs - your fee. So pretty close to what she owes.
Some investors especially in hot markets will pay more. I don't like to go more than 72% - repairs- fee. Which would put you at 93.6 - repairs - fee. Do you know how much work it would take to get it to where it sells like the competition? Do the homes selling have granite? New siding? etc.
Also pull comps. That will be step number 2 after talking to your seller. You want to have a value to work off of not a 10k range.
Best of luck! Congrats on taking action.
Ryan Dossey, Call Porter | http://Callporter.com | IN Agent # RB15001099
Most people that want out to buy another home won't give up all of their equity for no reason. Now if there was a pressing financial reason to "unload" the house that would be different.
She is most likely thinking that her home needs some of the major "updates" I listed above. So she is subtracting them from that 125-135k range. In her mind she would walk away with 40k for a down payment - taxes/etc.
You have to decide why you are her best option. (close fast, no commissions, no inspections)
You also have to be sure there is a market to flip the home to. I am unfamiliar with Fort Worth but my understanding is that Texas has a fairly strong market.
Ryan Dossey, Call Porter | http://Callporter.com | IN Agent # RB15001099
Thanks for the responses so far, I have my real estate agent pulling comps for me and I am going to see the property this week. I am hearing that her main reason for wanting to take less than top dollar is the time issue (she wants out like yesterday) and also she does not want to put any more money into the home in order to get top dollar for it. She did mention that they painted it recently (inside) and that the master bath has been redone. She actually mentioned that they just finished it a week ago. I know the market is strong in this area so I am hopeful. I just dont want to leave money on table. I am going to speak with her further because she may just be needing a down payment for her new property. @Alexander Merritt thanks for the advice on the two different ways to present to buyers, I did not think about that! Thanks again yall...I hope this turns into my first deal!!
Oh yes, Alexander, you are so right! Check the house out to see if it is even worth 72! It may need major repairs.
She doesn't want out that fast if she's trying to get that much off you. Wanting out fast is paying whatever is left and signing paperwork. Good luck with her though.
I would tend to agree with you @Chaz Reid I have also yet to talk with the husband so I am going to get my comps and go and meet with them and hopefully get to the real problem that needs to be solved. Taking the payoff would be ideal but I am going to see exactly how low she really is willing to go. Thanks guys
three things that you (and everyone else here) needs to know in order to advise you in this deal:
1.) ARV (based on comps of equivalent homes within 0.25 miles, back 6 months).
2.) Repair costs to get to ARV (qualified contractors estimates of repairs.... Or better yet three different contractors estimates).
3.) does she really owe $72k. I would not trust the seller, but rather verify this information before taking any more action.
Let us know what you find. I hope you hit a double on this one!
That was another question that I had, how exactly do I verify her mortgage amount?? What information besides her bank do I need from her?? I have a contractor going with me to look at the property and do the walk through with me so I think I am good there. And also can I just do comps myself?? Texas is non-disclose state so tax records wont work but would a site like CRS data be ok?? will sale prices be on there in a non-disclose state?
Have you been able to identify who the main decision maker is yet in the house? You have mentioned speaking at length with the woman, have you spoken with the husband yet?
Don't waste anymore time just talking to one of them. Sit down and have a discussion with both of them so you can see where they are at price and mentality wise.
I have not spoken with the husband, she said on the phone that he pretty much threw it in her lap and said get it done, but I am well aware of how attitudes change when it comes to signing a contract so I made sure he would be present when I do a walk through of the home. Its my first deal so I am just a little terrified that I am going to miss something or not have all my ducks in a row when it comes to going through or not going through with the deal. I am sure you guys can understand first timers fear!! I really appreciate all of the comments too , keep them coming!
@Ashley Guzman , have you ran the numbers through the wholesailing calculator?
I did and my mao was 87,000 which would still yield her a 15000 profit and I would get my fee as well
If the house was built in 2008 who is the builder and is she the original owner? Could there be something else than just disrepair?
Hey Katy, the house was not built in 2008, Im not sure where that was said, she actually bought the house from her mother two years ago. Until I meet with her I am just going to say that her main reason for taking a discount on the home is the time issue and the fact that she does not want to deal with an agent or pay closing costs. My comps are saying the house is worth 122,304 and the price per sq foot is $78 with 1600 square foot being the average square footage with in a 0.5 mile radius. I need to meet the husband and do a walk through before I go any further but I feel like I MIGHT have a deal. We shall see
Sorry Sandra, not Katy, I saw Katy . My apologies
So what happened with the house Ashley?
I might have missed some details, but paying 110k with comps around 125k is not enough spread in almost every scenario I can imagine, even if the house is PRISTINE and UPDATED entirely. She's barely knocking off the savings of not having an agent do the deal (usually 6%). Go in LOW if you go in at all.
@Ashley Guzman What ended up happening with this potential deal?
Ok Tom, so I fell off the map for a little bit but I got back on the horse and I am at it again. That particular deal did not happen as they were not as motivated at that time as I would have thought. I keep contact with them and they are still living in the property. I think I got a little scared and discouraged but I decided not to give up and to keep pushing forward so I came back to BP for guidance and support! I plan on just not giving up and making this work. Thanks!
Thanks for the update and wishing you the best of luck in your REI endeavors!
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