Found an off market SFH in Austin TX, now what?

Question

My friend just connected me with her neighbor who is selling her Austin SFH rental property off the market. The owner and I agreed to meet this week to check out the house. I’m new with off market buying process and this is an old house built in 1970’s with septic tank system. I wonder what I should look at and what questions I should ask the owner in order to evaluate the house condition and offer/negotiate a fair off-market purchase price.

There are many similar houses sold in past months in the same neighborhood but in various conditions. Some are completely renovated, some need lots of work. I don’t know if they could be practical comps. I assume the inspection only starts after signing the contract? How can I protect myself by including some clauses in the contract? What else should I be aware of when evaluating the house and securing a contract?

As you might tell, I’m super excited and nervous about this potential opportunity. I appreciate your advice and insights! :)  Thank you.

Ryan Kelly · Answer

@Qing Willow At minimum you need an experienced Realtor or investor partner that knows how to evaluate properties, negotiate contracts, and understands the current market conditions. It doesn’t currently sound like you are comfortable with any of those details. Don’t go it alone would be my advice.

Stephen Stokes · Answer

@Qing Willow bring in a partner with more experience than you.

Marian Smith · Answer

@Qing Willow  If the seller doesn't want realtors involved then that might scuttle the deal.  There is no standard septic inspection but there are inspectors and that is a huge risk/potential expense unless there is a sewer to tap into...sometimes the city adds sewer but doesn't force owners to tap in.  If the owner doesn't know how to sell without a realtor you could agree on a price and have a lawyer or a flat fee realtor complete the tar 1-4 contact (its online and you need to read it) for you guys.  Title and loan officer pretty much take care of/guide the rest...usually seller pays title policy but you guys can agree on title company.  The price is the difficult part.  If there are big issues like aluminum wiring and/or a fpe panel, old hvac or if the septic is old, has trees near the drain field, hasn't been pumped in years you need to figure out how you will pay to replace them.

Ryan Kelly · Answer

@Qing Willow my reply would be - how are you and the seller going to negotiate the sale and handle the contract process when neither of you sound like you have experience?

Michael Kundrat · Answer

He means for you to find someone who has done deals before and has the knowledge for what to look for to determine the opportunity that you have in front of you. Split the deal with them however you agree to.

This will get you to learn a lot in the process and thats the investment. It will also open up your network in working with a new partner.

Joe S. · Answer

For starters what is your goal with the house? Are you paying cash, getting a loan, looking at this house for personal residence, looking at this house for a rental, are looking at this house to flip, are trying to tie this house up to wholesale?

Also I find off market properties all the time where the sellers want more than the house is worth and they’ll net more than what they would’ve if they would’ve sold it on the open market thru a realtor. Obviously those leads are bad leads even if they are off market.

Lynn Wise · Answer

@Qing Willow I sent you a dm. I’m happy to have a preliminary convo just so you know your options.

Qing Willow · Answer

Lynn, at which stage should I engage a realtor? After signing the contact? I wanted to respect the seller's will, but also want to make the process easier on me.

Qing Willow · Answer

Should I engage a realtor when the seller already told me that she doesn't want to work with realtors?

Found an off market SFH in Austin TX, now what?

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