Posted by Monique on May 01, 2000 at 11:53:55:
Mark,
Thanks for the insightful post – particularly on using this tactic with homes that you do not yet own!!
We’re going to do this on our two optioned homes.
Monique
Conflicting signs on a flip - realtor’s & yours - Posted by Vic
Posted by Vic on May 01, 2000 at 24:55:23:
I recently put a house under contract that I plan to flip. In addition to running an ad, I would also like to place a FSBO sign in front yard to advertise owner financing. The realtor has his own sign in yard that he wants to leave there. I really don’t want to confuse people when they pass in front of house & see 2 signs, but I do need to let them know that owner financing is available.
I was thinking of just putting up an owner will finance sign, next to realtor sign, that would give my phone number out. Has anyone come across this dilemna of having 2 possibly conflicting signs in front of house? If so, how did you overcome it?
Thanks,
Vic
Re: Conflicting signs on a flip - realtor’s & yours - Posted by Bill K. - FL
Posted by Bill K. - FL on May 01, 2000 at 09:03:33:
Seems to me it would be the seller’s call about letting you put up a for sale sign. Technically, you haven’t bought the property and if you can’t find a buyer before the closing date are you going to walk/lose your deposit or are you capable of closing the deal? Or did you structure this as a L/O? Also, will the seller be responsible to pay the RE comm.when you buy?
Re: Conflicting signs on a flip - realtor’s & yours - Posted by Mark
Posted by Mark on May 01, 2000 at 06:32:22:
Vic,
I have done this several times. The sign I use says,
OWNER FINANCING AVAILABLE ON THIS HOME FOR INFO CALL 555-5555.
Typicaly what happens is you will get more response than the realtor sign because they now think they are dealing directly with the owner and usually they will call the number on your sign before they call the realtor.
When someone does call explain to them that you are an investor and you buy homes and sell with owner financing. Then say, you are buying this home and it hasn’t closed yet but you would like to find a buyer as soon as possible to put in it when it does.
Good luck
Mark
Re: Conflicting signs on a flip - realtor’s & yours - Posted by Vic
Posted by Vic on May 01, 2000 at 10:38:04:
Bill,
I set this up as a regular purchase with a closing date of June 30th. If I couldn’t sell then yes, I’d probably buy it myself & do a few little cosmetics & put it back on mkt. or either keep it & rent it out at close to a break even, then maybe move into it in a few mos.
It was not a l/o. Also, you mentioned that it would be up to the seller. I wonder if it would really be up to the seller or not, because once I have that purchase agmt., I then have equitable title. I’m wondering if that means that I can put up my own sign. Of course, the best plan is to spin it so that the seller agrees to go along with your plan.
Vic
Re: Conflicting signs on a flip - realtor’s & yours - Posted by Sammie K.
Posted by Sammie K. on May 01, 2000 at 12:26:36:
Marc,
I saw your post about owner financing but I did not understand how you were making money, could me by explaining further? Your example I believe you said you would have purchase price at 54,000 then sell on owner financing at 65,000 then pick up cash at closing by selling the note that you owner financed but I thought with those numbers that the spread was not big enough, like would not a note buyer want 75% LTV so how did you get the money to pay the original owner the 54,000 please help me understand thanks
Mark! Great Suggestion! In fact… - Posted by Vic
Posted by Vic on May 01, 2000 at 11:01:14:
… I planned to put up a sign very similar to what you suggested above. First I asked the agent if he’d take down his sign & let me put up a FSBO sign. Of course, he didn’t want to do that. Then I asked him if he’d let me put up a financing sign like you mentioned above. He said he’d check with his broker & the seller & let me know.
The question I have though is this - Once I sign that purchase agmt, that means that I then have “equitable title”. Doesn’t that give me the right to put up a sign, even if the seller objects?
Of course, in the real world, I would never attempt to put up a sign if the seller objected because I might need the seller to do me a favor later, such as sign an extension. But anyway, I’m wondering what rights I would have in regards to putting up a sign if I really wanted to. Anyone know?
Thanks,
Vic
Have you done this when your price was higher? - Posted by Monique
Posted by Monique on May 01, 2000 at 08:48:25:
Mark,
Great idea! Have you done this when your price was different? For instance, when you’ve got an Option to Purchase on the home and the owner is still marketing the home themselves.
Eager to know how this has worked for you!
Monique
Re: Conflicting signs on a flip - realtor’s & yours - Posted by Eduardo (OR)
Posted by Eduardo (OR) on May 02, 2000 at 24:01:32:
Vic–
You don’t have equitable title or equitable interest or anything else in this property unless you are making payments. All you have is a contract to buy it on specified terms at some future date. Right now it doesn’t belong to you and any signs out in front are with the owner’s permission. --Eduardo
Re: Conflicting signs on a flip - realtor’s & yours - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on May 01, 2000 at 14:59:33:
Once the purchase offer is made and accepted, you do have equitable interest in the property, but you do not have possession. The seller has possession and can let you put out your sign (or not).
The function of the real estate broker is to bring buyer and seller together, so at the time that is done the commission has been earned. The seller owes the broker $xxxx. The commission is paid by the seller (usually) at the closing table, from the proceeds of the sale. Now if there are no weasel clauses on either side (not likely) the closing could be forced by any of the parties involved. Most contracts do have some clauses that would allow an exit. So the seller retains possession until he gives it up, and he would decide who puts a sign on his property…ED
Re: Conflicting signs on a flip - realtor’s & yours - Posted by Mark-NC
Posted by Mark-NC on May 01, 2000 at 13:48:14:
Sammie,
If you were interested in using notes to do these type of techniques it would be best to see what is out there. As far as A 75% LTV that would be a tough one on this example deal unless the buyer had a lot to put down to cover it. I personally deal with better credit buyers so I don’t have to deal with the low LTV’s. My typical buyer has a credit score of over 600. With that score I can get a 90% LTV with as little as 5% down, with a buy rate on the note of around 95%.
Here is an example with the full 10% down.
sales price 65,000
90% LTV 58,500
discount 95% 55,575
down payment 6,500
This puts 62,075 on the table
pay the seller 54,000
Your cash profit 8,075
Here is the same deal with 5% down and 5% second.
sales price 65,000
90% LTV 58,500
discount 95% 55,575
down payment 3,250
this puts 58,835 on the table
pay the seller 54,000
your profit 4,835 plus a second mortgage for 3,250.
Hope this gives you a better idea.
Mark
The price is usually higher. - Posted by Mark-NC
Posted by Mark-NC on May 01, 2000 at 11:11:17:
Monique,
Yes, the price is always higher. What I do is justify it to my buyer. What I mean by this is, I ask them how much do they have to put down and how much do they have for closing costs? I tell them that there is a cost to doing this and unless they can come up with the additional funds I have to sell at a higher price to recover them. You will find that most of the people that respond to owner financing do so because of some type of problem. You will also find that most of them are not as concernd with the cost of the home as long as you can get them in and they can afford the monthly payments.
Another thing the buyer may not know is, I may have a contract on the property and say it was listed for 60,000. and I may have made an offer for 54,000. and the seller accepted. As long as I know it wasn’t over priced to start with and it will appraise out, I will sell it for 65,000. This is how I create the room to make money on retail flips.
Another nice thing about the wording on this sign. It says “Owner financing available for this home”. It dosen’t say home for sale so you don’t even have to have a contract on the property to put one up.
One thing I like to do is ask fisbos if I can put this sign in their yard. They like it because it draws a lot of attention to the home and I do this with out putting a contract on the property. I also tell the seller I am not going to even let anyone look at the home unless they are qualified, they like this. I have even had some of them pull their sign out and I ended up taking all the calls on the property.
Then when I get a good buyer I will put a contract on it, tie it up and close usually within 20 days or less.
When a prospective buyer calls, I tell them that I am an investor and I don’t own the home yet. But if they like the Home I will gladly buy it for them and resell it to them with owner financing. (That always gets a good response). I do however sell the financing at close to cash the deal out.
To any one that is wondering, I cleared these signs with our local realtor commision and an attorney.I have even had a few realtors request me to put them on a some of their properties. The signs also help you collect a buyers list for other properties from the calls you get.
Mark
Ed Coop, you are correct about equitable title… - Posted by Vic
Posted by Vic on May 02, 2000 at 24:39:52:
…& I’m also pretty sure you’re correct about the rest of the post as well. It makes sense that I have equitable title, but not possession. Thus the permission.
Vic
Mark, that’s some Fantastic Stuff!!! (nt) - Posted by Vic
Posted by Vic on May 01, 2000 at 18:47:32:
nt