Posted by Jim V on September 19, 2003 at 23:09:43:
Deals are always in the eye of the beholder. When you’ve seen a few real deals, the marginal, wishful thinking “deals” are fairly obvious.
The price a ready, willing and able buyer is willing to pay determines what FMV is, not what should be, or could be.
If you don’t want to accept that basic concept, any search engine can probably direct you to “Amway”, where everyone is a winner.
HELP! Advice on how to proceed - Posted by DT
Posted by DT on September 19, 2003 at 12:54:44:
Friday, September 19, 2003
First off, I want to say that I do not have a pre-qualification letter from a hard money lender,
I don’t have any deposit money to give the realtor,
I have never written any type of real estate contracts (purchase and sale agreement or assignment contract),
I haven’t done any deals,
And, finally, the investor/potential hard money lender is a realtor himself. What is stopping him from going around me to get the property under contract if I ask him for the pre-qualification letter for me so that I can submit an offer on the house?
Details: I am looking to perhaps do my first deal of many. The realtor listed the property for $269k, comps are $300k
The home needs some repairs.
What would you do in my shoes?
Should I first get the pre-qualification letter?,
Second, find out if the realtor needs a deposit?
Third, ask realtor to submit my offer ($300,000 X .70 = $210,000 - $13k = $197k.
Fourth, wait for counter offer to come back,
Fifth, sign the purchase contract with seller, along with a letter stating that we both agree that this contract may be assigned,
Sixth, sign assignment contract with buyer and ask for deposit from him,
Seventh, wait for settlement to get my assignment fee or get it after buyer signs assignment contract?
Any advice is greatly appreciated,
Newbie DT
Vacaville, CA
I’d walk away. It’s no deal. - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on September 19, 2003 at 14:25:05:
DT–(CA)----------------------
This is not a deal. Why are you even doing anything at all with it?
I think you can get a letter from a letter without specifying a property.
If you have no money, you probably are going to have either buy with no down payment or else you are going to have to use techniques which don’t need much money.
These would be option to buy or contract and then resell the option or contract to somebody else. This property would not be a candidate for that activity, as it is not a deal. Or else get the deed subject to and then rent the property or lease-option it out, or resell for a profit. Or find good deals–the property does not qualify–and tip off investors with the wherewithal to buy them and receive a small finders fee.
Meanwhile, study real estate investing, cut down you consumer spending, pay down your debt, save up your money.
Good Investing*Ron Starr
Re: HELP! Advice on how to proceed - Posted by eric-fl
Posted by eric-fl on September 19, 2003 at 14:20:08:
I think you are overthinking this. Why not just tell the listing agent, or whoever you are working with, that you want to make an offer on the house? Presumably, with that much of a discount, you’d be making a cash offer, right? Cash offers don’t need pre-qual letters. Even if they did, a hard money lender wouldn’t normally do one - after all, one of the characteristics of a hard money lender, is that they lend on the basis of the house, not the borrower.
I don’t want to burst your bubble or anything, but this offer has a pretty slim chance of getting accepted anyway. Is the seller highly motivated to sell quickly? If so, what is their motivation? Just how many repairs are needed here, by your estimate? Those questions are more important to answer than the details you are fretting over above. If you want to be successful at this, this will be your first offer amongst many. This game you are playing (steep discount for repairs), is a numbers game. Most people will flat-out reject your offer. A few will counter, and every once in a while, you’ll get one to accept, after a lot of back-and-forth. That’s how it is.
As for deposits, put down any amount they want. After all, it’s not like you’re going to be writing any checks until they accept, and the offer is ratified, and then you’ve got a few days to talk up the deal to lenders, investors, and relatives anyway. If you can’t find enough deposit money from SOMEWHERE to tie it up, it probably wasn’t a very good deal to begin with.
How can you tell - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on September 19, 2003 at 22:30:40:
from the few pieces of info he gave?
Re: I’d walk away. It’s no deal. - Posted by DT
Posted by DT on September 19, 2003 at 19:32:44:
I appreciate your time and advice Mr. Starr
DT
Re: HELP! Advice on how to proceed - Posted by DT
Posted by DT on September 19, 2003 at 23:30:53:
Thanks for the advice.
DT
Re: How can you tell - Posted by Lyal
Posted by Lyal on September 20, 2003 at 07:48:02:
Bryan,
The spread between market value and purchase price doesn’t leave nearly much room for repairs, holding costs (payments to the lender, utilities, insurance, etc), or costs to re-sell, let alone any profit (should be 20K minimum on any deal and if you shoot for that you won’t get it…just the nature of the beast).
Another problem here is he is taking someone else’s word for market value. NEVER take anyone elses word for market value ESPECIALLY that of the seller.
All the best, Lyal