Re: Pleeease Help - Have a Motivated Seller? - Posted by Ben (OH)
Posted by Ben (OH) on August 29, 2003 at 16:11:45:
I don’t know about your local market, but I’m near a large-ish city of around 1million people and properties with 8 acres can be had, since there’s corn in all directions and building just keeps on going.
I’m pretty new too, but I just want to send a caution to you because I learned an $800 lesson (inspection, appraisal, and then dropped it after much time and thinking) on a similar property from a motivated seller this year in what would have been a bad deal, and it nearly happened becuase I am green, eager, and inexperienced.
So, take these biases into account and email me if you want any more ideas/comments.
- I was smart and took the details to an experienced local investor and he said he would pass on it. I really thought I was onto something anyway. Learned: get a second opinion, and give it due consideration!
- “Motivation” is not absolute. I called on an ad for a self-proclaimed motivated seller (danger, will robinson!), yes, they were willing to let the property go for their balance, on an assumable loan, which happened to be within $2k of what new units are selling for in same develpment. Lesson: motivation and flexibility does not equal a good deal per se.
- Uniqueness. We don’t have 8-acre subdivisions with great comps. These things are unique and appraisals lie (virtually any number can, and will, be justifiable by paid appraiser). No big pool of buyers exists for such a property and they are hard to move/flip/retail. Lesson: in the beginning, stick with things common to the local market.
- Don’t kill yourself on deal #1. If I’d done it, I’d have been “all in” in poker terms, with vy little liquidity and cushion. I was nervous, but thought I could swing it. I began losing sleep, even though I thought I was buying at a 50k discount with my 280k purchase price. (this was based on an appraisal 4 years old, bringing me back to “appraisals can lie” above) Lesson: stay within yourself in the beginning at least (if not always).
Eventually, I started looking for partners to come in with me, but even people intimately familiar with the exact same property and area said it was not a deal. I dropped it, easily (and fortunately without further ado). I had the information, and I’m usually logical, but greed got the better of me in the short term.
Your person may be motivated, but unless you are dead sure you can retail this with multiple, pre-qualified leads and/or you know of better uses for this property (splitting lots off b/c it’s a growth area or whatever), then caveat investor!