VA foreclosure - first deal? - Posted by Scott - newbie

Posted by Scott on June 12, 2000 at 12:15:12:


Thanks once again for your input. Much appreciated. I will do some more research and get back to you with what I find. It’s still a mystery to me why the realtor would attempt to sell well under market value. Although I can say with some degree of certainty that the market in that particular subdivision will continue to be hot. I live there and have been doing homework on my area for almost 2 years.
All I know at this point is that the house was indeed a foreclosure that he purchased. My contract specifies I can tie the house up for 60 days, I have a $500.00 earnest money deposit as consideration.

I’ll let you know what I find out. Thanks again.

VA foreclosure - first deal? - Posted by Scott - newbie

Posted by Scott - newbie on June 11, 2000 at 16:20:28:

I’ve been reading the board here for some time now, have invested in several courses and am currently working with a real estate broker friend of mine to try and put together my first deal. I’m looking for some advice and opinions from some of you more experienced individuals please.
Here are some specifics: This is a VA foreclosure, VA list price is 106k however to aggressively win the bid we feel we would need to bid out at 110k-112k.
The house needs 10-12k in repairs, and completely fixed up should sell for 129k-139k. I realize there isn’t a whole lot of room here, but I know the neighborhood market extremely well, it is appreciating rapidly and is a very desireable area.
My exit strategy is to either buy the house myself and hold it for a rental or flip with a simultaneous closing to an outside investor who would do the rehab. Is the margin too thin for a flip such as this?
First, I need to win the bid and get control of the house but I wanted to solicit some opinions before I proceed.

A sincere ‘thank you’ to all who post and share information on this board. I hope someday I can contribute as well.

Re: VA foreclosure - first deal? - Posted by phil fernandez

Posted by phil fernandez on June 11, 2000 at 18:01:31:


Way too thin. You bid it up to $112,000 and if it needs $12,000 you’re up to $124,000 for an after rehab value of $129,000. And you haven’t factored in your closing and holding costs which could be as much as $10,000. Also if you have to sell it through a realtor there goes another $7,000 - $8,000. You’d end up losing money on this house.

Look for a house that you can lowball an offer on, not increase an offer above what the seller is asking. Don’t worry about losing a house because others may bid it up. Sounds like your competition are consumers. You’re an investor who needs to make a profit. The deal has to work for you.

Re: VA foreclosure - first deal? - Posted by Scott

Posted by Scott on June 11, 2000 at 21:43:11:

Phil, thanks for the response I really appreciate it. When I ran the nos. it looked that way you helped me confirm what I thought.
In the meantime, I have found another house. In the same subdivision this is a house that went to foreclosure and was purchased by a realtor. He is selliing for 115k. The appraisal is 127k and houses on the same street with similar specs have been selling in the 130-140 range. This house needs nothing!
Any advice on how I should proceed here? I made an offer contingent on my inspection as a weasel clause in the contract. I feel confident this house would sell very quickly at 125-130k.
What I would like to do is turn this property over, since I can’t qualify for a new loan myself. Any ideas on how to approach this one?

Again, my sincere thanks - maybe someday my ‘newbie’ status will be revoked!

Re: VA foreclosure - first deal? - Posted by phil fernandez

Posted by phil fernandez on June 12, 2000 at 09:26:50:

Hi Scott,

Do you know what the realtor paid for the house? That would be valuable information to have. Don’t take the realtors word on what he paid. Go down to the county/city offices and find out for sure. If FMV is between $127,000 - $140,000 why is the realtor willing to sell for $115,000?

From your last post, I believe you mentioned that you are in a hot market. Will it stay hot throughout the next few months with the Feds increasing rates?

These are all questions that you will need answers to. Not trying to rain on your party and this deal seems better than your other one, everything will have to go right for you to realize your profit. By right I mean a quick sale to where you do not take title. How long will the realtor let you tie up the house? If you aren’t going to take title, certainly the longer the better.

Once you get it under deposit, you will have to market the heck out of it. Do you have prospects for the house at this point?

And put as small of a deposit on the house as possible and insert a clause with your offer stating that the seller’s recourse for liquidated damage will be limited to the amount of that deposit.

Good luck.