Posted by Marlon on February 26, 1999 at 23:16:26:
The house doesn’t need any repairs. The owners wanted to sell because they live out of town and feel they are too old to become landlords.
What do I do next? - Posted by Marlon
Posted by Marlon on February 26, 1999 at 19:24:46:
I am at a total loss at what to do. There is this house that I finally got under contract. The house is appraised at 32k and the owners were asking for 25k. I took a risk and made an offer for 13k cash. They turned me down at first but called me back a week later and said they would do it. Well, today I called a few of the investors on my list. I figured this would be easy because one of them owns a house in the area selling at 35k. Two of the investors never asked me where it was located or the condition of the house. All they wanted to know was how many bedrooms it had and how many floors. From that info they were able to tell me how much they would be willing to pay - which is much less than what I have it tied up for. I still have about 7 more investors on my list but I was told by a third investor that I would never get that much no matter where it was. Maybe I went about this the wrong way and just don’t see where I went wrong.
Any suggestions would be appreciated.
Re: What do I do next? - Posted by David Alexander
Posted by David Alexander on February 26, 1999 at 23:36:24:
If it truly needs no work and will sell for 32k try this. Start looking for Hard Money Lenders, look in your yellow pages, they are the ones that loan on equity not credit? You can run an ad for a loan and at that low of a loan to value, will probably be able to get the money. Find where your local RE Clubs are and find principal notebuyers who work with rehabbers. Once you have the property bought you can sell with Owner financing and enjoy the cash flow, sell a note there will be lots of options.
How long did you give yourself to close? And where are you located? That last question should get you some emails.
David Alexander
Re: What do I do next? - Posted by JPiper
Posted by JPiper on February 26, 1999 at 20:46:21:
The first mistake perhaps, at least with these first few investors, had to do with not determining what it was that they wanted, what type of house they bought and under what terms and conditions. You now know what they won’t do??the question is whether you know what they WILL do. Hopefully your conversation today led to answer on that question.
The next issue has to do with the appraisal. There are appraisals and then there are appraisals. Understand that the true value of the property has to do with what someone will pay for it in an arms length transaction. Supply and demand as they say. The value of the property is not determined by an opinion of someone?.not even an appraiser. An opinion is just that?..although a QUALIFIED and ASTUTE appraiser may well be qualified to give an informed OPINION as to the properties’ ultimate value. Appraisals can be done by a seller, a lender?.and depending on who hired it done?.there may be a vested interest in the outcome. The point here is that relying on an appraisal is something I don’t do. I check the value of ANY property I buy myself?.I don’t rely on third party opinions.
The next issue has to do with repairs. You don’t say what repairs are necessary. But clearly if this property needs $20K in repairs it’s no deal. I’m assuming though that this is not the case?.but the point here is that it’s difficult to evaluate this deal without a repair number. Your potential investor will take this number, along with his profit expectation, to evaluate whether this is really a deal or not.
Finally, just because someone calls themselves an investor doesn’t mean they are. The newspapers are full of ads run by people with no cash?.people looking to locate a deal that they can flip. It’s possible that your first few “investors” are investors of this type. You need to get to the “real” investors. Further, the guy with the house on the market for $35K may not be able to sell for that price, or he may be selling with terms, or he may be out of cash until he sells the house.
Having said all this, here’s the steps I would take. First, I would get a firm handle on my repair cost, and see if this deal is going to make sense to someone else. IF it does, call the rest of your investors.
Second, if your contract has enough time in it, I would run an ad. Perhaps “HANDYMAN SPECIAL”?.MOTIVATED SELLER?.MUST SELL CHEAP THIS WEEK?..ALL CASH?.XXX-XXXX. Or something along these lines. Build your list of investors this way, rather than through the “I Buy Houses” ads. Many times, as I said above, these investors are not real.
In the event these steps above don’t work, hopefully you have some contingencies in your contract that will enable you to walk from this deal?..that’s what they’re there for.
Post some details on your repair costs, and perhaps this will shed some light.
JPiper
Re: What do I do next? - Posted by Jay
Posted by Jay on February 26, 1999 at 19:37:15:
Hi Marlon, dont panic. As long as you included the
proper clauses in your contract then you are ok. Call
the rest of your investors and see what they say. I
also have a list of investors in my area in here in
Dayton, so I would be willing to help you out if your
last 7 fell. Let me know how it comes out. I just
got a draft of my contracts today that I had my
attorney draw up. Good luck.