why is this house still available - Posted by jim

Posted by JohnBoy on February 16, 2002 at 17:34:41:

$300k for a $350k house that needs to be finished isn’t a deal. That’s why it’s still sitting there.

Now get it down in the $250k range and then there’s a deal!

Listing with a realtor to get it sold for $350k after it’s finished will cost you $21k in commission!

Then figure 6 months holding costs that could cost up to $18k.

Plus the cost of finishing the rehab.

So after all that you’re into the deal for about $50k right there!

So offer $225k and see what they come back with. Then see if you could get it for around $250k! Then you have a deal worth considering.

why is this house still available - Posted by jim

Posted by jim on February 16, 2002 at 16:31:59:

There’s a bunch of RE brokers in my area that buy distressed properties, fix them up themselves, and sell them, just like private investors from this site.

One of these brokers is selling a house for a couple who are going through a divorce. They have rehabbed most of it themselves, but for some reason stopped MIDWAY through putting vinyl siding on the house; half the house is re-sided and half the house looks like hell.

According to the listing agent I spoke with, that’s about all that’s left to be done to get the house in sellable shape.

They’re asking 300k and she, the agent, says it will sell when done for 350k … it’s a BIG Victorian with 50 feet of frontage on a pond … she says they just sold a comparable house a month ago for around 350k.

So this obviously has me thinking (finish the siding, make 40k, or even in a worst case 20k or so). BUT … why is this house still available if it’s such a good deal?

I asked why her boss, the broker who does rehab’s himself, doesn’t do this one himself too, and she said that they let lots of them pass because they just can’t do them all, and because the owners have already done most of this one themselves.

I’m considering putting in an offer and flipping it to an investor I know, but being new to this game, I’m wondering: Is it possible that all these people in the rehab game in my area have missed this opportunity? Why hasn’t the broker tried selling it to other rehabbers he knows? Why is it that either 1) no one knows about this, or, 2) everyone is passing on it?

Can anyone shed some light on this for me? Thanks in advance. I appreciate it.

P.S. I already know and am willing to do my due diligence as far as checking out market values and inspecting the house, and all that. Just looking for opinions BEFORE I spend time doing legwork.

Re: why is this house still available - Posted by jim

Posted by jim on February 16, 2002 at 18:47:24:

JohnBoy is right (as usual). I don’t know what 350k will buy in your area, but in some areas 350k is considered “upper brackets”. If the housing market in your area begins to soften, the upper brackets will be hit first and hardest. So when you go to sell this house, it might not bring near 350k. You should consider this in your evaluation.