i found a property that is fsbo … has anyone assigned a contract to wholesale a property like this. is this ethical any help would be apreciated thanks BigShem
I don’t see any problem with getting a fsbo property under contract and flipping it to an investor. Why would the owner care, they just want to sell their home?
okay the fsbo ive been comming across are asking way to much for there homes …there asking prices that are treated as if they were new homes… one in particular nice 3 bed/ 1 1/2 bath … 1 acre of land it needs some paint has carpeting but i’d re do the hard wood floors underneath… and spruce up the yard a bit…and viola i have a cool house to sell right… wrong this guy wants 240,000 houses in the area that are fixed up go for that much… now does anyone know how i can negoiate to try to get this guy down abit to make it atractive to other investors… :-\
I’m a new realtor so bare with me,how about just telling him straight what and why you think he’s asking for to much,get comps. ran,and in the mean time keep presenting offers to other people,but continue to follow up with this guy also,but from my understanding if their not really motivated by either a job loss,death,relocation or they have another house an paying two mortgages you may be just wasting valuable time,what if none of those unfortunate situations are the case and this person does have the money two carry two mortgages why would he sell to you for less when he doesn’t have to,well that’s just my 2cents
okay let me explain a bit … the house has been in his family for 70 yrs or so, hes recently lost his job, and just had heart surgery… there is only one mortgage on the house 84,000 remaining wants the other to i guess move on… now he has told me he’s had several realestate agents to his house wanting him to list with them… but he refuses why i have no idea… they told him his house would only bring in 180,000 tops in the condition its in now… im thinking of offering in between 200,000 to 210,000 fix it up just to get to sell higher than that it would probably cost maybe tops 4 to 5 thousand for the fix up… i’m thinking i can get atleast 270,000 to 290,000 for it… now tell me if this sounds like a good deal… but first i have to get him way down on this pricr… any suggestions out there… or should i just move on… ???
It sounds good,but like I said I’m new so I’m going on the numbers you presented,but just like you I’m puzzled now because this guy has lost his job,etc plus realtors offered to list his property,well due to the job loss he’s probably trying to keep whatever money he has,in his situation he’s definately a motivated candidate,stay busy with other people,but don’t forget about him as time goes by his mortgage still has to be paid,keep work on him,and if your looking for deals I have properties available,but I’m in the state of Maryland,but if you brought through me you’ll have a partner,two heads is better than one.
Okay new dilema for the evening… I have a new potentional client. He wants out of the house asap cause of job… he tells me that he would like to get 350000.00 for it.its fmv is 320,000.00 its asseced at 210,000.00 now the comps in the area are between 320 to 370’s… now this guy really wants me to put this under contract… for him… i need to know from someone smarter than me which way to go with this one… or should i move on…
A $320K house for just $350K?? Such a deal…!
First, don’t worry about what the property is assessed for. In most cases, tax assessments in now way reflect any sort of reality!
Second, this is a ‘no-brainer’…this guy “wants” $30K more than the property is worth – and people in Hell “want” ice water.
Move on…try to find a real deal.
Keith
Thanks , Kieth
now would i have to advise him to come way down in his price… or tell him to list with a realtor and move on… any opinions
Either way, unless there is something that we’re not hearing, the house is going to sit on the market. People rarely pay $30K over value for a property…I guess it only takes one buyer that sees something that others don’t, but…
Stick to properties that are under retail, not over!
Keith
Thanks Kieth,
i just told them that it wasn’t going to work out… i told them i’d offer them 260,000 for it do you think this is still to high or what do you think how low i should offer without insulting them thanks Shem
Kinda depends on your business model and exit strategy. If you are going to resell, the conventional wisdom says:
Max Offer = (FMV X 70%) - (Rehab + Holding costs)
That’s about $224K less holding and fix-up costs…
Keith
Kieth you so sart…lol thanks i don’t know y i didn’t think of that my mind is in such a fog today thanks again
Hello, Shem-
First of all, good job finding those leads! Even though they might never work out, look at all the knowledge you are gaining.
I have a reply on the first property you described; the man who just had heart surgery. These comments will apply to most any deal you become involved in.
1. Why do you think you can get 270-290,000 if all the comps are coming in at $240,000?
2. Are your comps from within a 6-month time frame and are they within 2 miles of your potential property?
3. Are you doing your own rehab or contracting it out? Remember to bill for your time if this is your job.
4. Are you presenting yourself as a problem-solver and an ally to the seller? He is going through a tough time right now- use empathy, sympathy, and quiet confidence that you will help him through this in a quick manner. Then he can move on, if that is what he TRULY wants.
5. Use the formula Max Offer= FMV x 70% - (Rehab + Holding Costs)
Best of Luck!
Deb
Keith, i just relized i misspelled your name backward i appolagize. i do’n’t want you to think i’m dislecsice or anything…lol.
Deb also Thank you for that insight … I wrote down those rule’s of thumb… i do notice however that people over here are trying to compare thiere homes to new home prices and they think they can get top dollar for them… which is logical i personally think if i were in that situation . now i’m not knocking realtor’s or anything but… i think there pumping these people up… just to get them to sign with there company.now i do notice that house that are listed in my town and surrounding area are sitting alot longer??? i don’t know why this is i don’t know if its cause of the econimal stuff thats going on now, or what or maybe around herethey have maxed out the new homes devolpment are going up faster than i can blink…but for now i’ll still keep up with my leads that i’m getting and try to wholesale them and use the formula you and Keith gave and keep at it… thanks Big Shem
p.s any insight on what i said tonight would be helpfull please feel free to answer…
<<Keith, i just relized i misspelled your name backward i appolagize. i do’n’t want you to think i’m dislecsice or anything…lol.>>
Not a problem. You should look into joining DAM (Mothers Against Dyslexia)…LOL
<<… i do notice however that people over here are trying to compare thiere homes to new home prices and they think they can get top dollar for them… which is logical i personally think if i were in that situation.>>
Older homes shouldn’t be compared with new homes for a price point. New homes are, well…new. Most also come with a full warranty. My home came with a 2-year “bumper-to-bumper” waranty. Anything wrong will be corrected by the builder (who lives down the street in the development).
I will say that some higher-end homes can be compared somewhat favorably with new homes but it’s still not the same. A lot of Realtors are smoking bad dog food when they price properties – it’s a dream price that they’d like to get. In their defense, though, it is often the owner that thinks the property is worth that.
Now if you are just starting out and want the experience more than the money, that formaula can be adjusted to, say 80% and you’ll have a thinner profit margin but a higher chance of getting the property.
Keith
Thanks Again Keith, I like the insight.now heres another dilema as i was typing this last night i get another call??? so i talk to them ,these folks live in a devolpment around here known as ritch folk there is a mansion caompared to other homes. There asking 489,000.00 for there house so i used your formula there , so went with the 80% xfmv and come in just under 400,000.00 + i added fees and such +my assignment fee i was going to do 5% and this all comes in at 443,000.00… now i present this with them and in amazement they went for it… now i have to find an investor who is looking for a house that big… any suggestions on that one… becuse this house needs no repair and has 5 large bedrooms 3 baths and a hole bunch of other goodies… any help on this one would definately be helpful… Thanks BigShem
Shem…
You need to multiply the Fair Market Value by the 70 or 80% factor then SUBTRACT fees, etc., not add them!!!
This should have come out to $400K - 43K or a max offer of $357K
If you signed a contract, you may be in trouble here…go back and re-read the thread in its entirety.
Keith
Keith,
I hope you can get out of this one!! My other bit of advice for a house this costly is to look for investor/buyers before you sign on the dotted line. If what you are saying about the length of time houses are on the market in your area is true, then this one won’t sell quickly. Are you primarily operating as a wholesaler? Have you created a list of investors to contact when you find houses?
By the way, what sort of contingencies do you include in your contract in terms of being able to rescind it with no loss of respect or money?
Best of luck-
Deb
Keith , relax i did it the right way the way you told me to. iwas just seeing if you paying attention .i actually got them down to 328,000.00 they want to move to florida… anywayi figure i can whole this one do a double close and possibly walk out with a little scratch in my pocket…
Deb, i think you have keith and i mixed up… anyway nothing done in writing yet i do have to find an investor who wants this home… then i’ll have my lawer draw up the contracts then we’ll do the deal…!!! Thanks BigShem