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Author Topic: i'm new, is this right for wholesaling?  (Read 3047 times)

Offline hhughesmi

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i'm new, is this right for wholesaling?
« on: September 16, 2007, 10:00:49 pm »
want to know if i'm thinking of this the right way...have a house thats listed on mls for $400,000 it will appraise for about $850,000 (lakefront/6acres), not a "puffed-up" value"..i want to put it under contract (PA with sellers) and then find a buyer (preferably cash) for at least $450,000..is this whats defined as wholesaleing the property and do a lot of buyers have an issue with the property being listed on the mls?

Offline BrandonModrov

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Re: i'm new, is this right for wholesaling?
« Reply #1 on: September 16, 2007, 10:24:59 pm »
For a first deal you may have struck gold.

The numbers you speak are an excellent deal.  Think about it you have a property that you say they are asking .50 on the dollar for.  If thats the case then go for it.

You shouldn't have a problem finding a buyer for that deal.  Also they shouldn't care at all how you found the deal.  A deal is a deal no matter how you found it.

They will just be concerned with the property and the numbers.

Nice work!
www.WholesaleRealEstateSecrets.com
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Offline hhughesmi

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Re: i'm new, is this right for wholesaling?
« Reply #2 on: September 17, 2007, 07:31:38 am »
great! how do i find the "cash buyers"?

Offline fdjake

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Re: i'm new, is this right for wholesaling?
« Reply #3 on: September 17, 2007, 08:21:02 am »
Something isn't right here. 

First off, if ANYTHING came on the MLS now a days that had an INSTANT
$450K of equity in it?  It would be the shortest listing in the history of the MLS system.

Second,  Those types of deals (TON'S of Equity) are known in the business as "shirt sleeve deals."  In other words, the realtor keeps that listing "up his shirt sleeve" and IMMEDIATELY calls his best buyer, (or better yet, his brother) the buyer grabs  it, full asking price, deposit in hand, no strings, DONE.  He closes ASAP.  It is then relisted at the $800K number and the realtor gets 2 commission checks totaling $72,000!!!!  ($24K for the $400K sale and another $48K on the $800K sale) Now technically, what I just discribed "NEVER" happens, it's unethical.  Yea right.  It happens everyday.
There is absolutley nothing wrong with that realtor calling a proven buyer with a great deal.  By some laws he SHOULD have listed it first, but in reality he didn't.  He gets a verbal agreement from his buyer and then lists the property.  Everyone who calls is told "sorry, it's already in agreement" which is true.

With that in mind I can't see how this property is STILL on the MLS with what you say is over a 100% potential return on investment.
I've be doing this for 20 years, those deals NEVER make it to MLS in my experience.  I think you may be missing something.  Unless you have inside info. An upcoming approved developement going in next door where they'll be building million dollar homes. (I have seen that happen)

Another thing you might want to check out is the zoning requirements for 6 acres on that lake.  How much lake frontage do you need to build a home there?  Is the lot pie shaped with only 100 feet on the lake and the rest in back?  I live on a Lake.  I can tell you this in no uncertain terms.  Lake front acreage NEVER makes it to market if it is priced right.  The neighbors down there would have eaten this thing alive before the owner EVER got a chance to call an agent.  The last 6 homes on the Lake I live on all sold through word of mouth.  Never had even a sign put on the front lawn.

Just check it out.
« Last Edit: September 17, 2007, 09:32:10 am by fdjake »

Offline Monte7101

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Re: i'm new, is this right for wholesaling?
« Reply #4 on: September 17, 2007, 10:03:01 am »
Find your buyer first!

Offline Rich_in_CT

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Re: i'm new, is this right for wholesaling?
« Reply #5 on: September 17, 2007, 10:59:08 am »
Nothing that far under value lasts more than a few days.  Where is the estimation of price coming from?

Offline hhughesmi

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Re: i'm new, is this right for wholesaling?
« Reply #6 on: September 17, 2007, 12:09:01 pm »
2 appraisers preliminary value from comps only, they have not been out to the house as of yet

Offline fadi

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Re: i'm new, is this right for wholesaling?
« Reply #7 on: September 17, 2007, 12:35:41 pm »
It this price range in your city considered a luxury home?
Location: San Antonio, TX
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Offline Rich_in_CT

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Re: i'm new, is this right for wholesaling?
« Reply #8 on: September 17, 2007, 12:42:18 pm »
2 appraisers preliminary value from comps only, they have not been out to the house as of yet
Have you been to the house?

If the comps are all new inside with new marble countertops, stainless steel appliances, travertine and hardwood everywhere, etc versus your home that may be trashed inside, may have 1970's everything, and a mold problem how do you know you are getting a deal?  You first need to see inside this house if you haven't already.  Next you need to find out specifics about the comps.  Maybe you can have your realtor dig up the MLS listings from when they were listed and see what amenities were listed.  You also want to be sure they are RECENT comps.  Old comps and toilet paper have a lot in common.

Offline Rich_in_CT

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Re: i'm new, is this right for wholesaling?
« Reply #9 on: September 17, 2007, 12:47:25 pm »
Also, and last but not least......luxury homes don't move for beans when the market goes south, they also often take the biggest price hit.  I think Fadi was hinting at this in his post, think that's why he asked.

Offline BrandonModrov

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Re: i'm new, is this right for wholesaling?
« Reply #10 on: September 17, 2007, 02:15:09 pm »
That explains a lot.  You would for sure have a good deal if you have been through the house an actually taken a good look.  But without doing that your numbers could be very off as many have already mentioned.

What's holding you up with seeing the property?  If there was that much chance of equity in there you should be there first thing.

How long has it been on the market and how old are the comps?
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Offline fadi

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Re: i'm new, is this right for wholesaling?
« Reply #11 on: September 17, 2007, 03:20:03 pm »
Also, and last but not least......luxury homes don't move for beans when the market goes south, they also often take the biggest price hit.  I think Fadi was hinting at this in his post, think that's why he asked.

Yes... if you are in an area where average house price is $600k, then this could be a good deal. If the average house is $100k, then that is a different story.

I have seen an $850k luxury home in San Antonio offered at $550k. I went to the house. From outside, it looked absolutely fabulous! I fell in love with it. But after walking through it, I realized I need to redo the tile since it was out dated and redo the kitchen and buy new appliances and A/C unit. My cash partner who happened to be an inspector and visits luxury homes often said the entrance had to change because the master bedroom's door was in your face as you entered and stairs not in the right place.

Estimated rehab was about $75k, estimated time on market for this price range and comps was 6 to 9 months, add the rehab time and calculate the Property tax + insurance + mortgage payment + closing costs + realtor commission for a year.

At first glance, the house did not need any work at all... it was just out dated.


A friend is trying to sell her luxury home for about a year now, its her house and comps shows it is worth $900k. But the house layout is really out dated and I can't imagine any new buyer would buy it in its current layout. Kitchen too small for example. I still think she will lose it to foreclosure before she can sell it.

Luxury homes are a different animal... one way to do them is to auction them if there is such a large spread.

Now, is it worth looking at? absolutely... end buyers may not want it, but you might be able to flip it to an investor for $10k or $15k.
Location: San Antonio, TX
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Offline streamlinesolutions

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Re: i'm new, is this right for wholesaling?
« Reply #12 on: September 18, 2007, 01:28:12 pm »
Hello HHughes

We have had several $million+ homes here in MI under contract that are appraised for twice what we are selling them for.  We've not sold one in months. 

I've found the key to wholesaling is to have a strong buyers list before you get the home under contract so whenever a home falls in your lap you have a SERIOUS buyer that can pull the trigger immediately.  Steve Cook has a pretty good article on this site for building a buyers list and Eric Medemar had a post that went into pretty good detail.  Do a search.

The only success stories I have heard with selling these homes are through auctions.  The Redfield Group has come highly recommended to me.  Anyone else have any input on them?

Tim

 




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