Motivated seller wants me to wholesale her home.I don’t have access to her place because current occupant can’t seem to allow me access to the place… Due diligence completed and got her to accept my lowball of $10 K less her asking …She gave me the occupants contacts.She even called to ask them to call me and set a date for me to go over…I drove by ,house looks decent…not in a war zone…but I need to see the inside…or do I ?
Is this where ,it is really not that crucial to see the place ?..she was willing to sign my contract even before I saw the place. Is this where Wholesaler’s prowess kicks in…after all don’t we just need a Laptop,cellphone & fax number? :help
I believe its safe to reason that your buyers aren’t going to buy it unless they can get inside. How in the world can they estimate what the property needs in repairs without seeing it? For her to want to sign the contract before you looked at the place, she must be MOTIVATED SELLER. :bobble Why exactly can’t the occupants not let you have access inside Marma? Are they refusing too or what?They might be fearing that if the property is going to be sold, they’ll have to move. Then again that could also explain the seller’s ultra motivation. The tenants could be deadbeats. If the seller’s tenants are good tenants, they wouldn’t have a problem complying with the seller’s request of having you to check out the inside of the property.
Thanks for the response…turns out I had the wrong phone#…I just spoke to the tenants and on my way to se it.
I’ll update you sooon as I get back.
:smile
Made the meet…saw the house & the hiccup is that a death of a parent as left one sibling in-charge after a will…and the other’s pleading her not to sale their ancestral home…sad situaion when you know the responsible sibling is tired of footing the bills & wants to rid themselves of the burden of bailing out folk.
Had to separate ones’ self from the inevitable …sale the house now while it still is redeemable or wait for it to deteriorate and end up saling the house for pennies.
I told the selling party she has a decision to make .
Is this where we grow a second skin to keep from being sucked into emotionally charged situation.One way or the other ,that house will be sold.
Low balled her because the house has more repairs than led to believe.
I want to be cautious & helpfull without falling into bad karma territory.
Any takers?
You still haven’t brought your numbers.
Is this where we grow a second skin to keep from being sucked into emotionally charged situation.
Or you can grow a 3rd or 4th skin, buy one of the family members portion of the house. Now you are an owner and forced yourself right into their family. Now you can legally FORCE the sale of it… And as an owner you have to agree on the price they will sell it to you. And if you can’t agree the sale still HAS to go on and you will get a larger share back on your money if they were able to find someone to pay more than your low ball offer. But you still HAVE to agree on that sale too since you are an owner. So no matter what you win.
I want to be cautious & helpfull without falling into bad karma territory.
Well, I guess my creative real estate suggestion won’t keep you out of the territory of Bad Karma :banghead
Low balled her because the house has more repairs than led to believe.
How about low balling because of the reason of wanting more profit! That is a better mindset for you to have. Your justification to them is the massive amount of repairs but your bad karma inside is telling you that this is business, it is the business you have chosen to do and you are in this business to actually make money, not to do favors. If you don’t try to suck every single dollar out of that property it just may be you that gets taken to the cleaners. And us real estate investors avoid that at all costs. Remember!!! Unexpected things pop up from time to time and if you don’t have enough profit in the deal they could sink you and your family. So you need to toughen up a little Mama.
:beer
Hooch,
Thanks for the words of wisdom…I had time to think about this on my drive back home…I’m justified in low baling,It is business after all & it is what I have chosen to do…I didn’t go out there with a gun to their heads…the middle child is the owner of the house and she responded to my offer to sale her home…now I have to do the part of a creative investig…I DON’T FEEL BAD ABOUT IT ANYMORE…Golden rule leads me to do the right thing…not to be part of a transaction that won’t benefit all it affects.
I’ll update you…I await a response after my feedback follow up email post visit.
Golden rule leads me to do the right thing…not to be part of a transaction that won’t benefit all it affects.
The big question is if the golden rule leads you to do the right thing for you and your family or if it leads you to do the right thing for the buyers and their family. It’s one or the other.
Real “deals” require a winner and a looser. The idea is here to be the winner and make them feel happy about their decision. Make them feel like they are the winner. It is either going to be the investor as the winner or the seller. Fair deals are not investor deals. Honestly, a fair deal is full market value. What they would sell it to anyone else for if they put it on the market for a few months. And how will you ever do what is right for your family (the golden rule) by buying a property for full market value? Just think of it that way. Because you should be looking out for good old number one first.
Now if you have bad feelings about lowballing a seller but you don’t have a problem doing it to banks you should get into shortsales. In that case, if you did your math correctly, it is the bank that gets the short end of the stick rather than an even shorter one by having to acquire the property, holding costs, foreclosure costs and selling costs.
Hooch Socrates,
Thanks for that exploratory take on the virtues/values of ceative investing period…Good news ,I heard from the seller.
These are the numbers.
ARV : $93 K
Repair cost: $ 15 K
MAO : $45 K.
She originally asked for $57 K.Dropped it to $55 K.
I lw balled for $35 K post visit (I admit I ws pushing it )…she counterd with $46K.I can make this work.
I am currently looking at Philly GIS…Market value has not changed for the past 6 yrs & stands at $27,400…this is confusing Hooch…what gives ? What does this mean…total assessment is $8768 …what does this mean?
I checked other comps and I get $53,919 from one & $94K from zillow…how do I do this.
I’m about to lock this but I need some feed back …did I mention I’m doing this with a $0 .00.
My ears are open wide. :help
Forgot to include that my exit strategy is to wholesale…assignment fee $10 K.
I’m telling you, I have no idea what is going on with your local tax assessed values. In most towns across the country they are very close to the actual value. Maybe 10 or 15% below fair market value normally. In many areas 30% or so high in the current economic conditions. The government likes money and usually they get every penny they can. This is the only thing that is throwing me off.
How do you know this ARV Mama? Because you are talking about Zillow and that is NOT the way to determine a properties value. I’m pretty sure Zillow is information obtained from tax records. That even makes it more strange that you are getting $27K on the GIS. Prior to purchase, you need to call the tax assessors office and ask them what the tax assessed value of the property is.
You then need to ask a realtor to tell you what its ARV would be. Since this is your first deal I would like to see you cover your bases in all areas. Especially when there are all of these conflicting numbers.
If you are correct and feel overly confident that the ARV is in fact 93K and the Repairs are 15K than you can pay $45,450 for it. I don’t recall if you were wholesaling it or doing the flip yourself. If the flip yourself than $45,450 is fine. If you are wholesaling it you need to come down more! Enough for your profit as you subtract your profit from the MAO. And do remember that the term MAO stands for MAXIMUM Allowable Offer.
And, you did the right thing by lowballing way under what you would pay. That is what you have to do. They have to feel like they worked you up to walk away with a smile on their face.
If your assignment fee is $10,000 you pay $33, 450 for the property. Make sure you have weasel clauses in your purchase agreement because the all mighty weasel clause is Plan C.
okay listen…I know I’m not to look @ Zillow for a definative value…I looked at comps of home sold close by & they average $80 K…The MAO I had for you is what I arrived at after assignment fee & repair fee subtracted.
So,$93 x %70 -$10- $15(or even less) gets me to $45ish…wholesale the deal.
Mama, I am assuming that the comparable sq ft houses that sold close by were in good condition. Usually the flip deals are the worst house on the block. If a flipper fixed it up to the value of the ones that are in good condition than it would be worth around the same. 80K as you said. So that would be the ARV.
So if you want to use 70% like they were doing in the bubble (more like 65% in most areas today) than you have
80K - 30% = $56,000 - $15K = $41,000 minus your assignment fee.
When you post your numbers, do not put your assignment fee in the repairs. Using this mathematical formula, MAO is a number that the flipper buyer is concerned with. Figure that first, then subtract what you want out of the deal.
You are down there within range. From what you just said, I would pay 41K minus your assignment fee. But, as long as you have weasel clauses I would have no problem in telling you to lock it up under contract and find your buyer if you don’t already have one. This will be a good learning lesson for you even if you don’t sell it. And you will be out 10 bucks for your escrow money down so no big deal.
I locked it & will be a learning experience any way I look at it.So here goes nothing…will be back with update.Wish me the best Socratis. :deal
You’re awesome Mama! Go Get Em’. Looking forward to hearing the updates.
So if you want to use 70% like they were doing in the bubble (more like 65% in most areas today) than you have
80K - 30% = $56,000 - $15K = $41,000 minus your assignment fee.
When you post your numbers, do not put your assignment fee in the repairs. Using this mathematical formula, MAO is a number that the flipper buyer is concerned with. Figure that first, then subtract what you want out of the deal.
Hooch…are you saying that my post should read …asking price is $45 K+ $15 K (repairs) only ?,for a total of $60K ?..then claim my assignment fee from buyer ?..where do I insert the my fee not have I cause an upheavel with the private seller ?
You are doing it right. What I was saying is in determining the value TO THE FLIPPER and when posting your numbers it should look like this.
If you thought the ARV was 80K and the repairs were 15K…
80K - 30% = $56,000 - $15K = $41,000 minus your assignment fee.
The $41,000 is what the Flipper is going to want to pay for it. Then you subtract your assignment fee. So if your assignment fee is 10K you would offer $31K for the house.
So your agreement is to pay the seller 31K, the flipper pays $41K and you get your 10K.
MAO is what the flipper will pay. It does not include your profit.
And I thought you said previously that the 15k that you told me was repairs, also included your profit.
That was my point.
So I did both a Voice blast/Email blast/Backpage/Kijiji/Craigslist /Rehablist.etc…got 2 callers to tel me that they price was too high… @ $55K MAO …I don’t think thats high…okay I asked for $58 K :rolleyes to make the max…I got believe in the power of “…ask and believe…”.
They are quoting $25 k- $35 K to make it worth their while…is that high way robbery or what?..It’s only been a day since my campaign launched…I gotta hear from other folks…YOUR TAKE?
You are right, you have got to hear from more people. Also every where you go you sell it to everyone you talk to. Tell the person in Burger King that you have an excellent wholesale house for sale. And that they will never find a deal as good as the one you’re getting ready to give them. TELL EVERYONE! Tell all of the we buy houses people in your area. Many of them are wholesalers. Go to your local REI meeting and tell everyone. Every single person you run into.
Also, most wholesalers will start dropping their fees if there are no takers. $1,000 is better than $0! Am I right?
Then when all efforts are exhausted, if you don’t sell it, we will talk more about what you need to buy for. This will be very good as it will teach you a valuable lesson. And EVERY SINGLE investor that you talk to that doesn’t want it, ask them what their buying criteria is so you can find them a deal.
Wholesalers are always best off looking for specific property that they already know they will sell. Every investor has slightly different criteria that is “local” criteria. This neighborhood or that. Nicer houses or junkers. Rehab houses or ones that are already pretty much fixed up, etc.
okay I asked for $58 K to make the max…I got believe in the power of “…ask and believe…”.
This is definitely a good way to look at it. Just drop it if needed.
This s school alright…I’m asking valuable questions about what exactly they are asking for.I aso didn’t want to hold steady 2 a price that may be too mhgh…so I emailed the owner with a complete justification for lowering her price…I also unleashed Market value/Tax assesors info I got from the Phily Board of Revision of Tax/Phila.gov /GIS…for her revision.Told her that the investors went snifing & came back with their need to buy at $25 k…because of partially fnished basement,no garage ect…told her I’ll waqit another day to hear from more buyers…but just needed to give her a heads up of the feed back I’m getting.
Hope she gets backto me in good time with a good figure …preferably $30 K…Your take?