Got my first property under contract

I found a rehab house on Craigslist…

Asking $62,000… It had no major structural problems… Just needs some new carpet, a window, and a few other minor things…

After looking at it, I started doing the “analysis paralysis,” thing and wanted to find comps on Zillow. I couldn’t find any…

I realized I just needed to get the thing under contract… I got it for $59,000…

4807 Balboa Drive
Orlando, FL 32808

I noticed the guy who sold it to me was not the name on the property appraiser… I think he was another wholesaler…

He asked if I was one, I said yes and he said “just what I’m looking for,”…

Now, I have to get it sold and I think some comps might help me with this.

I noticed running my RV park that sometimes, just by asking for a higher price (rent), you will get it…

I’ll try to sell it for $68,000…

But I also don’t want to get so greedy that I end up not being able to sell it within 21 days…

Hi,

That's great and may not be great! 

First if you want $68k and this property needs $4k worth of work this house needs a FMV of $104k or so, so what did the comps tell you value was?

Never ever buy from another wholesaler to sell to your clients, to much mark up of value! My guess is this house is only worth $90k or so based on the original sellers numbers! This means you grossly overpaid and you probable won’t find a buyer!

Now you can joint venture with another wholesaler where the two of you split one margin, but buying to theoretically pay one mark up and then thinking you have room for a second mark up doesn’t work! This is when you have a buyer and the other wholesaler has the house!

It also effects your reputation as this seller (Real Wholesaler) is going to spread the word when your first contract fails!

I think you will need to sell this property for $59k allowing for repairs and a 30% pristine property margin! This means by the time you pay closing costs you will lose approximately $2,655 in purchase and sale closing cost’s.

Don’t ever, ever, ever buy a property without running the comps on it and knowing factually your after repairs fair market value!!!

Dam I could have given you a $300k contract on a $100k house months ago!

                       GR

Hi,

You actually walked into a pile of crap on this one, not only did you make a huge mistake not checking comps (Sold Property) but you just made a $59k contract in a neighborhood of  $24k (Fixer) to $84k (Retail 1700 sq. ft.) home sales. There is no way that house is even worth $70k fixed up.

THIS PROPERTY 4807 Balboa Drive Orlando, FL 32808 JUST SOLD FOR $55K on APRIL 17, 2016, IT WAS LISTED BY KELLER WILLIAMS REALTY!

There goes your first failure as a wholesaler. Cancel the contract before you even bother to move forward!!! This guy just sold you this house for full retail value!!!

If your going to make an offer on a house and the house has been remodeled in the past 5 years, has no deferred maintenance and needs no work to be lived in or close escrow then offer no more than $0.70 cents on the dollar. $100k home offer no more than $70k!!! Look !!! Look !!! Look !!

If that home needs $10k in carpet, paint, deferred maintenance, appliances, air conditioning service, new water heater, etc. subtract $10k plus your closing cost and margin from your offer! $70k - $10k - $5k - $1.1k = $53,900 is the maximum offer on the home! Not a penny more!!! Look !!!

Now this is your best way to figure out what’s a treasure and what’s trash!

1. Look at the property, take a close look at pictures online if available. Assess the condition of the house, if it does not look like a brand new home inside then it probable needs work.

2. Enter property address into Zillow! Pull up property address, set parameters for listing type (Red / Yellow colored icons) yellow are sold, each property when opened tells the sale date! The sale amount is accurate as it’s fed to Zillow from sold data. Look for same sized property that closed in the last 90 days and 1/4 mile, 90 days and 1/2 mile, 90 days and 1 mile, 180 days and 1/4 mile, 180 days and 1/2 mile. This is a fair idea of value!

3. FMV minus 30% (pristine) minus (repairs, rehab, remodeling cost) $10k minus (Your markup) $5k minus (Your closing cost purchase) $1.1k = $53,900 dollars in US currency.

4. If the interior does not look like the picture of a new home in Sundays “New Home Section” it will need work before it’s sold to an end buyer! Every item inside will probable be repaired or replaced to make it appeal to an owner occupied buyer!

5. If your offer is excepted and you made it blind you have to get comps from your realtor on your team to verify value, you can’t go in blind on a contract and although Zillow information is accurate it does not accurately provide the same data an appraiser would use!

6. If your just not going to do the leg work you might as well get out as you will go bankrupt quickly and your reputation will be ruined.

There is no reason to make an offer and sign a contract for something you can not sell!!!

                        GR

Well I just wanted to get something going. At least this is experience if you can call it that.

I thought if I posted about running comps, you’d say I was over thinking it.

I’ve noticed that there are not always similar houses in an area.

Affect my reputation to who? He will tell other wholesalers? Why would this matter if I’m not supposed to be dealing with other wholesalers anyway?

I will try to sell it anyway and can always get out of the contract if I can’t.

Here is the report about the property you told me about

http://mfr.propertykey.com/imapp/viewer/4bb60c0a1b1fc0fa44255113d116fff8

Do you notice that it says estimated sales price of $58,000 and you quoted me $105,000?

What accounts for that difference?

That’s okay that this one didn’t work. That’s why it’s the first one… Obviously, none of my buyers have shown much interest, but at least I have experience talking to them now…

By the way, I can’t “cancel the contract,” because it’s something that I signed.

I can hope that my escape clause works… And these are all the problems that I was foreseeing when you told me I was “over thinking it,”…

Hi,

Actually an escape clause (Contingent On) is good right away, 30 seconds after signing you can cancel your contract provided you have those contingencies. 

Now your real estate agent has bad information as I want you to do your own homework!

These are comps for 688 Walkup Dr. Orlando, Florida 32808 1221 sq. ft.

This is within 1 mile and 1 year.

614 North Pine Hills Rd. Orlando, Florida 32808 Price per sq. ft. = $88.79
Sold 2/19/16
$130,000
1464 Sq. Ft.
Lot: 19,602

403 Dover St. Orlando, Florida 32811 Price per sq. ft. = $94.85
Sold 8/6/15
$105,000
1107 Sq. Ft.
3 Bedroom / 1 Bath
Lot: 6,246

340 Dover St. Orlando, Florida 32811 Price per sq. ft. = $94.50
Sold 4/4/16
$104,900
1110 Sq. Ft.
3 Bedroom / 2 Bath
Lot: 6,255

121 Mandrake St. Orlando, Florida 32811 Price per sq. ft. = $122.98
Sold 1/11/16
$130,000
1057 Sq. Ft.
3 Bedroom / 1 Bath
Lot: 6,969

5002 W. Robinson Orlando, Florida 32811 Price per sq. ft. = $123.47
Sold 3/24/16
$121,500
984 Sq. Ft.
2 Bedroom / 1 Bath
Lot: 12,196

And right down the street from you for sale today - Remodeled

673 Walkup Dr. Orlando, Florida 32808
For Sale
$111,900
1594 Sq. Ft.
3 Bedroom / 2 Bath
Lot: 9,199

Now Redstar before you except these bogus comps from your supposed Real Estate Agent do your own homework!

In order to understand FMV from as is value you need to learn to understand the comps!

Your real estate agent did not send you 1/4 mile, 1/2 mile and 1 mile, she sent you 32808 data which is north of the subject property! Nothing west, nothing south and nothing east!

You need to learn to do your own homework or recognize when your agent is sending you bogus information!

An appraiser will have to go out to 1/2 mile or 1 mile to find comparable remodeled sales in the past year! There is virtually nothing 1/4 mile and less than 90 days old. Remember the more square footage the less the sq. ft. sales price will be!

                  GR

And by the way you don’t have to copy the text above you as a quote, just write to the topic and post!

Did you find all of those comparables on Zillow?

Once I get good at this, I won’t even need a realtor.

Hi,

YES, the sold data on Zillow comes from actual sales! 1/4 mile, 1/2 mile and 1 mile is "As the bird flies" and not driving mileage!

You should still double check comps data before you except a contract you write blind as data can change over time!

        GR

Okay I’ll do that.

Buyers told me they would pay no more than $55,000 for the house I got under contract.

I told this to the guy I bought it from and he said he’d drop the price to $54,000, so hopefully I’ll make $1,000 on that.

I wud never tell my seller what my buyer is willing to pay, you just lost out on thousands of dollars.
Here is how it shud be played.

Mr seller, I know you want 55K, my partner has looked over the property, because of the condition, the area, and the amount of work and time needed & risk involved. We are willing to do 50K.
I can’t do 50K, Now remember, we pay closing costs, and there are no Realtor fees and we are buying as is.
I wont do 50 I cant. OK, my partner is going to be pissed at me, If you can do 52K I’ll take the heat, and we can get this done. OK I’ll do 52K
Now you made 3 grand cuz you got some gonads and negotiation skills.

:beer

Hi,

Something is bothering me, I started thinking after reading Rando's post about your adjustment of contract price based on what your buyer (s) told you, but tonight I went back through the sold properties in the one mile circumference of 4807 Balboa Drive Orlando, FL 32808.

I really had to search hard to find a couple of comp (Sold) properties as there are over 100 low value sales in the last couple of years and only a handful of remodeled sales of a sufficient value to calculate some kind of FMV! I had to calculate lot sizes and count the number of lots to make sure I was clearly within 1 mile.

The thing that is bothering me is there are at least 2 or 3 comps (Sold) properties in that area that project FMV after fix up in the $101k to $113k price range, so if a pristine property is bought at 70% or $70.7k to $79.1k for a home in recently remodeled (Last 5 years) with little deferred maintenance and no repairs required and you stated that the house needed and I quote “Just needs some new carpet, a window, and a few other minor things…”!

So if it needs carpet $1,600 and a window (Double Pain Low E) $500 installed and a few other minor repairs $1,900 for about $4k in repairs!

Why did you go ask for a contract change because the buyer you have said he would not pay more than $55k? I think the problem is that the evaluation you made about condition and repairs / remodel is grossly under estimated? According to your $54k contract and $55k sale price this tells me this property really needs $15k to $25k in actual real repair cost?

Or you basically let your buyers run all over you and the rooster is controlling the hen house? Unfortunately you are doing this deal live with all involved, you probable need to convert over like I told you and send these “Wholesale Home Available” notices to your investors by email! That way an investor expresses interest based on your price or range pricing (Range pricing is a spread the home is expected to sell for.) that way it forces the buyer to make market and condition assessment and either respond positively with a price offer, or not respond!

You can ask for feed back from investors after the deal closes 10, 20, 30 or 50 days later just to see what the investors thought?

I tend to believe in this case that you are really under estimating what it costs to bring a home up to remodeled condition which is why the difference, but you’ll never know until you gain more construction knowledge!

I am also positive you had absolutely no idea what FMV was before you made this offer and that’s spinning your wheels if you expect to do more properties. You have to check comps before you make the offer, whether it’s the way I did it tonight looking at the sold data on Zillow or getting actual comps from your real estate agent, the agent needs to learn how to set the 1 mile radius criteria on the MLS dash board before sending the comp link!

This makes sure the property is the center of a 1 mile circle with all sales for the last 12 months, remodeled properties are hard to see when you have a bunch of low priced properties as sold!

                   GR

You can also your negotiating skills on the home buyers, the Investors are a bit more difficult to finangle. But I do it.
Now, Mr. Buyer, I know you will only pay 55K for this property, but seller is holding out and he will get it, remember this house has hardwood floors and its in that desirable area. . If you can come up to 57K we can get this done.
Sometimes these back and forth negotiations can make you thousands. I know.
Rando

I’m hearing and listening to everything you guys are saying.

This is the first one, so it’s okay if it was a bit amateurish.

The next one will go better and the one after that even better.

I got my seller to come down to $51,000… So I should be making some money on this one…

Gold River,

Do you happen to still have the address to the comparables you found of 4807 Balboa Drive?

I looked, but could not find. I still need to work on my “comp,” skills.

How do I know what listings on Zillow are remodelled or need work unless it specifically says so?

It might say, “recently remodelled,” and it might say, “needs work,” but sometimes it says neither.

Hi,

Look at the photo's provided in the listing!


            GR