Craigslist FSBO property

[Randoskie]

Holy moses Redstar, If ur ARV is correct,  you might have a deal there.
Offer 10K less than his price and settle for 5K less. get it on contract and flip it for 5-15K more than the contract price.
Go for the throat and a get the kill shot.
But, an experienced selling for 50% of value? It cud happen.

[Redstar1324]

Holy moses Redstar, If ur ARV is correct,  you might have a deal there.
Offer 10K less than his price and settle for 5K less. get it on contract and flip it for 5-15K more than the contract price.
Go for the throat and a get the kill shot.
But, an experienced selling for 50% of value? It cud happen.

Just sent him an email with an offer for $76,000.

[Redstar1324]

I talked to the seller and he is insisting that I see the house. I told him I want to just make an offer based on the pictures, but he wouldn't let me.

So I'm seeing it on Friday.

I really don't know why this guy is insisting that I see the house. I could tell him I've been doing this for years and can tell what it needs by the pictures.

[javipa]

I have to laugh, because there's professional thought behind 'not' actually seeing the property before making an offer, and just as much thought behind getting in front of the seller, if not inside the house, in order to make an offer.

The problem is, no matter which tack you choose, you don't want to lose the initiative by equivocating to the seller's demands, without getting something in return.  In this case, the seller has successfully negotiated a physical look-see without giving up anything in the process.

So, you show up, take a tour, note every single deficiency you see, ignoring the seller's low-estimates for repairs, and continue making the longest list you can possibly make, using a black Sharpie to write on pages of a well-used legal pad, until maybe you've got three pages of repairs.  Don't refer to the notepad.  Don't mention any dollar figures you have in mind.  Let the seller imagine the worst figures, based on the amount of ink he sees you put on the legal pad.

Once the tour is over, and you still want to pay $76k, you pull out your already-completed purchase offer for $76k, and say "Approve this, and you've got a deal."

If you believe the house is worse than expected, and not really the deal the seller represented, then you pull out your note pad and review the repair items with the seller, and make an offer that is less than you made on the phone. 

Frankly, it's impossible to anticipate all the things the seller will do and say, so the bottom line is to hold to your Maximum Allowable Offer and not argue with the seller over his price, but simply agree he can get his price in a few years, especially if he spends the money on repairs, and does all the hard work.  In fact, you encourage him to do all the hard work, because he can get a better price.  And then remind him that he can have cash now, or gamble he can get more cash in a few years.  It's his choice.

I could say way more, but...   

[Redstar1324]

Yea I'm already kind of irritated that I gave in to his demand to see the house, but since I've never done a deal, why not?

Now I wish I actually knew how to estimate repair cost instead of just bluffing.

[Randoskie]

Nothing wrong with meeting the seller if it's not too far. But usually when they insist on me seeing the house it means the house is in seriously bad shape and to make sure I really want to pay the crazy exorbitant amount we talked about.
My first few deals I was so nervous I had to go to the restroom and gulp some water cuz of dry mouth, now I carry water with me.
I think I'm more excited than Redstar. Why wait till Friday, U shud of made the appointment today, you cud of had it sold by Friday.

[Redstar1324]

I'm going right now. He's giving me the lockbox code. He seemed excited to talk to me - "the investor"

[Luke9686]

Well got damn!!!!  Here's to you posting back in a couple hours with a signed contract in hand.

[Redstar1324]

As I entered the house, it dawned on me that I have no idea how to rehab a house. I wouldn't know what a rehabber would want to do. I know it needs new floors and new walls (is that even a thing?). Some of the floors look good.

The plumbing and electrical looked good.

I really don't know how to quote him.

I told him I'd get back to him in a couple hours.

He wasn't at the house and I'm glad because he would have seen my inexperience.

I need a checklist next time.

[Randoskie]

Tell seller you didn't realize how rough it was, it needs a ful gut and rehab, but you can see some potential.
Your partner says we can only do $60,00 because of the condition, area & risk factor.
But, we can close in 30 days or less and we pay all closing costs.
Wer ready to pull the trigger, you ready to do this deal?
Sign here.

[Redstar1324]

He said that he only got the house for $81,000 so he can't do the prices I wanted. No deal

[javipa]

Redstar. you did great! 

Keep at it.

[javipa]

The investor only marked up the price $5k?  OK, he's got a contract on it, but not the title.  Nobody takes title for a $5k turnaround.

If this guy doesn't have this house sold immediately, this tells me that the comps were wrong.

Track the deal, and find out what it actually sells for.  If you can, monitor the after-rehab sale price, and analyze the deal from beginning to end.  If there's an open house, go visit it.

[Redstar1324]

Redstar. you did great! 

Keep at it.

Thanks.

I just looked it up and it's a HUD home. Does that change anything? Can I start buying HUD homes to flip myself?

I will monitor it's progress.

[javipa]

I can't tell you about HUD homes, other than they are first offered to owner-occupants, and then to investor, and then the prices drop incrementally, until somebody buys it.

I gave up on HUD deals about twenty five years ago, after being unable to buy at the discounts I needed.  Never mind HUD was turning empty rentals into low-income housing, because they couldn't get the prices they needed.  This further depressed the market I was farming, as those who don't respect themselves, much less authority moved in and turned the neighborhoods into ghetto-wannabies. 

In fact, there was such an uproar by homeowners that HUD relented and stopped housing dependents, and started selling them for what they could get.  It took more than a decade to recover from that fiasco.  I was already out of that market by then.  And by 'recover' I'm talking like raising the Titanic through a sea of Molasses.

Like anything, if you're willing to specialize, you can eventually find whatever you want.