I found someone off Craigslist who wants to sell their house to pay off the mortgage they owe. Here is the situation I am dealing with. Seller owe right around $16,500.00 on the property. Seller says the repairs may cost under 500.00 which she can have done or if I am interested she can deduct repairs that I may see need to be done from asking price. I asked her what the ARV is. She tells me the market value is $45,700.00. and probably can resell for around 25,000.00. It appears she wants to sell property for the $16,500 she owes on the mortgage.
I could plug in the wholesale formula to come up with a price to put under contract then assign to end buyer for higher price. This time seems not the case because the seller seriously motivated to sell property for what she owes in mortgage, which is the $16,500. If that is the case then there don’t seem to be a need to come up with offer price and figure repair cost in the wholesale formula. I was wondering. How could I profit from this deal? Should I just use the cost of the mortgage owed as offer price then assign to end buyer for higher fee? The seller was telling me that if I would accept the home as is, she would be willing to accept a lesser amount for the home (she would be taking off amount for home repair) or she could get the minor things done prior to selling.
Home values below:
Zillow zestimate- $75,000
Eppraisal-45,033
Homegain- Estimated Home Value : $86,993 - $102,122
IF, and I mean IF, the information from the seller is accurate, this seems like a great deal. However, that being said, NEVER, NEVER, NEVER, NEVER…NEVER accept what the seller is saying without doing your own due diligence and verify the seller’s “facts”. Get your OWN independent ARV and repairs estimates. Check to make sure their aren’t any leins against the property. Make sure the seller actually owns the house and can legally sell it to you. Use a title insurance company to conduct the transaction.
Since it is likely that the seller can’t sell without getting any less than $16500 (she needs to pay off mortgage) and since, IF the actual ARV is at least $45K (Eppraisal) $16.5K seems like a great price. If these are factual numbers, I’d grab it in a heartbeat or someone else will.
I kind of saw it as a good deal from the information I got from the seller. I can run a check to see if everything what this seller say is true then I will grab it. I hope there is still a good title company available that is investor friendly. I need this deal to come through.
I agree! Take what the seller says (as far as numbers go) with a grain of salt, and get your own accurate numbers. If the property is worth $45k, and the repairs are what she says they are, you can make some good money off this deal. If there are like $5k to $10 in repairs, you’ll still be ok. Research is the key these days.
I am looking for a real estate agent right now. The one I did contact says he does not service or know anything about the area the house is located to provide an accurate value of the home. Now I am searching for another agent. All I need from the agents are the CMA or anything of the sort to get an accurate ARV. Once I get the ARV, I can go from there. I’d be so lucky if those numbers the seller gave me are right on point.
I’d try to avoid involving a real estate agent at all costs at this point. In my experience, they may likely try to insert themselves into the deal by trying to list the property at an unrealistic price and/or generating other problems. Many county clerks offices and/or county tax boards have record of sales online. Most local tax offices also have record of local sales. Note: you are NOT looking for the tax assessed value, but SALES figures. They are not as easy to use as the MLS and may not have all the info that makes the job easy, but it should list ALL of the sales in the area, not just the sales through realtors.
A good tactic might be to have the seller sign an agreement of sale or sales option that legally binds them to selling to you. Be sure to include an inspection clause and/or other escape clause so you can exit the deal if the numbers do not work out. However, that being said, I like to do my due diligence BEFORE making any offers. If I sign an agreement of sale it is because I fully intend to buy or sell a property.
The deal seems great but make sure you are confident of your numbers and your exit strategy, (wholesale, hold and rent, retail sale, lease option, upgrade and flip, ??).
Yeah I am not having any luck with real estate agents right now. Before warning me about these real estate agents, I had contacted another agent who also was not able to get me the information I needed. That is exactly why I am searching ahead of time for an accurate ARV before making any offers. I seen people use different tactics to come up with an ARV. One way I seen is to go to some online real estate site like zillow, eppraisal, or homegain. Then find homes that match the same descriptions as the home I am buying within the same neighborhood. Then look for the most recent price each home sold for. Use about like 5 comparables. Eliminate the highest and lowest sales price leaving the remaining three. Add all three sales prices up and divide by three. This should or supposedly gives you an ARV to work with.
Now that you mentioned tax assessed value, I did have one real estate agent give me a tax assessed value that looks the same as what the seller gave me as the market value.
Here’s one sorta sneaky way to get a realtor to figure up ARV for you. Call up a realtor and tell them you’re thinking about selling a property (you are, actually) and you just wanna know if you listed it with them what they would list it for, assuming it’s in very good condition. The realtor will assume you’re selling YOUR property (you never said it was yours) and they’ll assume you’re looking to list it with a realtor (you never said you were). Get 2 or 3 realtors to do this and you’ll have a good sense of ARV. One good thing about lower priced houses is there’s usually very little deviation, unlike higher price homes which are usually all over the place.
In the meantime I’d go ahead and get this deal locked up. Since the seller is willing to sell it for what’s owed on it there’s your sales price right there…$16,500. If you want to make sure the seller sees it through you may want to set the price at $17k so they at least will get $500 at closing, that may be enough to keep them in the game. I say lock it up now because since you don’t have a realtor to help you right at this moment, by the time you’ve nailed down a good ARV a week could have went by and the deal could be gone. Can’t steal in slow motion…get it under contract now and if it turns out to not be a deal just back out.
Yeah that is a smooth trick. I want to make a decent profit off this deal, but I don’t want to over do it by setting the price too high or buyers may not buy. I would say if I was being greedy for a bigger profit from this deal I would aim at close to $10k in assignment fee. I could settle for at least $5k in assignment fee. If that’s not too bad.
I contacted another agent using your technique. I swear it seems none of these agent are able to help me with what I want for the property in this particular part of town. Something about this part of town where the home is located no one is able to provide any type of information because they don’t know anything about the area or they don’t specialize in that area.
Sell it for as much as you can get while still passing on a great deal to the rehabber. Sure don’t be greedy but don’t sell yourself short either. If you can make more make more.
I contacted the owner like yesterday to see if the house is still available. The owner says yes. I am tied up with so much work to the point I have very little time to go meet the owner in person to have her sign the papers to get the house under contract. I searched online for state specific purchase agreements. I found one purchase agreement, but it may be the wrong one. I know we are suppose to use option to purchase agreements to get house under contract. I saw an offer to purchase agreement that looks a lot similar to a regular option to purchase agreement. I just don’t want to show up with the wrong contract based on what I think is right.
This is my first, so I don’t know what all I have to explain to the owner to get house under contract other than just tell the owner what to sign and be done.
I sorta stopped reading when you said you can’t set aside the time (an HOUR max) to go lock up a deal to make yourself $5-15k 2-3 weeks from now. :rolleyes
I mean, do you really want to make money? You must make one HUGE hourly salary. Say you invest 5 hours into this deal and make $5k. That’s $1,000 an hour. I’d drop EVERYTHING I was doing and probably get a speeding ticket getting this deal locked in.
If you won’t MAKE the time to do this deal I’d say you’re fighting one heck of an uphill battle. If that’s the case I can’t help you with that.
I see what you saying. Yes I really want to make money. I have to wait for a day off to do anything since all my time is spent at work most days of the week from early morning to much later in the evening. Those off times that I need are like so far away into the week. To make matters worse, I don’t have my own means of traveling around like I use to. I also didn’t mention something else. The owner still lives at the house. I can’t say for sure or if it even matters or not, but getting an agent to help me figure the ARV may backfire. I contacted an agent who turns and tells me he is know longer in the business. I was asked the address of the property so the house can be seen to tell me what it is worth after repair.
This didn’t seem ok seeing the house is not mine yet and is still occupied by the owner. The owner doesn’t know I am looking for the true value of the home after I was already given that value of $45k. To have someone show up at the owner’s place to do the evaluation of what it is worth without the owner’s consent or knowledge may mess me up.
Back to the contracts. I have two different contracts to use. One is an option to purchase agreement that is not designed specifically for the state I live in. Then I have an offer to purchase agreement that is designed for the state I live in. My guess is they are both the same thing. I need to be sure before I start signing anything on either contract that I am filling out the right one to show the seller. Aside from this, I need to find a title company that does closings for wholesale deals in my location. Right now I am looking for potential buyers for this house who will pay cash.