I got the information below from my real estate broker today. I would appreciate some opinions on the potential to do a deal on this property. What would be the best strategy, wholesale, lease purchase, buy & hold?
"Maybe a very good rental or even a possible flip on this one. I had a buyer with a prior contract on this house but they could not get financed - so the agent with the management property emailed me this morning to let me know that they have reduced the amount that they would accept.
Property was originally valued at $115,000
I had an accepted contract at $110,000. They have since reduced the price to $99,144
and today they will accept a Bid of $85,580
This house is in pretty good shape, and it sits on 2 Lots -
Once the Price Reduction hits the system, we will have to go through another 10-day Owner/Occupant priority period, so we should move quickly on this if you are interested.
Raburns - few things I didn’t like on the email he sent you:
1 - he does not even mention market value. Who cares about the listing price and how much it came down? He is a broker. He knows better than that. I have seen several properties listed for X and 2 or 3 days later going down to X-Y. I believe some owners/agents do that with the intent of misleading potential buyers.
2 - and when I read the below statement it seems to me that he is trying to create a sense of urgency. Don’t become a motivated buyer…
not a deal. you need to get it where your total costs including buying, repairing, holding and marketing it don’t exceed 70% of the houses value after all repairs have been made.
70% of 115k = 80k
you need to get it for about 50k
How were you able to get the contract price on the houses to be so much lower than the ARV? Besides being a great negotiator, what were some of the seller motivation that you tapped into.
I appreciate your response in that I’m just getting started in real estate investing and I am focusing on wholesalling.
Take what your realtor says with a grain of salt. He’s in the business of selling a property for as much as he possibly can in as little time as possible. He wants to move property TODAY so he can earn a fat commission check.
Do your due diligence and find out what the property is actually worth. A property can be listed for $200,000, but if it’s only worth $150,000 you won’t be getting a good deal if you pay “only” $160,000 for it. Run your comps and see what it’s worth. If you find that it’s listed well below market value and it meets your investing parameters, go for it. If it doesn’t – or you’re not sure – walk away.
You can walk away from a good deal a hundred times and not be hurt (other than the pain you’ll feel in your backside when you kick yourself), but it only takes overpaying once to teach you a valuable & expensive lesson.