Hi,
A few days ago I looked at a house offered by an investor that is buying the property from a bank and is trying to sell well below ARV before he closes in a few weeks. Has any one else done this? I have found a few bank properties that I would like to structure this way. How do I obtain the ability to show the property before I close.
Thanks
Once you have found a house you would like to “flip” you are going to make an offer. If it is typical in your area to have a 15-day window for inspections (bringing in a roofer, general home inspector, termite inspector is expected), you want to ask for a longer inspection period - usually 21 days. Also, give yourself a contract contingency of “subject to approval by my partner” along with “subject to obtaining acceptable financing”.
If the bank agrees to these terms, you need to do a couple of things. 1. Immediately record your agreed upon contract in the land records. (This prevents others ((such as a potential flippee)) from going around your agreement directly to the bank.) 2. Market the daylights out of your new found property to find a buyer. - You can market to other investors through your local REI club, or to end users depending upon the condition of the property. Better yet, develop a relationship in advance with an investor who will buy a good deal.
With the contract, you will give a nominal deposit of $100 to $1000. During this phase you are making sure you really want to pay for termites or a leaky roof! But be prepared to walk away from your deposit if nothing wrong is found with the property, you can get financing but can’t find someone to assign the property to.
As to obtaining permission to inspect the property. Usually, the property is listed with a broker and they need to earn their money so, they will have to let you into the property. If you have a relationship with the bank that no broker is involved, then you should also have a good enough relationship to access the property with a “key under the doormat” - or any other agreed upon location. On some occasions these properties aren’t locked in the first place!
Thank you for the advice :biggrin