I know this is probably not the best idea and not wholesaling, but has anyone found a motivated seller, who’s property didn’t have enough equity to sell to an investor, but was a good one to try and help sell?
I have someone who is looking to relocate, and they don’t have 30% equity, but do have some. Can I get their house sold for them, not charge them anything, and make money on it?
In other words: Can I put the home under contract for say 100K, market the house/ find a buyer who will pay say 107K, and be done and everyone be happy? Seller gets out of home and doesn’t have to pay any fees, buyer gets the house, and I get paid.
except I’m assigning a contract I have for purchase and not charging any fees (except for the money I make from the difference in the contract price negotiated and the assignment price negotiated). I’m doing all the marketing and showing of the house–which yes, it’s almost exactly like a realtor, except I get paid on the difference between what they ask and what I can sell it for…no commission/fees of any kind.
Oh yeah and one doesn’t need a RE license to do so. As long as I’m not taking advantage of someone and clearly letting them know that I will make a profit from what they sell it to me for and what I in turn sell it for, I think it’s a good idea…of course if I can’t sell the house in whatever time is agreed upon, I might end up shooting myself in the foot and hurting my own rep!!
...except I'm assigning a contract I have for purchase...
This is the key to making it legal. If you have entered into contract to buy the property first and then assigned it you are legit. What you described doing is exactly what a wholesaler does.
As long as you a) have a contract that is assignable, or b) are a principle in the transaction, you can do what you’re thinking. In the first, you are actually selling the CONTRACT, not the property. In the second, if you get on title/control title, you become owner and can sell property directly.
Here’s the problem, as I see it.
I would assume that these sellers would currently be trying to sell, if that was the goal in the first place. Keeping this short, if that’s the case, how can you sell the property faster, and for more money, than they are able to without spending any money or paying a RE agent? Especially if we’re only talking about $7K, which is really just negotiating room. And if we’re talking about a market which is currently slow or down (odds are, it’s one or the other), how strong is that $107K value really?
Raj Makes a very valid point. But the bottomline is that if you can find a buyer that will pay $107K, then you have a deal.
Make sure that its a good property in a good location. You don’t want to string along a seller if you can’t get their home sold. Don’t get attached. Investors don’t go for propertys with no equity(as far as I know…), unless its a lease option or sub 2, or a shortsale…(something creative…)
Therefore your ideal buyer would be simply someone who is looking to buy a home for themselves. If they can obtain the $107K, then you make your spread and move onto the next. If not, continue to market until your time expires and then move onto the next, ensuring that you took into consideration what you may have done wrong in regards to find the right buyer…
I’ve been looking at the exact same approach. Getting an option or purchase contract then using an aggressive 7 day sale to bring in buyers, hopefully for more than my option/contract. Problem I’m running into is that the target market would be conventional buyers getting a conventional loan, which means the buyer probably needs all of their cash for earnest money deposit, downpayment etc. to get their loan and isn’t going to have the money to pay you the assignment. I’m told that lenders are balking at assignment fees, so it can’t show up in the loan either. Not sure if there’s a way for the seller to pay you to release your option/contract to the end buyer. The other option is to double close, but again, I’m told lenders are balking at doubles. Basically trying to prevent folks from getting in the middle of deal and I’m told there are title insurance issues and also potential seasoning issues.
Don’t know if you’ve already encountered these things, but thought I’d share as I’ve been investigating the exact same approach.
I would put the home under a lease option for 60 days, make it contingent upon you bringing a buyer, until you bring a buyer the seller can continue to market the home as they normally would. Upon getting a signed contract the seller must give you a 24 hour first right of refusal…If you don’t exercise your option then the seller just does what they would have done anyway.
Make sense?
That is the short answer, i am a bit pressed for time. Good luck.
im doing exactly what you’re doing but i’m involved in the long haul. much like a sandwich lease option. i tell both sellers and tenant/buyers that im a principal in the deal for loss or profit and these are my premium terms. i love properties with no equity or properties that are severely overencumbered because no one wants them. seriously. these are free properties for us to control using terms and options. if you pass on properties like these, pass them over. ill make a full asking price offer on them. it only cost me $1.00 for the option fee and takes me 15 minutes to write up my full asking price offer.
i use a 90 day non exclusive option and its contingent to me securing my own tenant/buyer on my premium terms. i deal with land trusts so my option is towards acquiring personal property/beneficial interest NOT real property/equitable interest. two different things here.
anyways i tell the sellers to give me 90 days to do my due diligence and to see what i can do to market their property to my pool of tenant/buyers
i got 7 properties under my non exclusive option and i got over 100 tenant/buyers just within 1 month(august) of advertising. now im complaining about having too many tenant/buyers with a scarce inventory of properties available for sub2/lease to own.
anyone in southern california have properties for take over or owner financing? majority of my tenant/buyers have 3% - 5%. i already have the documentation and strategy in place. i just need some properties with good payments.
Can I just do a straight option instead of a lease option? I’m sure it wouldn’t matter either way. …If I already have a buyer, should I do an option or sign the contract myself and then assign it?
Also, are there ANY lenders that will loan on an assignment fee? What about having the seller buy me out of my original contract? Would this work?
Thanks everyone for the help; I love this site. I promise to give back to the people just getting in the business as you’ve done for myself.