Ok, I think Im ready to pull the trigger on my first deal. The problem is after reading most all of the posts in this section; Im still not quite sure how to get the property under contract when it�s on the MLS. On the surface the deal seems like a good one. Listed @ $29,251 the comps I got from Realtor.com hit @ approx. 78k, its got some new windows, newer roof, furnace 13 yr, old, Hardwood Floors, Full Basement, Great location. The owner is 80, in a nursing home & not doing well so they need to get rid of it. I drove by it today & it looks like its in pretty good condition. Ive got a few potential buyers lined up (i.e. the local we buy houses crowd) & my aunt is an agent so I plan to call her tomorrow & get real comps, but my problem is Im still not sure what the steps (or the order) are. The way I understand it is once a seller is found:
1.) Get comps
2.) Pending a good deal get contract
3.) Get repair estimates
4.) Assign contract
5.) Get paid.
Pending I have this right (PLEASE correct me if Im wrong) the thing that still gets me is #2, getting the contract when dealing with an agent. How EXACTLY do I make an offer,
I mean I know I would have my aunt submit it but the price is pretty good, should I still lowball it?
Do I submit my physical contract with the offer?
Give them the contract after the price has been accepted?
Do I put my terms in the offer & that acts as my contract?
What if they require a pre-qual letter?
This seems like the deal Ive been waiting for & I really want to get it under contract before its gone. So please help! I would greatly appreciate it!!!
This is easy peasy.
- Make sure that your buyers are solid (have cash or preapproval letter)
- Make sure that your buyers wont try to cut you out of the transaction
- If comps are strong put under contract, just buy with the usual contract that all agents use. Put as little down as possible, and be sure you have an easy out for the first 7 days of the contract.
- During that 7 days once it is under contract show it to all of your buyers and get a contract from them with a sizeable deposoit (at least enough to cover any expenses you might incurr if they back out). If none of them want it then use your out.
- If you signed the original contract with “your name and or assignees” you can assign the contract to your buyer who you already have a contract with.
- If you dont mind closing on it (slightly more expensive), then you could simply do a simultaneous closing. If the buyer has cash then you would close on the home. The title company would then close on the home with your buyer. Then they would take his money to pay off the first transaction and he would bring another check to you for the difference.
- Your paid.
Things to keep in mind.
- There are alot of investors out there who get upset if they see that your making too much money. If I run into one of them many times I wont assign the contract, I will do a simultaneous closing. That way I close the home, then I sell it too them right afterword and close on my transaction using their money. Doing it this way costs more because you end up doing one extra step, but this way the buyer doesnt know what you paid for the property. (I dont know why investors get mad if I make alot of money, who cares they are going to make good money too)
2, When doing comps pay close attention to more than the size of the home and bedrooms and baths. Be sure that the bedooms are livable, that the yard is usable, and that kitchens and baths are user friendly. Floor plans are very expensive to change and they can make or break your flip. Try to tour what else is available on the market and see what the competition is after all that is what your up against when you sell.
- If the home has been on the market for quite a while, you need to look over the deal carefully. If it was priced to high and you get the price way down then your probably safe. Price is what pays so be sure theres not something your missing. Keep in mind if your giving close to full asking price and the home has sat for quite a while, then every investor has passed on it for one reason or another. I always tell people who want to buy aged inventory and they dont get price down that they are pretty much saying that “I know more than every single investor who has been in this home”.
Eric Medemar