hello,
we are going to see our first house today that was in a fire. we got the comps and they are around 240,000. they are asking 150,000 for the house. it would need a total rehab. we were thinking of offering about 100,000-110,000. what do you think?
I think you better be buying it with a home equity loan or hard money because NO BANK is going to go NEAR that is this economy.
That being said…
How big is the home?
What part of the country is it in?
How much of it is damaged?
Are any rooms salvagable?
How much water damage is there? This is a HUGE concern with fire damaged homes. Water damage can be more expensive to repair than fire damage. MOLD??? Hidden damage???
Make SURE you have ALL your subs go in there and give you WRITTEN estimates on repairs BEFORE you submit any bid to the owners rep.
Obviously it should include ALL materials and incidentals.
Good Luck!
Let us know the answers to those questions.
i am going to wholesale the property. it is on a .25 acre and the house itself is 1185 square feet.
it is located in cecil county in maryland. where i live.
i am looking at the property this afternoon so i am not exactly sure of the damage extent.
Is it for sale by owner or listed by a Realtor?
for sale by owner
BEAUTIFUL!!!
MY FAVORITE!!!
Here’s my advice to you and why…
If I were doing a deal like this I would go at it with a straight option.
I’m sorry if you already know this but I’ll cover it for anyone who doesn’t. A straight option gives YOU the RIGHT, but NOT the obligation to buy a home for a agreed upon price within an agreed upon amount of time.
Meet this guy today, look at the house and you honestly tell him…
You know the problem with these things are the UNKNOWNS. I don’t know how bad the damage REALLY is, I don’t know what I can get for this house price wise because of that, and on top of EVERYTHING the market is getting killed now because of FINANCING issues with banks and banks don’t like these homes.
If it was 2 years ago we’d both be in good shape. But I may have an interesting way around this. Then set a price that works for both of you.
Using an option can help both parties…
First before any discussion of options agree on a price together.
Remember that…After the price is set explain to him that you have investors looking for these types of homes. Have a check with you for $1000. Show him the check and explain that this money is his TODAY. It’s not a deposit, all it does is give you the right to buy his house in 60 days for the price we just agreed on. If you buy it, the $1000 DOES NOT, I repeat…DOES NOT come off the homes price. So in essense, he’ll be getting an EXTRA $1000 for signing this option agreement.
So you guy’s agree on let’s say $120,000. You think you can get a wholesale buyer in for let’s say $135,000. The option gets filled out with these numbers… $1000 for a 60 day option for the purchase price of $120,000. You both sign and have a third party withness both signitures. He get’s a copy and you get one. Your lawyer records it at town hall so no one can cut you out of the deal. Then you get to work finding YOUR buyer. If you sell it for $135K you just made a gross profit of $15,000 on a $1000 investment. NOT TOO SHABBY… HUH? If you can’t sell it?? You just walked away from a LIVE BOMB and didn’t get BLOWN UP… BE HAPPY.
You learned more about real estate in 60 days than most guy’s on these forums will ever learn in 60 YEARS!!!
The beauty of the option is NO ONE else can legally buy or sell THAT home for 60 days. You bring in your wholesale buyers, get them to sign a sales agreement for an amount over YOUR purchase price and then re-assign your option to them for the difference.
It may sound complicated. It’s easier than actually buying the home yourself. No closings, no closing costs, no tax stamps, just whatever fee your lawyer charges to give you for an option agreement and assignment. This is NOT rocket science legal work. Any lawyer right out of law school can get these forms right off the internet. Don’t pay anymore than $200 for both.
ALL you risk with this is $1000. If you can’t find a buyer your out the grand.
But I’ll take the loss of $1000 over the headaches of trying to sell a fire home in a falling market that I’m paying a mortgage on ANY DAY.
You can also have your lawyer add a clause that says if you get a written sales agreement within the 60 day window the option automatically extends to the closing date.
Good Luck.
Maybe I am paranoid, but I would never give a $1,000 if I wasn’t sure whether I will be able to wholesale the deal…
How about putting the house under the standard contact with financial contingency clause and 60 banking days closing?
I would just do it as a standard purchase offer, contingent on your approval of the contractor estimates and obtaining of rehab financing. Sign them up, with earnest money to be given to the lawyer/escrow company.
This is much stronger than an option. Written this way if the contractor estimates come in too high or a rehab loan is impossible then you even get your money back.
I wouldn’t make it 60 days. The more flaky the offer the more the owner is likely on insisting on getting. If you are iffy and don’t have a bunch of solid rehabbers on your buyers list then make it a 30-day closing and market the hell out of it. That should give you time to find a strong buyer, assign and make the deal. If it takes longer than that, it probably won’t happen anyway.
An option with a thousand down is a really ridiculously bad idea. Why not use a purchase and sale agreement with contingencies. This way you can get the 1k back (if you even need to put that much down). Also, most of that list of questions about the house arent all that necessary to know to make a decision, especially if you are wholesaling. The numbers are the numbers.