I have been reading posts on this site for the past 6 mos. These forums are better than anything I have ever come across. Thank you Danny and Property mgr. yall are great. My very noob question is this: When I make an offer on a SFH, do I use the standard purchase contract for my state? And when I do make my offer, do I sign the document or do I wait for acceptance and then sign? Also how do I fill out the entire contract if I dont know what the seller is leaving and how much earnest money to deposit, etc. etc. I hope I provided enough info for an answer to this. Any help is very appreciated…
Re - “And when I do make my offer, do I sign the document or do I wait for acceptance and then sign?”
An offer that is not signed is a worthless piece of paper. By signing an offer you are saying that you are willing to purchase the property.
“…Also how do I fill out the entire contract if I dont know what the seller is leaving”
You write into the purchase agreement the items you want the seller to convey (to leave). For example, you would write " refrigerator, white, model such and such, serial number xxxxx, stove, black, model such and such, serial number xxxx, etc".
As far as the earnest money deposit is concerned, that is up to you. You make an offer, if they don’t like it they can counter offer your offer for a larger deposit.
I really think that you should work your first few transactions with an experienced agent. Ask questions and make certain that you understand what is going on.
When working with a buyers agent, how does the agent benefit from the deal if I will be dealing with mostly assignments from other investors or from for sale by owners? Most of the time there wont be an agent representing the seller… Thanks for the replies.
I would not use an agent when dealing with FSBOs or assignments from other investors. If you need help with the paperwork, ask a SUCCESSFUL investor at your REIA or an attorney to help with the first one or two. The realtor normally gets paid by the seller when the seller has the property listed on the MLS. If both the buyer and seller have an agent, the agents split the commission.
I’d agree with property manager that you don’t need an agent to make an offer, but would disagree about who pays. If you have a true investor’s agent, you’d just pay their fee on top of what the seller wants. Why would you have it come out of the seller side? The agent would do comps, tell you what to do to maximize value, etc. Every investor needs services of an agent or at least direct access to MLS, but it’s too bad most agents don’t really know much about investing.
Anyway, my buyers pay our fee if we’re going to represent them on assignments, etc. The deal needs to have the room in it. If it doesn’t, they either won’t do the deal or we just wont represent them.
Hope I’m not cutting across this thread. I’m in the process of selling one of my rentals to the tenant. She enlisted the help of an agent. I’ve signed offer and contract and home inspection has been completed, financing is in place. I’m just waiting to go to closing. Out of the blue, yesterday the agent calls me and says the bank requests to see all of my receipts for all of the renovations that I have performed on the property. The house appraised just fine, but agent is telling me to magically produce receipts, invoices, etc for about $20k. Agent says she has done this in the past, her realty company buys foreclosures and it’s nothing new to her.
Purchase price = $49k (cash)
Cosmetic repairs = $3k
Selling price = $72k minus closing
I’m new to REI but I know it’s not rocket science. I’m not getting a loan to refi my house. I don’t need an appraisal, the buyer does for her financing. So why is the agent saying the bank is requesting from me receipts, to justify their appraisal ??
I’m certainly no seasoned investor, however I have been a realtor and have bought and sold quite a few properties for myself and others.
That being said, I would approach any representative of the other party with one eyebrow raised at all times. They represent the other party. ALWAYS protect yourself. I’m not saying the buyer’s agent is up to anything, but if they are telling you another party is asking for documentation of something, I would tell the agent to have the bank call you or you call the bank and discuss the whats and whys. If you’re new to this, be skeptical of everything, question everything, so you’ll get answers and learn, and even possibly avoid some costly mistakes. I’d rather be considered a pain in the butt than a fool.
I’m not saying RE agents are bad by any means, but I have known some that are deceitful. Talk to the officer at the bank-don’t deal with your buyer’s agent; he or she is not looking out for you and has no responsibility to you.
I hate to be the bearer of bad news, but you may be about to lose the financing on this deal. The bank wants to see the receipts because you bought this property for far less than you are selling. YOU ARE A FLIPPER!!! Banks don’t like flippers to make too much money. Therefore, they are trying to justify the difference between your purchase price and the sale price. When they find out that you only put $3K into the rehab, the bank will probably back out of the deal.
So what’s the commitment date on the mortgage contingency? I suppose you could drag you feet by not returning phone calls and maybe that date will pass and they’ll have to go through with the sale or lose their deposit money.
What state are you in anyway? I’m not away of any law that requires you to hand them over. If it sounds like it’s going to fall through, tell your tenant to try a different bank or use a mortgage broker who can shop it around so that it doesn’t matter.
I would like to thank everyone who responded. I’m meeting with the realtor Monday to discuss our dilema. Agent owns a realty company, she says she has purchased foreclosures before and had the same scenario. I will speak to her about everything discussed on this board, then proceed with caution. Will keep you posted.
I’m in NC
I dont understand what you mean when you say you dont know what the seller is leaving. If you are talking about content. That has very little to do with the contract unless you are trying to make sure they leave certain items. And if you are financing this property listing stuff on your PA may cause your down payment to increase. Some loans subtract concessions from your sales price. Also, EMD is up to you. Realtors may say different but it is really up to you and what the seller will consider to make a serious offer.
GOOD LUCK! :biggrin
That was precisely the words spoke to me from the realtor about my pending sale. I insisted to speak w/ broker and she confirmed your suspicions. She also informed me because of credit issues that the buyer has, out of 500 banks, this is the only one that would help the buyer. NOT all banks require these receipts that I did supply. Broker would be meeting with appraisal and bank official 2/23, possibly deal may still go through with help of broker. In the meantime the home inspection revealed a small presence of termites, which I agreed to pay for treatment and would come out of my closing cost. ($780.00) OUCH!!! I just received the statement demanding payment !! Rent was due on 2/15, can I still request rent for February.
Buyer received mortgage papers from bank 1/2 weeks ago.She was unhappy with 14% and with loan being an ARM. Buyer spoke w/ bank and they insisted her to ignore those papers. The figures were all wrong and to throw them out.
Yes, you should still get the rent for February, but in reality the tenant probably won’t pay. You’ll probably have to wait until after the bank turns down her loan to try to collect the rent. I would be SHOCKED at this point if this deal closes. My guess is that the loan will not clear underwriting. At that point, it will be over.
You need to push the bank to resolve this issue ASAP, so that you can get back on track with collecting the rents. Otherwise, you’re in limbo, where you don’t have the rent and you haven’t sold the property. The bank and realtor will be happy for this to go on a couple of months, which won’t be good for you.
I hope that I’m wrong.