HI GUYS,
Do you look at the same ARV with high dollar homes? I have a house markets at $625k, offered payoff, which is $450k. Would like to wholesale it, and make $75k.
I can’t speak for your market, but homes in that price range are somewhat difficult to retail for full value.
Unless you can get out of the deal without risk or unless you have a buyer lined up, I’d tread cautiously here.
It is considered a luxury home in Texas, and they take few months to sell traditionally. I doubt she can make $75k on it, but cash investor might pick it up quick if she can find them.
As long as the contract has a way out (she can use the option period in TREC contract), she is fine.
When the economy sucks (like it does now) high dollar homes become much harder to sell than regular bread and butter homes that Joe Homeowner would be looking to buy. If I were you I’d straight option this thing for $500 or so option fee with a 60-90 day option period. I wouldn’t shoot for the moon on this and look for big numbers like $75k, I myself would want to try and get $25k or so and get in and out fast. A bird in the hand…you know the rest.
I was told to put a $10 option fee up, which is what I offered. She wants $3k. Will I lose that? How does that work? Yes, I do realize that I’m doing everything backwords.
Yes, any money you put up in option money will surely be lost if you don’t close. If you put up any money at all be darn certain you can move it within the option period. Knowing the average days on market and sales prices for comparable homes in the area will help you determine the marketability of the house at your estimated sales price.
Ps- Even if you put up $3k and only get $10k over your option price you’re still walking away from the table with $7k for a few hours worth of work and a few hundred in marketing costs.
I would offer to put it as an earnest money but not as an option money. Frankly, I would never put such an amount and I would rather walk away.
Option money is none refundable, so if you cancel the contract you lose it. Earnest money is refundable based on the conditions of the contract, but even then the seller may contest it and the money gets tied up.
I would just tell her it is against company policy and I cannot do it. If we had to put that much on every house we contact, we would have 10s of thousands tied up. This is our offer. Keep in mind, I never mention option money till after I fill it in the contract infront of them and briefly mention it to them. I never put any emphasis on it.
Another option is to just say thats fine, we don’t need an option period. You still have other escape clauses in the contract that you can use such as appraisal was not acceptable, or property condition is not acceptable and back out that way since you had that in the contract.
In general, it sounds like you are not dealing with highly motivated seller, or a seller who is questioning your ability to close.
There is only one way to find out. If it doesn’t need any work get it under contract at the $450K tack on $75K and market it “as is” with instant equity or $100,000 below market. You can start with your investor list, put it on craigslist, and in the newspaper, etc. Give yourself a long enough inspection period say 15 to 30 days depending on how long it usually takes things to sell in your market. If you haven’t assigned the contract by the end of the inspection period you’ll know it wasn’t a good deal and can cancel it.
SJB
I would put it under contract, & like I said on another related thread, put down $100, with the remaining $2,900 due in 15 days. Then wholesale it for $10K profit to get in & out super quick.
$10K in 15 days is nothing to complain about.