Hey, everyone!
I got a call from a motivated seller in Hawaii. When I asked what is the least amount she would take, she said 250k. When I asked how much her mortgage is she said 450k. She also has 5k due from back taxes.
So does anyone have any idea why she would take 250k when she owes at least 455k? Her house is nice and in a nice neighborhood. It’s a 3/2 built in 1998. She seemed really motivated on the phone but, I don’t think 250k would help her.
The ARV is $499,500. I pulled comps from a house that sold in November for 625k in the same area. It sold in 32 days.
Anyway, I don’t want to take advantage of this seller. What I plan on doing is making an offer for the amount that she owes ($455k) in cash, and selling the contract for an assignment fee. My strategy is wholesaling.
Anyway, I don't want to take advantage of this seller. What I plan on doing is making an offer for the amount that she owes ($455k) in cash, and selling the contract for an assignment fee. My strategy is wholesaling.
HELLO! If she’ll take $250K for a $500K house, BUY IT! Does she actually have enough cash to bring to the closing table to do this or is this just talk? Don’t be afraid to get a great deal.
seller: “I have a 500k home that I’m willing to sell to you for 250k”
buyer: “How about I give you 455k and we’ll call it done.”
Sounds fishy to me. If she owes 455k and was willing to sell to you for 250k that means she would have to come to closing w/ over 200k. If a seller can come up w/ 200k they probably don’t need/want to sell their house at such a steep discount. Maybe if there was a recent divorce or something like that I guess maybe I could understand. This scenario deserves a good bit of investigation, and for God sakes don’t give her 455k when she’ll accept 250k. If you do let me know, I have some buildings I’d like to sell you.
I recently bought a $230K apartment building for $30K. You can be absolutely sure that I didn’t complain that the price was too good to be true and I didn’t offer the owner more than he was asking. When a great deal comes along, TAKE IT!
It’s possible that it is one of those divorce deals that you see where the wife sells the hubby’s sprts car for $100 to hurt him.
However, unless you are in Hawaii and in her town, I would be wondering why she picked you to call.
She might also be thinking of a short sale and doesn’t quite understand how it works.
Or maybe she has found a good source of income. Contact 10 out of state investors every month, offer the house for half price plus $500 for taxes. She gets $500 earnest money from all 10 investors (to stop the tax sale immediately) and nobody gets the house but her.
Say, I think I am on to something. Maybe I’ve got myself a new business.
Is it possible that she is underwater, but her income is such that she can handle a little debt? Could this be structured as an installment sale? Maybe her home value has dropped and she’s paranoid and desperate. I honestly don’t know the answer to these questions, I wonder if anyone else does.
First of all, the comparable property I found sold for $562,000 in november. I’ve adjusted the price down (10% because the subject property is 7 years older and the comp property was remodeled just last year; and another 10% because the land sqft. is 300more). That brought the ARV down to $455,220. ACTUALLY, now that I think of it, is 300sqft enough to lower the comp down 10%? Maybe the ARV should be $505,800. Other than that, everything about these two properties are similar.
The seller confirmed that the least she would sell for is $250,000. She also confirmed that her mortgage balance is approx. $450,000 and that she has back taxes of approx. $65,000. We didn’t sign a contract yet because she wants to look at her documents to confirm the exact amounts that she owes. But to the best of her knowledge, these numbers are accurate. She said she’ll contact me.
ALSO, I explained to her that if she is willing to sell her property for $250,000, then she must also be willing to provide the difference in what she owes upon closing. She nodded her head in agreement and said, “I just want to get rid of the house.”
She understands that other houses in her area are selling for at least $500-$600k, and that the market is slowing. I asked about her situation. Her and her husband seem to be fine. They’re not going through divorce. But here’s something curious: She said that she’s been trying to sell her house for a year now. She’s allowed her mortgage broker to help her sell. HER BROKER has been paying $3,700/mo incl. PITI on the loan. And for a year now, her broker hasn’t been able to find anyone to buy.
I didn’t ask but, I think she has an agreement with her broker, which would explain why he/she’s paying the mortgage. Anyway, I wrote all of these numbers on a notepad in which the seller confirmed to the best of her knowledge. So there’s no typos.
If this is really a $500K house being sold for $250K, you are blowing it by hesitating. When people call me with deals like this, I ask if they can meet in 20 minutes and I get the property under contract IMMEDIATELY! By delaying, you’ve probably already lost this deal. Some other investor that is more confident will get this under contract and you’ll end up with no deal. Of course, you’re contract will need to specify that the title will be clean (not encumbered in any way be her deal with the broker).
You should have this under contract tomorrow morning. Agree w/ propertymanager 1000%, you’ve got to be ready to pull the trigger at any second. I carry all sorts of contracts and agreements with me in the event something like this comes along. Everywhere I go I take my laptop and portable printer in case I don’t have the document I need it can be printed out on the spot.
Another reason you want to move quickly, besides someone else getting the deal done, is so that you don’t give the seller a chance to change their mind or talk to other people who may change their mind and then you’re either out of a deal or ponying up thousands more, that hurts. If you have a good contract you should have all sorts of outs so if during you’re due diligence period you find out something that explains the steep discount. Good luck, make it happen!!
The mortgage broker has been making the payments for a year? I think maybe the mortgage broker has a lease option, and he hasn’t ben able to sell the house. Possibly the option is expired, but you’d better be sure. You don’t want to be the third party in a lawsuit.
Get it under contract and once it is in escrow you should have time to make sure you can get title insurance. If you can get title insurance, then you’ve got a good deal.
That’s what I’m afraid of. The seller said she was going to confirm the exact amount of what she owes and call me back. If she does, I’ll get the property under contract and try to find out what’s going on with the mortgage broker.