Ahhhh!!! OK, I made my first offer on a property that I would like to wholesale. It was an REO that has been on the market for 216 days!!! It was a complete dump and luckily there are not many investors in my area. The rest of the houses are very well maintained and it is a nice middle class neighborhood. There is a lot of potential there for sure. So, I made a very low-ball offer because it will need to be completely redone and I figure at this point, they need me more than I need them! Anyhow, I hope they will accept.
I have a few questions about the next steps. Should they accept my offer or we come to an agreement, I sign an offer to purchase correct? What escape clauses should I have in there? Also, I let them know it would need to be assignable as well. Do I need to do a title search or will the investor have to deal with that? What will happen if I think I have good wholesale properties and go under contract and don’t find buyers? Won’t my real estate agent get sick of going under contract and not having it work out? I do have some potential investors in my pool but I’m just thinking ahead here.
As far as contract goes what should I make sure I have… Option to Purchase and a Real Estate Purchase and Sale Contract?
Thanks for all your help. Whew, wish me luck! :crossfingers
Hello,
Im curious as to what you said , and how you found this property. Where did u get a contract?
I understand how the wholesaling thing works…i just dont have a contract yet.
Well I haven’t gone under contract yet, just made an offer. I just have a regular contract that I got at Staples but was told to add a assignment clause. I haven’t completed the contract yet… that is something I am seeking help here for. I found the property by searching my Central Wisconsin Board of Realtors listings. I use these search terms: tlc, repair allowance, undervalue, as is, motivated seller, handyman, assumable. I found these terms in the book, “Flip” by Rick Villani and Clay Davis. I am not doing flips myself but this book has been a great help. They also have a website, http://www.flipthebook.com.
I found a real estate agent that is willing to help me as far as finding “fixer uppers” and the like. I went and looked at this property and did a lot of researching of the comps and tax assessments so I could figure out whether it would be profitable for someone else or not. I know that that is the responsibility of the buyer but I don’t want to go under contract on something that is not worth it at all.
Miss Vanessa,
You ARE the buyer. You need to know what YOUR buyers would consider to be a good deal. You need to have market knowledge meaning you will already know what a good deal is BEFORE you make the offer. If it is an REO then it is listed with a Realtor so you must have made the offer thruogh the agent or with yours.You say you made the offer, the escape clauses should be in the contract when you made the offer.
You should know the retail price after it is fixed up, the cost of repairs, your profit margin before you make the offer.
What is retail for this home now?
What is retail after it is fixed up?
How long can you afford to hold it, how long do you want to hold it,
You are sooo going to love your first payday from a flip :dance
Answer the above questions and you will be a whole lot closer to that day
GOOD LUCK, Darin :elephant :banana :dance2
Actually I’m not flipping it myself, I’m going to wholesale it. I read earlier that aside from some general estimates, it’s not my problem to really know whether it’s going to be a great deal or how much will go into fixing it up. Am I wrong?
Make sure that you understand whether or not there is seasoning - most times you can’t assign an REO. The bank will likely have some addendems for you.
Good morning Ms. Vanessa !
Whether flipping/wholesaleling/sub2/etc. You need to know the numbers ! Why waste time offering/buying if there is no room for your buyer to make money after he fixes .
If you know that your buyer has an opportunity to make 30-50k after fix up , then you have a fairly easy sale ahead of you. You are correct that you do not need to know down to the last dollar for repairs, your buyer may spend more OR less than your rough estimate but you need to know that he will make a significant amount of money when he is done with it because that is THE reason he would buy. If you don’t know there is money in it for your buyer…how can you make any type of “buy” decision. You may be paying to much or you may end up selling it and leaving to much on the table and shorting your self. You need to know what numbers would make it a good deal before you buy or you are wasting everybody’s time…and more important, yours.
Love to see you succesful, Take the emotion out , plug the numbers in, and WIN !