Need help with transaction in Los Angeles. Offer trip to highest building in the world (Burj Khalifa in Dubai) in return for successful resale!
- SFH in Beverly Hills/Hollywood Hills area
- 4BR/3BA, ca. 2,700 sq.ft. (ca. 6,200 sq.ft. lot)
- Spanish style house build in the 1920’s
- private pool
- in good condition, though basic, old-fashioned style => very good potential for turning it into a gem through refurbishment
- MLS listed
- offered at USD 1.075m, though likely to sell for USD 1m (maybe even lower, motivated seller)
- comps in the area (0.5mi radius):
= similar house (also 1920’s, no pool) sold for USD 1.349m (LP USD 1.39m) end Feb’10
= 2 similar houses but build after 2005 sold for USD 1.9m (LP USD 2m) early and mid March '10
I want to make an offer on the house for max USD 1m and put it back on the market for USD 1.1 - 1.2m for a quick turnaround.
Since this is my first transaction, I’d be highly appreciative if someone experienced could lend me a hand and guide me through this, especially on the funding side and working virtual (based outside US but have reliable helping hand on the ground in LA).
Looking to make an offer before 22 April 2010.
Have can-do attitude and am highly motivated to get my real estate business off the ground, eager to learn the trade.
Altered due to rules violation
This deal is a dog. You want to pay 1m and then hope to flip it for 1.1M or 1.2M? The realtor alone is going to eat into your profits andyour carrying costs could eat up the rest. This deal will cost you money from the start and just get worse.
very very true unless you can get the home for far less than 1m offer low 900’s and see what happens if they dont want it…walk away on to the next one…
If it wasn’t listed I’d say do an “option” for the lowest price you can get, then do a round robin auction to sell it for retail price. You pocket the difference. No risk to the seller and your only risk is marketing costs to get the word out about the auction.
The fact that it’s listed means you’d have to get the agent on board. Maybe it’s worth a try. I’d definitely follow up with this one 'round about the time the listing expires.
Imagine if they’ll option it to you for say, $950k then 2 weekends later you get a contract on it for $1.1 mil. That’s $150k in your pocket when it closes and you never bought the house. Even if you have to pay 6% to the agent you’ll still make out.
I forgot you’re not local. You’d have to hire out the labor (signs, open house, etc).
Thanks for all your feedback, especially nsu1997 for the tip with the round robin auction. That’s probably worth trying, especially since the 3 comps have all been sold in less than 30 days.
Nsu1997 (or anyone else), do you mind sharing a bit more details on this type of auction? I’m broadly familiar with the concept, but not with the details. i.e.
- What is the appetite and success rates for round robin auctions in general?
- How likely is it that people bid when this property is offered at i.e. $950k but the property needs work (in a sense that the new owner wants to bring it to today’s standard) and the closest comparable was sold for $1.35m?
- Is it possible to do the auction although the property is listed in the MLS?
- What terms do I have to put in the option contract so I can market the property and sell through auction?
- Are there any contract templates available for round robin auctions? If so, where can I find them?
- How is the closing done if I never bought the house? Nsu1997 mentioned “Imagine if they’ll option it to you for say, $950k then 2 weekends later you get a contract on it for $1.1 mil. That’s $150k in your pocket when it closes and you never bought the house.”
- If I never bought the house, how do I insure that I get paid and by who - seller or buyer?
- Anything else I need to take into consideration when organising a round robin auction?
Re not being local - not an issue, have someone working for me on the ground who can organise all of this (signs, open house, website, flyers etc)
I would option it for the 1M with anywhere from a $10 to $100 binder deposit for this priced property with no real risk to you or the seller.
Overseas Investor you may want to buy a book titled, “How To Sell Your Home In 5 Days.” Also check out this article for a good general overview of the round robin process: http://www.ehow.com/how_5294483_sell-using-round-robin-auctions.html
A round robin is simply a marketing strategy. Once it’s done you simply get a contract signed by the highest & best bidder. You will get the true value of the house with a properly executed round robin. As long as you can get the listing agent on board and a standard option agreement signed you’re fine. Word of advice, get an attorney to close your option on the front end.