here is what i have this lady is in pre foreclosure is trying to sell fsbo wants to get out by a house out of state…anyways its a 7 total room 4 bd 2 bath 2 story house 1774 sq ft that is in almost perfect condition probably the best looking house on the block it also has a 3 car detached garage. i had my Realtor run a cma on the house and came up with fmv of 175,000 i am supposed to fax over the contract tomorrow we agreed on 148,000 this would be my first deal so im thinking about trying to assign to another investor for like 2,000 do you think this sounds like a good deal and numbers sound correct for assignment amount ???
I can’t answer the question for you, no experience in that; but I do have my own question. Why would the seller want to settle for $148,000 when she could get closer to the $175,000 FMV. I realize this is your offer, she has not accepted it; but what makes you think she will accept a lowball bid when the house is in good marketable condition? Maybe she is in a hurry, but that’s seems like a lot of money to leave on the table. If she is behind on payments, why leave cash behind? What area is this? Is it a buyer’s market? Homes not moving? If the home didn’t have curb appeal I could see not wanting to put in the work, but if it is in that good of condition???
My educated, but not tested, guess would be that you would not be able to get her to accept a low enough bid to be able to wholesale this out to another investor. Fees would eat up your profit and there is no incentive for another investor since there is no equity in the sale.
Will look forward to other responses also. Good luck with it. Betty
Guess I always expect some logic – not necessarily a prerequisite in buying or selling.
well i should have said i do have this lady undercontract for 148,000 reason she wants to sell wants our and wants to move to a diff state cant keep up with it and is behind about 8 payments and 148,000 isnt initially wat i offered i offered 137,500 but she just wasnt having it …now im intrested in how u say fees would eat up profit i must not be understanding something if there isnt enough there to make this work???
Well lets look at the deal a little closer. How much rehab does it need? Conservative lets say $5000. Now lets add up the costs to just close for a total of $3000 including attorney fees, title insurance, and other fees. What about 2005 taxes due $3000 guess. Now for financing fees. Where are you going to get the $148,000. Lets assume a hard money loan. 5 points commission of $7500 plus at very least another $500 in costs from them for a total of $8000. Now for the interest to carry the deal while you try to retail it. How about $6000 at $ 1500 per month for 4 months. And now to sell it you will need a Realtor at even a discount of 4% is $7000 and some more title costs and closing expenses. I hate adding up numbers when I know it is going to be a loser so you do the math. NO DEAL period end of discussion unless I overlooked something. Even without hard money costs where you have the cash and with a Realtor it will not make any money.
Wwrentals,
One thing I have learned by reading a million posts here is that if you take what you want to offer for purchase and divide it by what you have assessed - hopefully through good repair estimates and some sold comps within 6 months, especially if it’s a hot hot market but no more than 12 months out - as the full market value, you need to be at 70% minimum if you want to assign or sell this contract. You are in the low 80’s on these numbers.
However, depending on how much you want to make. . . say $5K. . . then you need to back that out of the numbers as well so ideally your offer would be no more than 65% of full market value.
THen there are all the fees TedJr spoke of (yukky fees!)