should i offer $100,000 off fmv close in 30 days with cash buyer can i do this with properties that are worth over $500,000 and have an escape clause if i do not suceed in finding a cash buyer.
Hi,
Unless you have a buyers list your chances of finding a buyer in 10 to 30 days for this size and asking price of property will be tough, the chances are prime for failure!
If your going to buy any property as an investor and offer it for resale you want at least an average 30% discount from market value, not asking price! In a appreciating market that is stable and growing you might be able to calculate fair returns at a 25% discount, but if your in a declining market with a higher than average foreclosure rate you need to be at 35% for a discount!
With a foreclosure you can not assign the contract so you will need transactional funding and need to get a transactional funder who would finance a $400k purchase price overnight to double close to your end buyer. You will have to close to you then close to your end buyer, so your going to have 5% just in escrow fee’s and another $6k to $10K or more for transactional funding!
You have to be careful buying foreclosures that the lender (Seller to you) does not try to slip in language prohibiting a re-sale (Flip) for 30, 60 or 90 days as this obviously ruins your goals! Also your going to need a good short sale package and potential seller’s with real proveable hardships to convince a bank it is worth excepting less money in a short sale!
Now you can do deals for as little as a dollar, but calculate your risk and where you believe your rewards should be and all your cost’s and you will see why I say you need a larger discount! To do a short sale your escape clause is not going to be very long, and your going to have to except the property as is, but you could be pushed to remove contingencies as part of the original lenders agreeing to allow a short sale and draft an agreement!
GR