I am a starting investor. However wholesaling is not my niche. I came across this one deal that I can smell it could be good one for little cash.
BUT I never done wholesaling. Assigning a contract. etc.
The property is REO and listed with agent.
Asking price 40K.
Comps 97K-115K.
Needs about 20K work. Maybe less.
Area not the best but clean and safe.
What would be the procedures of me getting this house under the contract and then flipping/assigning to another investor. How do I talk with agent about it? Should I offer 35K?
You know AJ is absolutely correct under normal circumstances, however $40k is actually a very fair price if your estimate for rehab is accurate. I have been investing in Phoenix and Vegas a lot lately, mostly in fix & flips but in these markets provided your estimate is acurate deals like this are being bought for the asking price here and sometimes for more than asking price!
It meets all the requirements for being 30% below FMV with an appropriate subtraction for rehab cost’s and provided you charge a reasonable assignment fee for a quick sale, you could just grab this for $40k! I recommend that you stick to about $3k for an assignment fee!
Do you have a list of investors in your area who are looking for properties just like this one?
I think if you have a potential buyer I think at $40k + $3k assignment fee would work! I quite frankly would hate to see you split hairs over a few grand allowing someone else to jump in and take it for $40k, being an REO you can never tell what mood the REO department is in or how fast negotiations would go?
You offer $35k and your offer sits there while the property is on the market and they eventually except another offer, wasting your time and preventing you from making a reasonable profit!
Also do you have a real estate agent you work with on your team, you really should make your offer if it’s going to be full price through your own agent, if you think you would like to make a less than full price offer it’s probable better to make it right through the listing agent as they recieve full commission and may be more willing to attempt to push the current owner to except the offer!
I only would use this strategy in the REO situation as you normally want to use your team agent!
If I use My Agent there is not financial use her her isnt there? If I turn around and I assign the property to another investor she will be out of the deal as soon as I gone, right?
after I make an offer (and lets say offer is excepted), how fast I have to put an investor into the deal? Is the listing agent gonna ask for proof of funds at some point after the offer.
sorry if the questions are 5th grader… Just want to make clear in my head before I get in.
If you make a full price ($40k) offer and use your own agent, your agent will remain in the deal and will represent your buyer (assignee C) until escrow closes and will be paid like all agents at close of escrow!
When you assign it your agent stays in representing the contract (Buyer) until close of escrow!
Your only going to have say 14 days to find a buyer in a normal 45 day closing! (15 to 20 days to remove an inspection contingency and a mortgage contingency if they allow you 15 days.)
Yes, the bank or lender who owns this REO will want a mortgage approval letter probable with your offer or within a few days of making the offer!