hey gang, new to the forum and this is my first post!
contacted a lady about her FSBO and she has already moved to NV, her home is vacant in San Francisco. i talked to her briefly but i didnt really know what to ask her. i got some info from her before hanging up, told her i will call her back after i look at the numbers. i guess im gonna try for a clean flip here if i can get this under contract, but i dont know what to do next! :help
3/2, 1475 sf
comps in area around $974K, according to Zillow anyways
she says “nothing wrong with the place, just need to sell”
First and foremost I would find out the actual comps of the property before doing anything. No investor in their right frame of mind would purchase a property based on Zillow estimates.
You should always find out if the owner owes a mortgage or anything on the property. Comps sold in the neighborhood, should be within a 1/2 mile to a mile radius, in the last 6 months to a year. The asking price is NOT a good asking price, as she says the house doesn’t need any fixing
up. If that is true, you need to be getting this house at 70% ARV (What the house would be wirth in excellent condition. I would call a realtor, and get a 2nd opinion on the value.
If you get this house, I would offer $660k, and don’t go any higher than $671k., and have your offer range be between $660K and $670K. (Sell to the end buyer for $681,000) This includes $5k assign fee, and $5k for any misc. repairs you don’t know about. (This is based off the $974K
value. If she can’t accept that offer and wants more than $671k, she’s not a motivated seller.
First I don't see anywhere in the original posting where Budd650 says anything about doing an assignment of contract?????? ???????? ????????? ???????????? ?????????????????
I as an experienced investor would never take on this kind of property for just 5K!!!
I would need to get this property for $585k provided the value actually is $975k!
I would want to market it for somewhere between $828,750 and $877,750 figuring to except something above $780k, but you have to remember to sell it at $780k will cost somewhere around $70k for realty fee’s and closing cost’s, then the original $585k purchase would cost around $12k to pay buyers side (Original Purchase) closing cost’s!
Now just to service the original purchase at 15% interest will run $88k a year plus you have holding cost’s and expenses including insurance, taxes, utilities, yard upkeep, etc.
Even under this scenerio you would maybe be lucky to make $50k to $70k clear before taxes!
This is something for a seasoned professional with a lot of cash, but you have said nothing about this sellers position and I believe they would not except a $585k offer as it sucks a lot out of there net, especially if there is no reason to “Fire Sale” the property!!!
But I sure as hell would not do this deal for $5k and it is to big and a special buyer property making it unreasonable to find a buyer to “Assign” to in 3 or 4 weeks!!
first find out whats going on, what her motivation is, how much she owes and if there are any deadlines (like foreclosure) that you should be aware of. based on what you learn, decide whether its worth pursuing
I agree…why on earth would anyone deal in these high numbers for a meager $5K??? We’re talking about a million dollar house here!
Anyway, based on the info you provided Budd650 this is not a wholesale deal. Not even close. Since it doesn’t need work you stand little chance at getting it under contract for a truly wholesale price.
What you have here is absolutely a “pretty house” deal. I would get it under option for the seller’s bottom dollar price, then sell it to a homeowner for as close to retail as possible, preferably using a round robin auction marketing strategy.
So let’s say the least the seller would take is $750k and you verify the value to be $975k. You’d get it under option for $750k then do a round robin auction hoping to get anything over $750k. Say you get it sold for $850k. You just made $100k cash.
THANK YOU for all the expert advice everyone! her and i both kinda got swept away with our World Series win lol Giants put it on dem Rangers! back to business after we celebrate at tha Victory Parade today
if it’s worth $974k and she’s asking $799k and it hasn’t sold, is it really worth $974k? probably not.
i’d do the deal for $5k… because i don’t have the funds to hold an $800k property for a month.
i haven’t wholesaled 1 property, but planning to, so this is a decent case study for me… i don’t have to worry about $1MM properties where I live, either… but math is math. $5k is an absolute number that would cover my families expenses for a month. if $5k is acceptable on a $100k home, why is it not acceptable on a $1MM home if the amount of work and risk is the same? (actually, in the case of the $1MM home, the $5k is probably less risk…). I understand percentages, but if my cost is limited, i’d rather have $5k than $0k.
Of course $5k is better than nothing, however I would expect to earn MUCH more. When the deal is about to close and everything went wrong and the most I’d make is $5k would I still close? Of course! But the poster stuck it on there as if $5k is the standard goal for an assignment fee regardless of the actual numbers of a particular deal. He/she only seems to expect to make $5k. Many new investors think like that…just have a particular assignment fee stuck in their head, regardless of the deal.
That’s the wrong way to think. As long as you’re passing along a great deal you should feel absolutely entitled to make as much as the market would bear. And in this particular deal the bigger the deal the bigger the expected profit, simply because you are dealing in bigger numbers! Add the fact that it’s more difficult to price a higher priced home (as you eluded) and you’ll see the numbers get very soft the higher you go…more room to make more money.
Ask a realtor would he expect a larger check for selling a $1MM home compared to a $100k home.