I met a seller at a property for sale. The house was left to two brothers in a will. They wanted 40k for it ARV acould be 90k and it could be rentable after 20k. The rent would be around $950. $1600 a year in taxes, no leins, and a two car garage with a loft.
I went to see the property and the seller wanted it get ris of it. A few buyers fell through already. I told him what exactly I do and that if I am a “filter” and that it it gets trhough me I will be sending cash buyers his way. I liked what I saw and called my best buyer. He came down immediatley and was interested. He wanted to pay 35k but offered 27k because he figured they would negotiate up to 35k. The owner said it sounder good but never got back to my buyer. When he finally did after my buyer trying to reach him, he said he had another buyer.
I believe I should have got it under contract for 30k.
What else did I do wrong? I want to give my buyers 24 hours if they need to “think about it”. after that should I chase them until I get a no? I am afraid of scaring them off.
I do not understand why you are allowing your seller and your buyer to work directly. It’s as if you’re only trying to agent a deal without even getting in the middle.
You have two deals here. not one. Make your best deal with the seller. Get it in writing. Then make your best deal with a buyer. I’m also not sure why you would limit yourself to a “best buyer” at the onset. Maybe if you have one guy in mind that you like to work with, you give him the right of first refusal, but you should say, “Here’s the price. If you want it, I won’t show it to anyone else. If you don’t like it, then I am working down my list.”
I would never, ever let the seller and the buyer be in control of this process, and I would never remove myself from the process. Someone needs to be involved to make the sale happen. That’s you.
First, putting buyers and sellers together and being paid for it is acting as an “Unlicensed Real Estate Agent” and is a crime in most (if not all states). This is a dangerous game to play. As Paul said, you need to be a Principal in the transaction. This takes care of the unlicensed real estate agent problem.
Second, when you find a good deal, put it under contract IMMEDIATELY. If your numbers are right, you could have bought a $90,000 house for $40,000 ($30,000 + $10,000 rehab). That’s less than 50 cents on the dollar!!! With rents of $950, this is a very good deal! If you don’t have the cash, get set up with a bank or hard money lender so you can close if needed.
Third, I’m not sure how serious your “best buyer” is. If this was a great deal, what is he doing??? A competent successful investor would have bought the house right on the spot (like the successful buyer ended up doing). Making a lowball offer and then waiting for an answer is a loser’s strategy. This was a GREAT deal as-is and to fail to get it under contract makes me think your “best buyer” is an amateur. There is no excuse for being so greedy that you lose a great deal trying to drop a few additional thousand dollars.
Finally, a serious investor doesn’t need 24 hours to think about a great deal. Offer them the deal and if they don’t immediately sign a contract and give you some earnest money, move on!
I thought if I go to see the property then call some-one I was birddogging. I didn’t act as an agent. I just went to see if it was a deal or not.
They buyer is a begginer, as I am too. He just bought his third property and I deal with him because he actually buys houeses as opposed to jerking me around.
There are not many serious investors around here. One guy I talk too just wants 60k equity in the deal whether it be 100k house or a 500k house, so as you can see it is easier for me to find deals with this criteria.
The houses was rent ready and 20k and sale ready would cost more I operate in the second lowest income town in the state.
i am a noob too but correct me if i am wrong here.
according to your number, if you really cant find a serious buyer in your town, even if you get hard money to fund your deal, (or private lenders, that would be a lot better) that still looks like a good deal.
OMG i would have got it to be my virgin breaker deal.
I would have bought it if I could. I get a 10k check in November. I will use that to show the bank for P&I to show the bank. Until then I will birddog and wholesale. I find deals like this and better every month or so.
A $500 straight option could have locked this thing up for you.
Your new, it’s OK, but next time…
Go look at the property, Do your home work first, get comps, last sales in area ect.
Offer the owner a price that you KNOW leaves you room to make a quick sale at a WHOLESALE price to your buyer.
Tell the owner you going to give him $500 in a check, RIGHT NOW! It’s his, go spend it. For that $500 he’s is going to agree to sell you his house for $XXXXXX and give you 60 days (don’t do less) to close. He signs, you sign, someone signs as witness. DONE! Give him the check.
Now, he CAN NOT sell that house to ANYONE BUT YOU for 60 days. Bring your buyer in then and YOU AND YOUR BUYER negotiate a price, the owner has nothing to do or say about it.
At the closing you assign your option to the buyer and you get the difference in price between the option price and YOUR buyers agreed to price.
Super, super easy way to lock these types of properties up with VERY little money.
YOU WILL NEED A LAWYER TO WRITE UP THE OPTION AGREEMENT AND HANDLE THE CLOSING. If you don’t you’ll be writing in again.
I think $500 is a bit too much to risk here, especially for an option. If you think your seller is going to honor that option agreement when a better offer comes along, you’re dreaming. And then what? Are you going to sue for specific performance? Yeah, right…