Thanks for the reply. The seller wants to get this property off of his hands. He bought this house in 1988 with the intentions of fixing it up, he never did, now he wants to sell. He’s willing to sell for 15-20K and we will sign a purchase agreement today, he’s also going to give me keys to the property. What should I do next, should a title search be done, or should I start looking for a buyer. At this price I don’t think it will be difflicult to flip as the property needs about 10k in repairs. Any suggestions?
I’m a newbie, yes another one, and I’m interesting in flipping properties. I found a buyer who is interested in selling a 2 bedroom 1 bath house that is in need of repairs. The seller is asking $37,000, he says this is what he paid for the house 5 years ago, he never made any repairs. What should I offer him as a purchase price? I’d like to make at least a $3,000 profit. I pulled the property record card from the internet, and it appears the property is appraised at $37,000. How should I handle this, this is a very motivated seller?
I met with the seller this weekend and he is very, very motivated to sell this property. He is willing to sell for 15-20K just to get property out of his hands. I can find a buyer for this property and still make a pretty good profit. The seller will sign a purchase agreement this week as well as give me keys to the house to show potential buyers. What’s the next step after this. Should I now turn everything over to an attorney to handle, title search, etc. Or should I proceed with finding a buyer. At this price and the condition the house is in it will be very easy to wholesale to a rehabber. Any suggestions?
First of all you need to find out what fair market value is. I am assuming that the property record you pulled up is the tax value. Which in most cases is not the way to obtain it’s value.
If by chance this is the FMV there is no deal here at all unless he sells it to you for way below what he bought it for.
Another thing you didn’t mention is, how much would it cost to cure the repairs? This is going to be part of your formula for your offer. To be honest unless the fair market value is much higher I really don’t see a deal here. Just because the seller is motivated, it doesn’t necessarily mean that it is a deal.
That being said and using your figures what you need to offer tops is about $20,000 minus the cost of repairs if you want to wholesale this thing to an investor.
You may be able to get the seller to hold the financing at a higher price and sell on a wrap to a retail buyer as a last case scenario. But it would be doubtful to get $3000 from a buyer and expect them to do repairs in that price range of home.
Unless your numbers are a better than what you post I would move on to the next one.
It would be helpful to know WHY the seller is motivated.
Also, find out what the cost of repairs would be to a potential rehabber – you’re going to have to get a price from the seller that discounts the appropriate amount for the repairs, plus allow an acceptable profit for the rehabbers once they fix it and sell it. And of course, you need to build in your profit as well.
Problem: Seller wants “appraised” value for the house. Is this “tax” appraised value? “fair market” appraised value? Is this “appraised” value you speak of based on the current condition of the property or the value of it once it would be fixed up? (I’m assumming it’s for the current condition.)
As I have read, many experts don’t utilize appraised value anyway, but rather are interested with comparable sales of similar property in the area.
Find out what it would be worth once repairs are done, then you’ll have a better idea of the profit potential.
A double closing sounds like a good idea so you don’t have to come up with any money yourself at the closing table. The new buyer you found to flip it to will be the one who has to produce a check. (Make sure your attorney or title company is familiar with doing this) And if you structure it right, you should get a healthy profit out of it. Refer to the HOW TO articles and SUCCESS STORIES on this site to get examples of what I’m talking about.