First deal! for newbies and all (long) - Posted by SueC
Posted by SueC on July 14, 2001 at 07:30:46:
Hi everyone - despite my willingess to post at length in this site, until last week I had only made a lot of offers and never actually closed on a deal.
So, I thought I ought to post my great first deal to give everyone encouragement!
I had someone distributing flyers for me on cars in parking lots and train stations actually in a different area than where I live, but the area I want to farm. Someone called with a fire-damaged house, in a copmletely different area, but right in the area (coincidentally) that I knew investors.
I spoke to this seller a few times on the phone, the insurance co. was paying off her mortgage and she wanted to move. She was getting her full price for the house from the insurance company. She wanted to just get rid of the house, but said the damage was not all that extensive, mostly the back deck and part of the kitchen.
I did not know the area very well, but somewhat as it’s near where I live. I ran some comps, and with my working knowledge of repairs, estimated that I could only offer her $3,500 (but would be able to get $5-8K from a buyer). (The next best offer she’d had, she told me later, was $2,500, so it turns out I was pretty close to the mark.)
I planned to take an option from her and discuss this deal with other investors, one in particular that works this area and for whom I’ve done some legal work, so that if the inspection didn’t work out, I would not exercise.
I called my investor friend (before getting a contract from seller) and gave him the address and told him to drive by and see what he thought. He called back to say he was interested, how much? For him, I told him $5K, and he said he’d take it.
The next morning I met seller in my remote office, (Mickey D) and we signed a purchase agreement - not an option, since I had an agreement with my buyer - in a half hour. Then a week later, I met my buyer in my local office (Burger King) and we executed an Assignment of Contract for $1,500 which he paid me right there. (Note that I know this guy and was willing to take his verbal agreement that he wanted it!)
So, it’s not one of those big $$$$$$ deals, but I figured I had less than 2 hours into the deal, still haven’t seen the house and don’t even know exactly where it is, and I still made $700 an hour. Oh, less about $50 for the kid who put out the flyers for me that day.
Important things about this deal are that I met investors from my local REIA and didn’t have to advertise for buyers in this area. I will always go to the REIA folks first, since there are dozens of them - and I’m getting to know them by being active in the group and posting on their discussion boards!
Also, I didn’t have to get this under contract first, since I knew and trusted the guy from my group that I was working with. I also knew that I could rely on him to do an inspection of the property and be frank and fair with me if it wasn’t worth anything to him.
Finally, because I had read Steve’s course, and spent the last ten months educating myself on all kinds of RE opportunities, I had a clue about what to do with something like this when it came in, and also now have an idea when to trust my gut. The big mistake I made was that it turns out I probably could have gotten more money for this, but instead I have made a good relationship with a friend who will buy from me again, and learned more about the area and what he and his competitors are looking for. I also did not do an inspection or title search which just kinda worked in this case, but may not work in any other deals. It will depend on the investor, and the property I think.
Today my realtor in this area is showing me two more properties (he was thrilled and stunned that these sellers accepted almost at my lowball offer! He can’t wait to show me more stuff!) that I think my pal will be interested in. So, there is a lot to learn and a lot of success even in the $1,500 deal that will lead to more deals.