New deal feedback... - Posted by Denise

Posted by John(NH) on October 27, 2000 at 10:48:32:

That would be tough. You can either 1) Wait until the listing expires, then contact the owners or 2) Make the offer with enough cash down payment to pay the realtors fee.

New deal feedback… - Posted by Denise

Posted by Denise on October 27, 2000 at 08:05:13:

Would appreciate some feedback.

Found a 2/2 house in a great area.
House is appraised at $115,000, and listed with a realtor for $115,000. I went to check it out and there were rehabers in it, finishing up some work. Found out that it’s owned by an older couple who had it rented out, and now they just want out. After checking everything out (rehab, etc.), the only thing I’d have to do is replace carpet.

I know it’s not a 30% deal (almost 22%), but if I offer $90K, replace the carpet and resell at $115K, after all costs, wouldn’t this be a pretty good flip?

Any thoughts? Ideas?


Re: New deal feedback… - Posted by JohnP S. FL

Posted by JohnP S. FL on October 27, 2000 at 22:07:37:

I agree with Brian as far as the seller not being motivated. I would do a follow up every month. They will get motivated when the house dosen’t move quick enough for them. I would then go in and try doing some owner financing.

John P

Re: New deal feedback… - Posted by B.L.Renfrow

Posted by B.L.Renfrow on October 27, 2000 at 08:56:35:

Doesn’t strike me as a particularly motivated seller, if they are rehabbing and listing at market value. Do you have reason to believe they would consider a low offer? The typical “don’t wanters” with whom I want to talk are those saying, “Take my house, puleeeeezzzzeeee,” not the ones rehabbing and selling for full retail.

Also, have you checked comps? Remember that appraisals are generally worth the price of the paper they’re writen on; they are one person’s opinion, and as such, very subjective.

Do you know if they owe anything on the house? Perhaps they would be candidates for a subject-to deal. But before you could consider that, you’d have to know what the sellers needs are. That’s pretty tough to determine with a listed property.

Regarding retail flips, a year ago I’d have said it would be worth considering, or alternatively, a simultaneous close with a note sale. Not anymore. Because of the title seasoning issues with most - though not all - lenders and note buyers, it’s become a very difficult way to pull off a deal.

Brian (NY)

Re: New deal feedback… - Posted by Denise

Posted by Denise on October 27, 2000 at 09:43:26:

Thanks Brian,

They don’t owe anything. And they’re definetely not saying, “Take my house, puleeeeezzzzeeee,” but according to the guy doing the rehab, who knows the seller, they are just done with it.

If I don’t have to worry about seasoning, would you then consider it to be pretty good?

Can you explain the subject-to deal, in this case?

I also considered taking title and either trying to L/O or keep long term and renting out. The area gets top rents, has steady increses in value, adn almost all of the work has been done!

Just want second (third…) opinions, if I’m thinking the right way. This one seems simple (if they’ll take my price :wink:

Thanks again!

Re: New deal feedback… - Posted by John(NH)

Posted by John(NH) on October 27, 2000 at 10:28:54:

If they don’t owe anything, there’s no pressure to sell to a low ball offer. I would try to offer close to full price if they would carry at a good interest rate, then do a wrap or L/O for some up front money and cash flow.

Re: New deal feedback… - Posted by B.L.Renfrow

Posted by B.L.Renfrow on October 27, 2000 at 10:04:59:

In that case, subject-to wouldn’t be a consideration, since there’s no existing loan. What I might do in this case is see whether the sellers would be receptive to carrying some or all of the financing themselves. Often, the elderly need monthly income to supplement their pensions, savings or whatever. So if you can show them how they could receive $xxx every month, perhaps that would solve their problem.

With a seller-financed deal, you could in turn either L/O it or sell on a land contract (or even just rent it, if you want). That way, you avoid, or at least minimize, the title seasoning issues which will arise if your ultimate buyer brings a conventional lender into the picture.

And if you can convince the sellers to give you a low interest rate, you can offer them pretty close to market value and still come out OK. Just raise the interest to YOUR buyers and raise the price, since you are offering a “value-added” deal with terms.

Brian (NY)

Re: New deal feedback… - Posted by Denise

Posted by Denise on October 27, 2000 at 10:39:11:

How would you approach this through a realtor listed property?