Posted by Big Rob on June 21, 2001 at 12:15:36:
Valerie,
If at all possible, do not get a loan to pay cash. Dont even give it to the seller as a possibility. The only time you should offer all cash is to make the seller salivate at your CFD or subject to offer. In my opinion. I also dont think you will get a rehabber to flip it to at that price. we cant help you until you find out how much he owes, how much his pmt is, at what rate of interrest, how long has he owned it, stuff like that.
NOW he’s Motivated!!! (LONG) - Posted by Valerie
Posted by Valerie on June 21, 2001 at 11:24:32:
Hello All -
I went to look at a property (4/2-CUTE!) in my area last week that needs some work (carpeting/paint/sod/new driveway, etc.) In other words, it needs some “prettying up”. He had one other offer in (so he said) so his motivation level was not too high but he did seem very concerned that I was not going to be putting in an offer.
Well, this morning, he called. My husband is off work today and got the call. He said that his “two” deals fell through and he just wants to get rid of it. He said that he knows he’s gonna get killed on the money but he is just tired of showing the thing. A main point is that this guy lives about 2 1/2 hours away in the poconos and his friend is showing the place for him so I think his friend is tired of showing the place, not him. This is definately not a “move-in condition” house, it’s an investors delight. It really would need to be cleaned up first. A family looking for a home would not choose this one unless they were specifically looking for a handymans special. My major fear is getting rid of it. The location is on the Route 1 on-ramp. YES, on the ramp. As you are coming OFF the ramp, you make a left into the driveway (it’s far enough down the bottom to make the left and not hit the guardrail.) There is a junk-yard across the street, too. He tried using a realtor with no luck (she didn’t advertise or show the property a lot-low price = low commission) then he broke the contract and turned it into a FSBO.
My original post with replies can be found at:
www.creonline.com/wwwboard/messages/32763.html
Asking $85k
I told him 2 weeks ago, no more than $75
Now he’s desparate
Comps in at approx. $90??? (brought down because of location)
Neighborhood directly behind property comping at $108-$120
Now what do I offer and what would be the best choice of acquiring this property. Any ideas or suggestions?? Please?? FIRST DEAL ON THE LINE!
NO OFFER!!! - Posted by Valerie
Posted by Valerie on June 21, 2001 at 20:27:37:
Well, after all of the advice from the people on this board, my husband, and myself, I decided not to put an offer in. There are a few factors but the location was my main concern. Phil wrote an e-mail to me (don’t see it on the board though as of 6/21 PM) and felt that the location could really hinder my ability to re-sell the property. I couldn’t agree more! As a newbie working on getting my first deal, I don’t mind the homework and research but I do mind having a house that no one would buy. So, I guess I will just say NEXT!
I did manage to find an REO so I will start working on the possibilites of that property. I am amazed that I do not feel discouraged! I really want to make my first deal but after reading a lot of posts here, I have a pretty good idea of what not to do. I am so glad I found this board!!!
Thanks again for all of your help!
My 2 Cents - Posted by CurtNY
Posted by CurtNY on June 21, 2001 at 12:12:02:
Valerie,
Being this is your first deal, the location and the figures you did give… I wouldn’t touch this for anything over $51,500. But thats just me, keep us up to date as things progress.
not yet he’s not - Posted by Anne-ND
Posted by Anne-ND on June 21, 2001 at 11:47:16:
Valerie-
What does the seller NEED? Selling at 88% of asking price (i.e., $75K) isn’t very motivated. You need more information about what he owes, what it will rent or sell for, what are the comps (if there are any comps for this kind of property), what will it cost to do the repairs? Do you have any potential buyers lined up?
Be especially careful on your first deal to make money, or it may be your last deal. This doesn’t sound like a good deal to cut your teeth on. If this were an investor’s delight it’d be priced at BELOW 65% FMV minus repairs.
Good luck,
Anne
Re: NOW he’s Motivated!!! (LONG) - Posted by Valerie
Posted by Valerie on June 21, 2001 at 11:29:23:
Forgot to mention - All major repairs have been done.
New roof, heater, water heater, washer/dryer and refrigerator included.
Hey Kent - Posted by SueC
Posted by SueC on June 22, 2001 at 13:13:47:
Hey Kent, did you see your name on You Don’t Know Jack the other night?
Re: NO OFFER!!! - Posted by Kent Cheatham
Posted by Kent Cheatham on June 22, 2001 at 03:29:22:
I figure everything has a value. And its set by what the MAJORITY would pay for a property. If you think it will sell quickly at 50k offer 35k. Politely tell him it may be worth more but you had a few people look at it to see how much they would pay and 50k was all they would give if fixed up, because of its location and the junkyard. Tell him you see 7k (driveway, paint, trimming, wiring, whatever) in repairs plus a couple thousand in closings to re-sell. Tell him you are a business person and dont work for free and all you can make off it is 5k. Then shrug, wish him good luck and leave.
He may call in a couple more months. Then relist at 75k and to entice a buyer (you’re gonna have to give terms because of the location) hold a 20% 2nd based on a 10 yr payoff, with a 3 year balloon.
I look at a place, run a scenario like this in my head, politely state your position to the seller (try not to belittle him, say “I’m just a business person”), then I walk a way and dont look back. Sometimes it works, sometimes it doesnt. But when it does…grin.
Re: not yet he’s not - Posted by Valerie
Posted by Valerie on June 21, 2001 at 11:55:13:
Only my husband spoke with him and no numbers were mentioned ‘yet’. I told the seller last week that I would have AT LEAST $8k in repairs. I was thinking of L/O at $65k and L/O to my T/B for $95k OR using a private lender to pay $65k cash and flip to a re-habber.
Re: NO OFFER!!! - Posted by Valerie
Posted by Valerie on June 22, 2001 at 08:14:03:
The worst part about this is his mortgage balance is $30,000 with PITI of $650/mo, he bought the house 3 years ago with 20% down conventional. I sat and crunched the numbers last night and came up with four offers all revolving around an offer price of $55k. After a few deep breaths to calm down, my husband said “Don’t forget to add in the moving expense.” When I asked him what he was talking about he said, “The only way you are going to make a profit on this property without ripping all your hair out and going into an asylum is to pick that house up and MOVE it.”
Point taken.
Thanks for all your help.