Posted by Michael on October 29, 2003 at 24:20:55:
…you are.
Tie it up with a negotiated price contingent upon approval of the physical condition of the property (in case he hasn’t disclosed the full extent of its poor condition), utility bills, title report, etc., and then contact some rehabbers to flip it to. If they think you offered too much, walk. You don’t have to write a contract “full of exit clauses”. One is enough, and you have the right to protect yourself.
Is the agent going to be around to help you feed the alligator when you pay too much for the property and get stuck with it? No.
If your agent is worth his/her commission, he/she should be able to better sort out your comps and give you a more reasonable range of value after rehab. If they can’t, get the agent’s broker to help. This is a reasonable expectation, I think.
Posted by D (in TN) on October 28, 2003 at 22:05:47:
hello all,
i visit this site quite often and consider it a goldmine of useful information. i am trying to get started in rei and have what could be a pretty sweet deal on my hands. however, i am paralyzed by the fear of what could happen if things don’t go as planned.
here’s the situation. today, i looked at a house for sale which is located in a very nice, historic part of town. the gentleman who owns it inherited it from his father and does not wish to keep it. he is asking $90,000 for it, but it needs EXTENSIVE rehab. comps are ranging from 140-240k (yes, i’m serious). my goal is not to do the rehab myself, but to flip it to a more experienced rehabber. i want to go ahead and tie this deal up with a contract as he seems open to negotiation and even mentioned owner financing to my agent, but am put off by the fear of what if no one wants to buy it (i know, i’m paranoid— right???). furthermore, i don’t want to write a contract full of exit clauses because i am dealing thru an agent and know that they frown on that sort of thing. i would rehab it myself but i just don’t have the resources or experience right now.
any and all comments and suggestions are welcome and appreciated.
Posted by catbert on October 29, 2003 at 05:56:15:
The property sounds like it has potential. Go for it.
Who cares what an agent does or does not like. Have your lawyer write out the agreement the way you want it. Michael is right in that you don’t need a lot of exit clauses. But if you’re flipping it, then you need to have an acceptible inspection, and the deal probably needs to be contingent on you finding a buyer within a certain period of time. Just to be safe, you could always throw in something fairly abstract like a need for a “lawyer approval”. But even this is probably not really necessary if you’ve done your homework. Good luck.