After much thought and worry on this deal I have decided not to close on this property. Between the time I emailed you and now I did get one more opinion on the repair estimate from a “handy man”. In other words not a general contractor. To repair this house it would need about 22k in repair before anyone could live in it. This is someone I know and use to do work. He is not putting the screws to me.
Another determining factor is that I have had 30 calls from interested “investors”. Not one return call to see if I was negotiable on price or anything. I started calling them back and asking them what they thought of the property like Mr. Piper suggests below. After about 5 calls ,from the serios investors who I have flipped to in the past, No one wanted this property. I even asked if I could give it to them. “No” was the reply. Now I agree that every house can be sold to somebody, but I did not get into this business to find out who that somebody is at all costs.
This property is very deceiving from its looks. From the outside it looks like a steal of a deal. Even walking through it looks like mostly cosmetics. However, it is the DEVIL!
I did learn some new ways to detect rotten wood in the walls and termite damage. I also put about 10 new buyers on my buyers list. Not all is lost.
I have a property under contract that is due to close tomorrow. I am trying to flip wholesale. When I submitted the contract I submitted with a 15 day closing window and a 3 day inspection period. After a week of back and forth I received an accepted contract. This property is a FNMA and my offer is all cash. They also faxed over an addendum that needed to be signed and it is only 6 pages in length. As you probably know the addendum supersedes the contract from what I have seen buying from institutions. The addendum had a closing date of 6/30. (Did not realize the closing time frame until realtor pointed out after I signed and faxed back.) I called all of my buyers and no takers. Ran a new add over the weekend and rec. about 20 calls. Still no takers. The value of the property is 45k and I am asking 14.9k. Property needs @10k in repairs. Built in 1974. The property has a lot of rotten wood and some termite damage.
My question is this. Should I cut my losses and move on? or should I buy the place and still continue marketing the property? I have the cash to close but do I close and own a dog of a property? I haven’t done wood frame in the past only Block construction. I also have another one under contract that is block w/ a lot better numbers.
My thoughts are cut my losses and move on. I don’t want to have to put up my cash to make this deal happen. So far the only deal here is for FNMA.
LBP, (Lead Based Paint) Federal Law says that you must disclose to the buyer that either (a) you have knolage or (b) you have no knolage of LBP in the home/ apartment, if it was built prior to 1978. I think the law was passed in 96 and according to my state’s news letter and the national REALTOR magizine the Feds are begining to check for compliance. See the HUD www site @ (http://www.hud.gov)? for more info.
Would your buyers buy YOUR house over say… a brick or block house if they had a choice and could afford any one they picked.
Do you have to warrant the condition of the property after the sale? In my state the seller, by LAW, implies a warranty after the sale , doesn’t matter if defects are known to the seller or not, unless it is put in the contract, in “laymans terms” that the buyer is buying “as is”.
You must have bought (offered to purchace) the house at a good price, otherwise, you wouldn’t have offered it for sale for $15K.
Relax, you’ll do fine on this deal.
Re: To close or not close?
You never get a second chance to make a first impression.
Personally I woud close. I know many would disagree, but when I put my name on a contract it is as good as sold. I have made a few bad decisions and did what I had to do to make the best of the situation.
I feel that my reputation for closing everything I put my name on will eventually pay off for me.
Now if you find out that you are way off with your numbers and financially this will put a real hurting on you then you could reconsider, but from the numbers that you posted, if accurate the deal is not bad. Instead of making $15k when it’s all said and done you may make $10k. Save your name and still make money, what, not bad.
To me this question would be answered by the response/feedback I had received from my potential buyers/lookers, along with what the contract says in terms of my liabilities if I walk.
If the feedback is that the price is too high or the repair cost too low, I would start to question my deal. If I were getting favorable feedback, but not enough time has gone by, then I might close. Just depends on the feedback from the buyers.