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Hello Everyone,
I would like some ideas on structuring the following deal:* Owned Free & Clear (Son Inherited from Mother)
* Single family 4 bed / 1.5 bath
* 1,800 sq. ft.
* Built 1971
* 1 car garage* Foundation is Ok
* $35 to $40 in Repairs: Needs full cosmetic update ( Kitchen, Baths, Carpet, Paint {Interior & Exterior}, Gutters, Landscaping, etc.)
* Took loan against property ( Still owes $11,000)
* Seller needs money!
* Not Listed with Realtor or at All.
Similar Homes For Sale: (All 4 bed / 1+ baths, 1700+ sq. ft.)
1. $234,900
2. $214,900
3. $214,000***All 3 homes are on the same street as Subject home.
Thanks Everyone,
Wydell Conley
[email protected]
O: 302 754 1715HI Wydell.
Has the seller indicated what they want?
Do you want to keep this house or just make some fast cash?It is not a good time to do a rehab with talk of raising interest rates to 4%.
If it were me, I’d negotiate the lowest cash price the seller would take. (remember it is better if YOU are not the one naming the price – ask the seller what they would take)
Then tell them all about the wonders of a Highest Bidder Sale (and perhaps how you might be able to get them even more) Get an option, then do 5-7 days of aggressive marketing, a 2 day open house, sell to the highest cash buyer.
There are two ways to structure the option:
1. You make everything over the strike price
2. You and the seller split everything over the strike price.Jackie,
*I asked the owner what price was he looking to get. He said he would wait on me to give him a price after I do my numbers?
* I want to make quick cash with this one. Trying to make it to Panama!
* He doesn’t have money to move until after settlement.
* Would you start with ARI x 70 % minus repairs?
Thanks.
If he won’t throw out a number first then this is what I’d do/say
Mr. Seller, I estimate it will take $50,000 to get your house fixed up so it can be sold retail. Homes on this street are selling for about $210,000. Investors have to make a profit if they tie up $50,000 in repair costs plus the purchase price. Plus there are the costs of taxes, insurance, etc while rehabbing the house which will probably take 4-5 months. Of course there will be closing costs too.
So, Mr. Seller, based on these numbers, the best I can offer you is $110,000. Honestly, it is a bigger project than I’m willing to take on at this time. However, I do have a way that you could get your house sold fast, potentially make MORE MONEY than $110,000, and close by the end of the year. This is how it works:
It’s called a Highest Bidder Sale. It is similar to an auction but very different too. Don’t worry, I will do all the work! I’ll do 7 days of very aggressive marketing to attract a lot of potential CASH buyers to a two day open house. When they come to the open house, they have a leisurely opportunity to check out the house, then submit a bid. With my professional marketing, I usually get 100s of potential buyers/bidders at the open house. The more bidders, the higher the price goes up ( that’s how you could potentially make more money). After the open house, I will call all the bidders to tell them what the high bid is then give them the opportunity to increase their bid. This is where it REALLY gets interesting because buyers are literally fighting over who will pay you the most for your house.
It sounds like a lot of work – and it is. But don’t worry Mr. Seller, I will take care of everything.
All I need to get started in a contract to purchase your house for $110,000 with the agreement that anything we sell it for over that amount, we will split 50/50. The buyer will pay the closing costs.
I will also need for you to get your house inspected by a professional inspector. I can help you find someone. The reason we do this is so the buyers know exactly what they are getting in to when they buy your house. There will be no contingencies to get the house inspected because that can really slow things down. With the inspection report readily available during the open house, buyers can make a quick decision about buying your house.
NOTE: If he balks at $110,000 you could go up to $120,000 but no more. Tell him if the price is $120,000 you will not be able to split profits with him 50/50 if the house sells for more during the highest bidder sale. This will usually get the seller to stick with the lower price.
Let me know how it goes!
hope this helps
jackie
You can pay for the inspection but, like Don said, include in the agreement that you get reimbursed out of the sales proceeds
You could just wholesale it but you’ll make more money if you do a highest bidder sale. You could also do a modified HBS where you only have an open house for a few hours on a saturday. You still need to do aggressive marketing to attract buyers. invite the investors too. accept bids then call the all back to get the price up higher
I can tell you that 90% of the investors at your investor club are NOT buyers. They would want to get a contract then try to wholesale it too. You absolutely cannot get involved in this.
You provide the inspection report so no one says they need time to get an inspection (code word for flip to someone else)
If you know any private lenders or hard money lenders you may want to have them at the house to offer financing.
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