You must be logged in to reply to this topic.
-
I have an out-of-town owner of a property in my area that is currently occupied. She is behind on her taxes (although she said she didn’t realize it). Other than back taxes, the property is free and clear. When questioned about the condition of the property, she indicated that there was a hole in the roof over the eave (not into the house) and that the deck was in pretty bad shape. I tried several different ways to get her to quote me a selling price, but couldn’t get her to do it. My conclusion was that she didn’t want to name a price because she really wasn’t sure what it was worth. She’s an elderly lady, although from our conversation, she seems to be very competent. I would like to get an option on the property first, and then develop an exit strategy after I have my signed option. What is your suggestion about how I should proceed? Thanks!
Don, she doesn’t live in the house and hasn’t for 4 years. She’s basically had ‘caretakers’ in the property that pay her a small monthly rental payment. Like I said, she’s behind about $3.8K for back taxes and there’s also repairs that need to be done, neither of which she has the cash on hand to take care of. She said the neighbor across the street told her that it should be worth $75K to $100K, which I put little or no stock in. I’m trying to figure FMV by comps. Will try to come back here with that information to gather more advice. Thanks, Don & John!
Mike,
I apologize, you did start out saying you have an out-of-town owner. As far as your exit strategy we first need to know a little more on what you expect out of the deal. Do you want the property or a long term hold? Do you want the property to turn for a quick profit? Do you or a private investor have the cash to purchase and fix up as a long term hold?
Don WedeI’d tell the seller about the Highest Bidder Sale method and how it would be the best way to “let the market determine the price” And you will do all the work to get a slew of potential buyers at the house
Get an option for 60% BELOW market with the agreement that you will split all profits over that amount when the house sells during a HBS . You could even try 70% below market as the starting option price – making sure she understands that she will get HALF of anything the house sells for over the option price.
Example – the house is worth $100,000 all fixed up.
Your option price is $40,000 ( 60% below market)
During the highest bidder sale, it sells for $70,000
Seller gets $40,000 + $15,000 = $55,000
You get $15,000
buyer gets a great deal at 30% below market
win win win for everyone.
Of course, the numbers should be modified to fit the deal.
Take lots of pics to send to the seller so she sees all the people at the house and knows that you got as many people there as possible.
Make sure your HBS has limited schedule each day – 3 hours max on Satursday and 3 hours on Sunday.
You want everyone to be there at the same time to drive the price up up up
Even if the house only sells for $10,000 ( you get $5k and seller gets $5k over option orice) it is OK! You get experience in doing a HBS and there is a really good chance that people will come to the HBS who says PLEASE DO A HBS FOR MY HOUSE TOO.
You must be logged in to reply to this topic.
