Help With This Deal - Makes Sense Or Not?
Found a home that is gonna get to auction.
At this point, dealings are with the seller thru
buyer and seller RE agents.
FMV - 250
Offer - 205
------
Discount - 18%
The seller wants 210. This would drop the discount
to about 16%.
I thought the standard margin is about 20% or the
investors will and should not touch.
The plan is to flip. House needs about 3K of work.
Figuring in the backend cost of listing to a Realtor
and paying buyer realtor costs, holding costs,
mortgage costs etc, the profit will be around 12K or
so.
This of course assumes that the market will be good
in Spring.
Oh, i am offering a Cash closing.
Any suggestions?
I feel like i am letting a good one get away, but
due diligence says beware. Please help.
Thanks
Kris
The seller has loans to the tune of around $160.
Probably some piled up charges and delinquent
payments as well.
At this point the owner will have positive cash
left.
The owner is trying to get their purchase price of
210 with no loss. Well, perhaps a loss of 10K or
so in RE commissions.
My guess is that the property will take about 4 months
to sell. Renting out will at the most break
even with the mortgage, forget about getting extra
cash flow or even covering yard maintenance etc.
The seller and their RE agent are talking to other
investors. I see that they are burning time unless
someone else will take the risk for less reward.
-Kris
For starters, I think I might be inclined to talk to the two RE agents and see what they’re willing to contribute from their commissions to help get the deal done fast with cash.
I would also point out that even with a better offer, if it’s not cash, they could easily wait another 30-45 days or more, just putting the seller further in arrears.
You could also tell one of the agents you will re-list through them – providing they can get the deal accepted immediately.
My 2¢
Folks,
I guess i lost the deal. Someone came along and
offered to purchase it. I just found this out after i
bumped my offer up to 210k. Now, i am in position
No.2 as a backup.
I learnt something from this. Never use a realtor
to do the negotiations. It would have been better if
i had done it myself. May be the deal would have
gone thru without the 2.4% commission getting
padded in.
-Krish
You need to get a contract with the homeowner and in the buyers block add an or assigns to your name. This allows you to assign the contract to another buyer for an assignment fee.
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[ Edited by NancyChadwick on Date 11/14/2005 ]