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

Comments(4)

  • krish10th November, 2005

    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

  • mcole11th November, 2005

    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¢

  • krish13th November, 2005

    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

  • INVESTORWALLET14th November, 2005

    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.

    _________________
    [ Edited by NancyChadwick on Date 11/14/2005 ]

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