What Do I Tell An Interested Investor/buyer??
Just a quick question for anyone who has a second. One a different note, I REALLY appreciate this site, and everyone who posts. Its been a great help in my learning process, so to all of you, THANKS!
I just recently got into real estate investing (im starting out with just finding properties, having the seller sign a purchase agreement with me, and re-assigning the contracts to investors). Im very interested in it, and I have possibly my first deal going. I had a question though about one thing. When it comes to talking with investors.....when they ask "what is the selling price?" how do I respond? Do I tell them what the seller, who I have a contract with is selling it to me for, or do I tell them a different price (one that would make me a profit). I hope this makes some sense. Any help would be greatly appreciated, as I am starting to get some calls on this property! Thanks again 
-Nathan
Quote:
When it comes to talking with investors.....when they ask "what is the selling price?" how do I respond? Do I tell them what the seller, who I have a contract with is selling it to me for, or do I tell them a different price (one that would make me a profit). SRC="images/forum/smilies/icon_smile.gif">
-Nathan
Nathatn,
You would of course not tell them the price you are getting the house for, if you plan on making a profit on the deal. They do not need to know how much you are going to make. Good luck on this one!
I agree! I am getting ready to wholesale my first property and I plan on getting it on contract with a nice out clause in case I can't move it, selling it to an investor for a profit. I won't make a lot because the investor will need to be able to make money, but it will feel great to walk in to my home with that Tag watch my husband has been eying for the last 5 years and we have never been able to afford it....How much is the difference in the price you are getting it for and the sale price to the investor????
Hey,
How would you NOT be able to tell an investor the sales price of the house???? You said you would assign the house to the investor. The purchase price is on the contract.
This question pops up all the time (to tell or not tell the price).
I believe the way to handle it is when you are marketing the deal to an investor you say:
"The purchase price is $75k and the Assignment fee is $2k" or whatever numbers you want.
In my book, you do not get anywhere near as much money on an assignment as you do on a wholesale deal (where you close on the house). Additionally, you are at risk that the contract will expire BEFORE you find an investor, so DON'T get greedy.
question.. the "assignment fee" is written up on an addendum? ... ...mcldavid
Thanks everyone for your replies! The seller wants $40k for the house, and it appraised for $60. I told the seller I would be able to give him $35k and probobly not much more than that (he's motivated....so I think I can get him to agree to this). Once he agrees to this, and I have a purchase agreement signed, I will tell investors (using advice from this website) that the purchase price is $35k, and the assignment fee is $4,000.....making it $39,000, which is 65% of market value. This works out, right? Even if I only end up getting $2,000 or $3,000 for the assignment fee...im happy, because i'm learning with each one!!! Thanks again everyone!
Hmmm....your assignment fee is as much or more than a realtor's 6%. I guess the seller doesn't realize that he may be able to get more if he were to list the property. Shhhh....
Way to go, Nate!
Get the first deal done, and the small fee you may make is "priceless" relative to the experience you've gained.
I'm rooting for ya; you've got the right attitude.
[addsig]
Hey,
Are there any repairs that need to be done?
That will greatly effect what an investor will pay for it.
If the house is in PERFECT condition, you should be able to work a deal with someone.
Do you have a list of investor contacts ready?
Remember, once you sign the agreement, the clock starts ticking.
Finding a deal to assign is only one part of the puzzle.
Good Luck!!!
It is no one's business how much money you are making on a deal, period.
Is the seller happy? Great. Is the buyer/investor happy and can make money? Great.
There are ways at closing to create two settlement sheets I believe, one for seller and one for buyer. I believe this is a simultaneous closing, or one example of it. They can be in separate rooms, or drop by at different times.
Seriously, going around telling the investor you are making $4k makes no sense at all. And again, who cares if you are making more than a realtor would make - realtors don't sell fixer properties very well anyways, because they don't understand them! No one's business but yours....
An addendum,
I think the two hud-1's allow you to hide from the seller what you are making, but buyer will see it. But they should have done all their numbers and seen the profit in it for them, and them noticing the assignment fee on the hud 1 should be an after thought.
Hey,
Since we are talking about assigning the contract, I don't think simultaneous closings are an option. Bascially, the investor buys the purchase contract from you and closes on the house. The amount you earned (the fee) does not have to be disclosed to the seller, as it can occur outstand of closing.
But truth be told, going through all this cloak and dagger stuff is a bad idea. If I am buying the contract from you, I have to know the selling price and the fee. If you are trying to build a long term relationship with investors (and you HAVE to, or else you are not going to be able to sell the contract), being coy is just shooting yourself in the foot.
What it seems like to me is that you should be signing an option which secures your place and then you can sell it for whatever you want before the option runs out.
Bruce is making a very important point here.
An investor knows you're in this for a profit, and they would be very surprised if you were "giving it away".
What will tip the scales is whether there's a profit in there for them, period.
How much of a profit you make, is not something that will "turn them off".
[addsig]