First Potential Wholesale/Retail Deal

[ctang]

Hi, I`m going to see a ugly house tomorrow and really think this might be a serious wholesale/Retail deal.Area is good, easy to rent place, etc.Worth $200,000 in good to excellent condition (told by my realtor)

House listed March 2007 for 189,000, sold for 189,000 in Feb 2008. Buyer started renos but then something happend and...

It`s now owned by CIBC and listed at $98,000 just couple days ago.

My realtor told me that there`s already 2 offers waiting to be put in, and tomorrow noon is the deadline to put it all in to the bank.

It needs some work but I`m not sure how much.

EXIT 1: I want to have my offer accepted so I can tie up the place to wholesale to another investor before I close.
What should I put IN my offer, that is, subject to what in order to have a better chance at getting it accepted?

EXIT 2:I`ve also just met a friend who`s a handyman although he won`t be doing the work himself but hiring people he knows.
Partner up with him to sell retail?
Reason I called him is because he has the `hands-on` experience and I don`t (but I found the deal)

EXIT 3: no partners, I hire people to get it fixed up and sell it to the end consumer?

I`m wondering what you experts would do in this situation to make this deal work.

Thank you,

Chung

 

[Aaron Moore]

Hi Chung,
If the property is listed on MLS and there are already 2 offers, then the seller (the bank) will want a buyer who closes fast, has financing already available, and gives a big deposit.
If it`s truly a great deal, then one of the competing offers may be a firm offer with no conditions.
All the properties that I have wholesaled are properties I bought privately. I have not wholesaled a property I bought through MLS. It`s a lot tougher to get a deal you can wholesale when there are 2 other competing offers!

In summary, this sounds like a property that you should be ready to close on. But you can also assign the contract once it is accepted. All contracts are assignable unless they state otherwise.
Aaron

 

[ctang]

QUOTE (aaronmoore @ Dec 9 2009, 05:18 PM) Hi Chung,
If the property is listed on MLS and there are already 2 offers, then the seller (the bank) will want a buyer who closes fast, has financing already available, and gives a big deposit.
If it`s truly a great deal, then one of the competing offers may be a firm offer with no conditions.
All the properties that I have wholesaled are properties I bought privately. I have not wholesaled a property I bought through MLS. It`s a lot tougher to get a deal you can wholesale when there are 2 other competing offers!

In summary, this sounds like a property that you should be ready to close on. But you can also assign the contract once it is accepted. All contracts are assignable unless they state otherwise.
Aaron

Hi Aaron,
Thanks for your insight, that`s exactly what I end up finding out from other folks... the offer is actually pending as 6 offers end up going in (not including ours since we found other potential issues like encroachment on city property and the actual house itself).

We learned a lot though so now I`m just waiting and curious to see the amount of the accepted offer.

Ducks are lined up now for the next prospect.

And I did not know once an offer was accepted, you could assign it as long as the contract states otherwise. so Thank You.

From your experience, why do you think that the properties you bought from the MLS were not wholesale-able?
bought too high?
people find out from agents how much you bought it for so now they don`t want to pay more for it? do you know?

I`m wondering because i`m seeing a few prospects and have thought about how i may not be able to wholesale it once i`d bought it because of the 2 issues/ questions i mentioned above.

Would appreciate your insights/ experience.

Chung

 

[Aaron Moore]

tJust wanted to respond to your questions with my observations...

Any great deal or discounted property is wholesale-able, whether it comes from MLS or not. Its more challenging to get great deals on MLS.

I`ve noticed good deals on MLS can come in different situations:
-you get information that other people don`t have about the seller and their motivations.
-people often lower their prices by $10,000, $20,000, or more on MLS. If by chance you make a low offer a couple days before the date when the seller planned to lower their price anyways, then you`ve got a good chance at a deal. You won`t have competitors to buy the house at the lower price.
-the property may have good zoning that only informed investors know about (i.e. you). The realtor and the owner may not have researched the zoning. Maybe you can buy a big-old-ugly single family home and turn it into a duplex, triplex or 4-plex.

Generally, if someone has problems that you can solve for them, then they should be willing to give you some equity when you buy. If someone has owned a house for 15 years, maybe they`ll keep 10 years worth of equity and give you 5 years of equity. But you`ll probably need to give them something... close fast, do needed renovations, or pay their bills for them!

 

[Thomas Beyer]

QUOTE (aaronmoore @ Dec 9 2009, 02:18 PM) ..

In summary, this sounds like a property that you should be ready to close on. ..
indeed .. around 100K .. cash .. no condition .. cheque attached as 1st deposit .. closing in a week ..

This assumes that
a) you KNOW it is worth far more than 100K, has no major or hidden defect (drug op ?, caving roof ?, structural problems ? mold ?), and
b) you have 100K cash accessible plus holding costs to fix up and resell