OfflineI have a client who is going into foreclosure. However she is very complicated because. She wants me to buy her house for 50,000.00 she then wants me to put her in another home similar are close to the one she is currently in.
Which consist of....
-4 beds
-2 baths
-1500 sq
-a large back yard
-good neighborhood
-none flood zone
-ect
-priced below 60,000.00
The appraised value is 113,000.00 according to Chase Home Value's site and according to totalviewrealestate.com its worth about 63,000.00
She owes $31,000.00 or more on the property she is six months behind payments. based on the photos she showed me it looks like she needs about 20,000.00 in repairs.
I started my offer at $40,000.00 because based on dean's offer formula I would really be offering about 36,000.00. She didn't agree with the offer of $40,000.00 because she feels like whoever buys the house will make a good profit off the home.
On top of that I have another investor involved whom I don't actually trust. He claims he can get her into a home using seller financing. The reason I don't trust the guy is (A) he wants me to share half of what I make after I wholesale her property (although he will still make money if he assigns her another property.) (B) he doesn't even have a property under contract to show my client. He claims he has the experience but I don't see it.
***he also told me if I don't share half he will back out of the deal.***
My questions are.
1) Is my offer of 40,000.00 good or should I just go with the accepted offer of 50,000.00
2) Should I agree to give half of what I make on the deal to the other investor?
Someone with experience please tell me what to do...
I would not make another move until I verified the repair costs. One wrong guess can be very expensive. Run your numbers after you have good repair information to see if the deal will work. Will the Investor be willing to share half of his other assignment with you?
Yeah that's what I plan on doing because my client isn't really happy with my low offer. She was actually upset when I countered her back with 40,000.00. The investor did agree to share half of what he makes once he puts her in the home. The problem is its verbal and not written. He wants to put his name on the contract that I have my client signing. I want to make sure he keeps his word and doesn't screw me out of my time and money.
Just because it was appraised at $113,000 doesn't mean you'd be able to sell it at that price in this economy or in that neighborhood. Not sure where you are, but that's where it's at where I live and you may need to remind her of this. When you are attached to a home, you tend to think of the value it had before, not right now. Why did Total View value it so much lower? Must be a reason. And you really have to pull your own comps and come up with what you think is the value, or get an agent to give you comps. A quick way to get comps is to use Zillow.com. After typing in the address, go to the "similar" link. It will bring up all the "similar" home sales within a mile or so. Click the date to sort by the date, then scroll down and look at all the sold homes within the last 3 months. Don't use really old sales, only recent ones. Try to pick homes of a similar size and age. Write down the price per Sq.Ft. they give to you, kick out the highest and lowest and average the rest to get a new price per SF. There you have real comps almost as good as what an agent will give you. This is my quick way of evaluating a property to see if I want to actually tour the inside. (And this is what it might sell for retail, not a wholesale price)
From the photos it may look like $20K needed in repairs, but if you tour the property it might be worse. I've had that happen....
What you offer depends on a lot. If you think you can get it for $40K, then go for it. If she really wants more, you may have to meet in the middle at $45K. It's all a negotiation. You need to figure out your bottom line. What is too high that you will walk away?
I haven't really done any wholesaling, but if you don't trust someone you should probably go with your gut. Or, can you figure out a way to make the deal work and not lose it, while protecting yourself from someone you don't trust?
Less money is better than no money.
Hope this helped 'cause I'm just throwing some thoughts out there.
Two more posts by the time I finished typing! Sounds like you are on the right track.
Thanks for the advice mbjoseph, I was actually just thinking about pulling comps because I have none to show my client. I will use zillow like you suggested and see what I can pull. Also should I make a separate contract for the other investor so that I know for sure that he will keep his word? Probably a dumb question lol I'll probably end up doing this anyway.
Also I'm in baton rouge LA