Pre-Marketing this property

the assessed value means nada, zip, zilch.

The ARV is the selling price of the home so an investor would have to buy it for about $250K - $270K to make a proper ROI.

The comps you gave show the best end user values:

4/2 2500sqft $327,500 2/2011
4/2 2688sqft $380,000 11/2010

Is this house for an investor? Only if you can buy it right. Try a subject to L/O it for an amount equal to the homeowner's mortgage balance assuming in is low enough. At least the seller can move on quickly.

Otherwise, move on as this is a train wreck waiting to happen.

I told the seller that I need to be at a price at least 70% of ARV. He said he couldn't do it. I am going to talk to him some more and tell him that in this market it is just not possible to sell his house for what he wants for it. I have buyers lined up to buy your property at this price, if we can make this price work I can put cash in your hand fast and take this burden away from you in a short period of time.

Besides what Bill said, I can pretty much guarantee this guy is upside down, He owes more than the ARV of $336,968. Remember ARV is where you start, not what the owner wants! He is asking $33,000 over ARV. How can this possibly be a deal? If there is 0 repairs/remodeling needed you need to offer $250,000. This will not be possible because he owes more that I bet. No deal, move on. Don't try to shove a round peg in a square hole!
You know how the numbers work, what are you thinking on this? Is this property listed of FSBO?

Michael Mangham
MD Home Acquisitions LLC

He has already offered to come down to $330,000 and pay me $5000 if I get it sold for him. I just sent him an email explaining where I get my comp values from and that I cannot pay more than 70% of ARV. He is stuck on how much his house is assessed for and how much work and time he put into building it. He is current on his payments and is not upside down on it. He has a tenant in there right now. He is just tired of having it and wants to let it go. The property is here in Illinois and the owner is in San Diego, CA

I will move on, I am working on two other fsbo's and my MLS offers are starting to recycle this week.

Your saying I don't have to go all the way down to 70% ARV on this property? $250,000 is close to 75% ARV

with request.

i agree with bill ARV means nada properties that has a assessed value of $ 350k here in Long Island New York are seling for $180k up to $220K

I don't believe the owner is upside down, he just has an emotional attachment to it because he personally built it and knows what it COULD be worth. He started by telling me $370,000, by the end of our conversation he was already down to $330,000 without me even asking him to go lower. He is lowering the price farther and farther the more we talk.

I was thinking of a compromise with this owner and this deal. It looks like it could go to an end buyer if it is totally move in ready. You could offer a little more in that case because you would sell for more. Remember the formulas are just that, the numbers aren't carved in stone. If you stick to them 100% you could miss out on a deal here and there. You must be flexible and work each deal. Now on REOs, I stick to the offer formula!

Michael Mangham
MD Home Acquisitions LLC

USE THE OFFER CALCULATOR DEAN PROVIDES TO GET A GOOD IDEA OF WHAT YOU NEED TO OFFER. EVERYONE IS CORRECT ASSESSED MEANS NOTHING. YOU NEED TO LOOK AT COMPS OF RECENT SOLD. ME MYSELF I OFFER 65% OF ARV - REPAIRS= PRICE

This house will most likely not sell to an investor because there isn't too much of a spread from his purchase to a seller who will have to get it financed.

You'll waste both your times

With Bill, Michael and Elix. Time to pick up your cards and go to another game Lane. I don't see it happening here. Good experience though...Jan

Is there a rental agreement in place here Lane. If so the rent income may not be what a new investor would take for rental income on this property. Also can the rental agreement be broken.

Steve.

L/O it from him, then L/O it to an end buyer if you break the current lease or get the tenant to convert to a purchase.

thishousebuyer wrote:

L/O it from him, then L/O it to an end buyer if you break the current lease or get the tenant to convert to a purchase.

The only way to work around it is to have the tenant willingly leave(not happening) or to buy them out.

Again the biggest issue with this house is it is for an end user only and Lane I believe is not as experienced to actually find and qualify someone. If I wrong I apologize.

From the beginning this property seems to be more of a headache than anything as it is so I hope he does move on from it.

Greg Murphy would probably do this deal if he took 30 days from the seller to find a L/O buyer.

Seller wants $370K? Lane wants to make $10K? Find a bad Credit High Income Buyer.

Lane offers $5K Option consideration fee to Seller and collects $15K non refundable Option consideration Fee from his L/O buyer. Lane keeps $10K.

Sellers mortgage payment is $2,000, Lane pays $2,200, L/O buyer pays $2,500. Lane keeps $300.

Seller no longer has a house payment, Lane Gets Cashflow, L/O buyer has nice house.

It is possible, but only if you try.

Would be an issue, unless maybe he could offer the tb another house to move into (if he had a rental or something). I know in the rental business, if the tenant moves out and breaks the lease, they are responsible for the rent until that house or apt. is re-rented. I wonder how much the current tant is paying in rent each month?

will be out by the end of the month. That is why he wants to sell it out right. He doesn't want to hold the mortgage anymore.

Communicate with the seller on all of his needs. This sounds more like a potential Sandwich Lease option Deal.

He said he would take $330K, is he upside down on his loan but has enough to cover the loan if he can get $330K? IDK, ask the seller. Either way he answers if you find a buyer for $350K with $20K Down available there could be a deal, lets ask another question.

He has it rented currently, but for how much? IDK, ask the seller. If the mortgage is $1,800 and the current rent is $2,000 find a buyer to pay $2,500 and this could be a deal, lets ask another question.

Seller said he doesn't want the mortgage anymore, does he need to cash out now on his equity or can he wait? IDK, ask the seller. If you can make his payments its like he doesn't have a mortgage anymore. If he can wait this could be a deal.

Don't become complicated and worry about current tenant for now, they're moving out anyway. The good sign is that its rented so you know there are people who will rent a $300K+ house.

Call the seller and spend 20 minutes asking questions and laying out the L/O. If the seller likes the L/O idea then Ask the seller 30 days to find a possible buyer, not to collect a check just to find possible buyers, if the seller likes the idea ask for permission to show the property. Keep the seller informed of everything your doing. At the end of 30 days you will have either found a buyer or not, either way you will be successful because you have completed a very important aspect in investing, negotiations.

If the seller doesn't like the idea then move on because now you know this is not a deal. Just thank the seller for their time and say goodbye.

If you find a buyer then your making money, if you don't find a buyer then your building skills. Each have a positive outcome.

Lastly do not accept any money from the seller for your service, you are not a state licensed real estate agent.

Reading this thread was like being invited to sit in on an important summit where only the smartest get to the microphone. Not only was the information excellent, but the approach each of you took was very enlightening. Most had a different take on what should be done, but each had a nugget you cant find laying around. Thanks to everyone for the info and the atmosphere.

Btw, looks like we need to move James (JGREER) up in the batting order. Very thoughtful posts. BUT, we have so many outstanding hitters in our lineup, I guess well just have to rotate our clean-position!! (I bat 8th right now when Im not busy with my bat boy duties)!

All of this L/O, Sandwich lease option is just speculation. Does he want to cash out or will he take payments. His answer will take care of the L/O possibility. What is this guys pay off? Does he have a second? This info should be a known fact before any thing is posted in the first place! Young gun, you jumped the Gun! Have you established his bottom dollar. The post started at $370,000 and worked its way down to $330,000. Next time get all of the final info and then post!! No repairs needed at all? I bet he owes more than the ARV!

Keep it up, the more you do the more you learn! Don't waste time trying to make a deal where there is none.

Michael Mangham
MD Home Acquisitions LLC

I have moved on, I sent him a final email saying if he wants to sell for the 65%-70% ARV price then he can contact me. I have others I am working on.

other fsbo's baking in the oven right now. One couple is relocating for their job and they have about a month left to try to sell for what they are asking. If the cannot sell in the next two weeks they are going to contact me. However, I will be calling them back early this week to "check in" on them. Pull on their strings a little more, throw the word "cash" around a few more times. They don't want to pay for this house once they move.

I have another house that is owned by two sisters. It was their mothers house and they just want to sell it for what they can get. I offered them a cash price minus repairs. They are thinking about it and will get back to me. I will be calling to check in on them as well.

That's the way. Don't waste time with the old round peg in square hole!!!

Michael Mangham
MD Home Acquisitions LLC

looking on the Denver area craigslist for you every once in a while. I am just focused on my own area and trying to get a deal done here. I am going through the PMI courses and workbooks now. I just finished my website today. I have my rockstar realtor and we are submitting at least 10 new offers a week, if I do not have time to go through the property to estimate my repairs, my realtor will go through it and estimate them for me. She is in the process of her own rehab/flip right now so she knows exactly what to look for and calculate in, she actually tells me to take off more or less for this and that. She knows her stuff. I have made offers on houses that I haven't even looked at because she has already been through them and just emails me and tells me to bid on them. She knows my buyers target market and she only looks in those areas. She two different purchase agreements that I have signed so all she has to do is ask me for permission to bid on a property and she will do it. I have a system built that does not require all of my time. All of my offers are re-submitted every two weeks. She notifies me if there is a pending sale on any of my offers and if there has been a price change in any offer before I re-submit. If the listing is pending then I don't offer on it. If the asking price drops then I drop my offer by the same amount.

A lot of great info in this thread!

Sandwich L/O is an option, depending on all the factors, numbers, motivation and the entire deal in general.

Great idea Lane, to move on! If the seller doesn't budge, tell them to keep you in mind and/or contact you if their situation changes. That way, when the house doesn't sell and desparation sets in, they will remember you (hopefully), and give you a call. That's where the motivation and the numbers come in ~ If they jive, you can make a deal work. If not, pass it up or pass it off to someone. When they get tired of maling those 2nd mortgage paypents, they'll wish they woulda took your offer.