OfflineNeed some help here. 
Drove the neighborhood and found a property with weeds growing all over and I sent a letter to the owner and found out that he had tenants and then he evicted them and it's been vacant for over a year. I Asked if he wanted to sell it, he said yes. I asked him if he knew how much he wanted to sell it for, and he said.. oh.. i don't know what the market is right now... I guess i'll just sell it for what i bought it for (which was like 20 years ago) $30K. He had tenants and the property needs work (rehab cost 8-9K) I Marketed the property to my buyers for 43K and none of them wanted it. I asked for some feedback to see if it's the price or the location and they said that they don't prefer that neighborhood. Well, it's not the worst neighborhood in town but it's not the best either. I guess it's not working too well so far... The contract was signed on 10/2/12, and I had the right to get out of it within 17 days (which is next Friday) if I can't find a buyer. Well I can't seem to find a buyer. I decreased the price down to 35K so I could just make 5K in profit and get out of it. And marketed it on craigslist again. The good thing is that by marketing this property on craigslist and through the rei club forum I found 5 more cash buyers (woot! woot!)
Should I ask the seller for price reduction? Say, there's more rehab cost involved than expected, If so, how would I go about doing that? Do I need to sign a new contract with him or just cross the price, change it and initial?
Anyway, I'll try to wholesale it for $35K by the end of next week and if not, I was thinking of buying it myself using hard money and using credit card to rehab it, and put it on the market to resell.
So... ARV 80-90K (I'll use 80K to be conservative)
Purchase Price for me $30000
ARV-$80000
Hard money fee-$4000
Holding cost (385/mo)(6 months)-$2310
Rehab cost-$8000 (if I do work myself)
Realtors fee+closing cost with taxes 9% when reselling-$7200
so If I would flip it for 80K I would make about $28500.
But my concern is, why don't all those investors say that this particular neighborhood is not their favorite? Should I treat is as a RED FLAG, and stay away from that location? Or I could still buy it and rehab and put on the market for 80 or even 70 and make not 28K but 18K?
Any help would be appreciated.
my buyers don't want the property... price reduction???
Posted on: Sat, 10/13/2012 - 02:51
my buyers don't want the property... price reduction???
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- by artemtroy
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If you have a contract with the guy, you can't just change it yourself on a whim. Unilateral material changes to a binding written contract will land you in very hot water and get you scaled and gutted in court for fraud. You want to change the price? You have to ask him first. If he says yes, write up a new contract with the lower price and take your chances. If he says no, let it expire and walk away unscathed.
If other buyers don't like the neighborhood, YES that's a red flag! However, it's also a sign that you haven't found the RIGHT buyer yet. Start asking the buyers who won't touch that neighborhood, "Do you know someone who will? If so, can you give them my number please?" Best of luck to you...
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
It is real simple!
What is the average DOM for the sold comps in the area?
If properties sell quickly it does not matter if AK-47s are going off in the background. If DOM averages are under 45 days you need to find some real buyers!
However if average DOM are higher than 90 days it may not be a good location,
Also, your ARV may not be accurate on the specific property you have. Comps can vary street to street and house to house.
Michael Mangham
Mentoring/Team Building Nationwide
MD home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
I Just emailed my agent to see what is the DOM for the sold comps in the area.
Also, why are you saying that my comps might not be accurate? Did I miss something?
My agent says that I can sell it for $80K.
If you need to renegotiate the price, and the Seller agrees, you don't need to write up a new contract. Strike through the old price, write the new agreed-to price next to it, both parties initial and date.
Regarding the comps and likelihood of selling - look at both sold comps and what's currently on the market that's similar. Maybe there's an unusually high amount of inventory already on the market? If so, you'll need to adjust your list price for a quicker sale. If not and the numbers still look good, go for it!
Good luck!
well, what's the worst thing that can happen if i proceed with buying it myself for $30K? I mean, will I be able to sell it if I price it right? Or I can put myself in a position where I buy the property, put all the money and time and effort into it and it's not selling... will I be able to get like a $30 yr mortgage and do lease option or rent it out or something? or it's a bad idea?