OfflineI am so excited, this could be my 1st deal. Heres the situation....
Wholesale deal-
MLS REO foreclosure, listed for $24,500
Tax Value - $64,000
Have buyer interested but wants to see it now. This is an REO with no chance of locking it up without proof of funds. Can't get proof of funds from him until he sees it and commits to buy.
Q's
1. It is on the MLS with a real estate sign out front so if I show him before I lock it up, what would prevent him from making an offer to agent?
2. I could tie it up with my proof of funds prior to showing him but I'd need to show my bank account and would not be able to use financing as my exit strategy. IF I do that and he doesn't want the house, how would I get out of it?
3. This house would need total rehab and not something I want if this buyer doesn't come through. The buyer is not an investor, he is looking for a home to rehab for himself. Would be his first home. How can I lock this deal up?
Appreciate any help. Thanks!
Go get a proof of fund letter from www.coastal-funding.com you can print right off the internet and use that to put your offer in. For your exit strategy use an inspection clause. In CA the law is 17 days. I don't know where you are at, but you have an inspection law. If you can't find a buyer within the inspection period, then tell the bank after inspecting the house, I just feel it needs too much work and I am no longer interested. What is the FMV of the house? You can't use tax records as a way to determine FMV. You need to find out what similar homes in your area (not more than 2 -3 mile radius of the your house) have sold for in the past 90 days. Tax records could state 64k, but your 90 day comps could show that your house is worth 28k which is not a wholesale deal for you unless you negotiate the price lower. Are you using the buying formula and factoring in repairs? I wouldn't let your buyer see the house until you have it under contract. There is nothing to keep your buyer from snatching the house from you. Hope this helps...
KimmyJ
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Thanks. Very helpful. I am researching and getting comps.
The info the agent sent states-
"cash deals only, strictly sold as-is with no repairs or inspections"
Does that mean I can't use the inspection as an exit? I am in Virginia. Current average home sales is 200k in my area, this is a very rare find.
Best,
Brenda
Thanks good to know...
Sounds like your buyer would be using a conventional loan to purchase the property. So seasoning would come into effect on this deal.
the virginia association of realtors and ask them if Virginia has a standard inspection law. CA is 17 days, but the banks still try to push their weight around and say no inspection period. I tell the listing agents, no I will have an inspection period based on the CA 17 day inspection period. Once the listing agent knows that you know your stuff, they let the bank know and the bank accepts the inspection period. If you don't have an inspection law then have the agent put it in the contract as addendum or use "Subject to business partner's approval"
KimmyJ
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Who do I call to find out about the inspection period in Maryland?
as far as the inspection clause is concerned, couldnt the seller just be like inspect the property now before we sign the contract to make sure you cant get out of the contract, that way he'll know you cant get out of the contract and he'll have a sure deal? how do you work around this if the seller brings it up?
I don't know how each state runs, but I would be very surprised to find that a state does not have some sort of inspection law.
If the bank says inspect it then put in an offer, you tell them no, first you accept my offer then I'll go and pay for an inspection. I don't pay for an inpsection unless I know I have a deal accepted.
Every state should have a real estate association. So you want to google real estate association of blank state or department of real estate for blank state.
I prefer to get answers from the state association before going to the department of real estate because they're easier to get a hold of. However, either one should be able to answer your inspection period question.
KimmyJ
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Thanks so much, I'll find out about the inspection clause asap. Really appreciate your help.
Keep us posted on how your deal comes out... KimmyJ
If the bank says inspect it then put in an offer, you tell them no, first you accept my offer then I'll go and pay for an inspection. I don't pay for an inpsection unless I know I have a deal accepted.
Every state should have a real estate association. So you want to google real estate association of blank state or department of real estate for blank state.
I prefer to get answers from the state association before going to the department of real estate because they're easier to get a hold of. However, either one should be able to answer your inspection period question.
KimmyJ
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are you actually paying for an inspection or is it just a way to give you sufficient time to market the property to your buyers? And one more thing kimmy, how do you go about earnest money deposit? lets say you have no money to put down but you are representing an all cash offer since it will be an assignment?
No you're not going to pay for the inspection, but the bank and/or agent do not need to know that. It's a time strategy. As far as EMDs, you ar going to have to put something down. I would keep it as low as possible $500 to $1500 max if it is a killer deal. You can write in your contract that the EMD is due at the end of inspection period. That will be you at least 10 days to find an end buyer. Remember, if you have to put and EMD down, your end buyer will be reimburse you in your fee.
KimmyJ
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Just something I would add real quickly, I never get a wholesale deal with a property that has a realtor and is on a MLS. The reason is this, everyone knows where the property is located and can make better offers. The only way I will think about wholesale a property is if it's a pocket listing. I just found a house that I got under contract for 5K, and will be closing on the house with my end buyer next week for 10K cash. That leaves an option fee for me at 5k minus 200.00 towards closing costs. I feel that the great deals are the ones that only I know about (and of course the seller). Just my 2 cents worth. Destrie
Destrie
Failure Is Not An Option
It is possible to wholesale MLS properties, but it is imperative to work with a listing agent not a buyer's rep. And establish a good relationship with the listing agent. Once you close a deal or two, the listing agent will send YOU all the good deals before anyone else. However, destrie is absolutely right. It is much easier and more lucrative to go through a FSBO than a tradition listing.
KimmyJ
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