Placed 1st offer today.. Finally!

Mike,

You sounded like you are making all the right steps in this 1st offer, especially in gaining the trust of the buyers, showing them options in financing that they were not aware of, putting the emphasis on getting experience over making a lot of money in your first deal. The bigger money part will come later.

As far as this not being a killer deal, as long as you and your buyers are happy with it, that's all that really counts, since your buyers are purchasing this for their home, and not as an investment property. If they are concerned that they would not have enough funds to cover closing costs, they can ask the seller to pay all closing costs for them. Remember, when you are putting a deal together, EVERYTHING is negotiable. Be creative.

Hope this deal comes together smoothly for you. And good luck on your future success.

cactusbob

Thank you for the feedback, it is much appreciated.

I am doing my best to be as patient as possible. I agree, as long as they can walk away happy, so can I.

I did request a 6% Sellers Concession toward closing costs in contingency. Along with earnest monies to be deposited at open of escrow, so that I can use buyers deposit money. As well as 45 days to close.

Thank you for the recommendation, I will certainly keep that in mind. Good luck in the future to you as well!
-Mike Hutchins

Still waiting impatiently lol.

No word yet, as can be expected. Chain of communication goes as following: Myself --> Realtor --> Listing Agent --> Seller (Who again, is in Taiwan.).. and then all the way back.

I anxiously await some form of response and will be sure to post updates as they progress.
-Mike Hutchins

Thanks for sharing the information with us and keeping us all updated. It sounds like it could be an exciting deal for you. The waiting for a response is sometimes the hardest part of the deal. We wish you luck with this deal and all your future deals! Believe and Achieve! - Joe

good luck on your deal,a+ for taking action and yes you are right on the experience aspect!!just do it and you will gain an abundance of experience not to mention the "extra" deals and opportunities that just happen to arise since taking action!! great job mike and just be patient it will happen!!

Absolutely, I will! Thank you for the feedback!

Waiting is both exciting and nerve-racking. Hopefully I won't have to wait in suspense for TOO long!

Thank you both, I wish the 2 of you even more success then you have achieved already!
-Mike Hutchins

P.s- Great job on the call the other night!

Thank you much for the positive feedback!

I am confident things will work out that way. I am hoping to get everything in motion and be able to take advantage of the "snow ball" effect. I also know that word of mouth is the single, most successful form of advertising. My goal is for everyone to walk away happy, I hope in turn I will have established a valuable business relationship.

Thanks again for the words of motivation! I'm doing by best to be patient.
-Mike Hutchins

Hello DG Fam!

I apologize for not updating sooner, it was a hectic weekend and last few days.

I received word from the Realtor on Saturday that the sellers countered our offer at $325,000 with no concession toward closing costs. I did not expect they would accept our initial offer and I was glad that they did atleast counter our offer. I was however, a little bit shocked that the seller hardly budged on price.

We re-countered at $300,000 asking 3% sellers concession toward, but not to exceed, closing costs. This was yesterday (Monday). Today, I spoke with the mortgage broker and he told me that 3% is not going to cover closing.

I keep running into obstacles but I have been able to deal with them all so far. I am hoping that we can negotiate terms acceptable to everyone. I guess I will have to wait and see what happens.

If this property does not work out then I will still be working with the buyer towards purchasing a home. I am really hoping things will work out on this property tho.

I will keep the post updated as negotiations progress.

Good luck all!
-Mike Hutchins

stay the course mike!! just remember peoples needs and wants change every day!!start looking and working on finding another property for your buyers and i will bet $$ something else will catch their eye OR the sellers will contact you to continue negotiating.great job so far keep at it it will happen !!!!

Thanks again for the positive feed back, we are certainly on the same page! I'm doing my best to remain patient and continue pushing forward. You are right, it will happen, just a matter of time..

Good luck! I hope to hear success stories from you soon!
-Mike Hutchins

Hello DG Fam!

The last few days have been slow progress so I have not been updating. BUT, there has been progress.

Our last offer of $300,000 with 3% sellers concession, was entered verbally. But, the sellers stated that they really didn't want to go back and forth on price negotiations. They asked that we give a final offer and go from there.

So, in the last few days I have been speaking back and forth w/ the mortgage broker and my buyer. Basically trying to establish a walk-away price (I know, I know.. I should of had this established before-hand lol ).

We have determined that they buyers are flexible on price but absolutely need the 6% concession toward closing costs. So thinking creatively, we decided to propose three options to the buyers:

1. We can make one last "low-ball" offer and hope they will accept (I discouraged this as I did not want to insult the seller.).

2. We can offer their full asking price provided they concede the 6% toward closing.

3. We can move on to a different property.

As I know they (buyer) are flexible on the price and absolutely love the property, it was quite easy to propose option 2. I told them that the mortgage broker and myself had been thinking creatively and running some numbers and this seemed to be our best bet.

I also stated that by offering, say, $295,000 (our 1st offer: $285,000 + $10,000 profit margin) and asking 6% concession, we where actually offering only $277,300.
Ex: ($295,000 X 6% = $17,700 concession)
($295,000 - $17,700 = $277,300)
Asking price = $329,900

That said, I asked if they would be interested in offering more then the asking price, say $339,900 so long as seller concedes 6% toward closing costs (This will also be contingent upon property appraising for more then purchase price).

I stated, the math goes as so:
($339,900 X 6% = $20,394) ($339,000 - $20,394 = $319,506)

Obviously, this is does not reflect on the purchase price. But in theory, they would be getting the property for approx. $319k IF they where paying their own closing costs. Thankfully, the buyer understood and was right on the same page (which ALWAYS helps!).

Now this will give me the option to offer seller full asking price, $329,900, so long as they concede the 6% toward closing. I will then market the property to my buyer at $339,900 and walk away with $10k profit margin.

Now I don't wanna hype this deal up too much. I am still unsure as to how it will play out but I am certainly feeling positive. I left my Realtor a message right before this posting and we will (hopefully) be placing this offer today (or atleast within 24hrs).

As soon as I hear something back, I will be sure to update on progress.

Good luck!
-Mike Hutchins

Hi Mike,
Congratulations on your first offer. I look forward to hearing about your accomplishments. Everything will work out for the best. Continued success......Lubertha

Thank you! I do hope so!
-Mike Hutchins

Hello DG Fam!

I skipped a few days of updates, I apologize. There was little activity since my last posting. To pick up where I left off..

Monday (yesterday):

Word came back from the sellers and to my surprise, they did not accept the previous offer! They said they would cover no more then $10,000 toward closing. This was not acceptable to buyer and would have blown the deal.

I asked the Realtor to verbally tell them this was the best we could do. After all, we are offering to pay their asking price so long as they would cover closing costs. I could not believe they would not accept our terms!

The listing agent quickly responded stating that the sellers would be willing to accept if buyer could come to closing with $3,000-$5,000.

The 1st thing I did was get on the phone with the mortgage broker and make sure that this was financially possible, which it was. I then called the buyer and asked if they where interested in further pursuing this home or if they just wanted to move on to another property.

They decided to take this last step toward reaching negotiable terms with the seller. As I mentioned previously, they absolutely love this house. If this was not the fact I am sure we would have long since moved on to another property. But as is such, they decided to bring $3,000 to the closing table. No more.

I called the Realtor back and informed him they where interested in bringing the $3,000 to closing but this was absolutely our FINAL offer. If seller did not accept we where going to continue on searching for another property.

Tuesday (today):

I received word that, FINALLY, our offer had been accepted! Now, this was only verbally. So we had to re-submit our offer so that we could get everything inked. As of 4pm we where getting the purchase and sales agreement set up and ready to be re-submitted.

I spoke again with the buyers and informed them of the good news (They where ecstatic!). I then called the mortgage broker and told him to be ready to start pushing everything thru. Now I am waiting to hear back from the Realtor and mortgage broker so that we can get everything submitted.

I don't think there will be a whole lot more action today, as it is 7pm. Hopefully we can jump on everything 1st thing in the morning tho. I will be sure to update as things progress!

Good luck!
-Mike Hutchins

You really worked that deal, Mike. Congratulations on the positive outcome. On to number 2.

CONGRADULATION MIKE....ON GETTING THAT 1ST ONE PUT AWAY, EVEN THOUGH IT WAS A NAIL BITER. YOU ALSO WALKED AWAY WITH 10K AND A WEALTH OF KNOWLEDGE...KEEP UP THE GOOD WORK.
HAYWOOD

Thanks! I hope that all goes according to plan and we move on to closing. I can't wait to work on future deals!

Good luck!
-Mike Hutchins

Thank you! We haven't closed yet, so I still need to work to make sure all continues along smoothly. Hopefully this deal will be wrapped up soon! The wealth of knowledge is absolutely true.

Good luck!
-Mike Hutchins

great job mike!! that first one sure is exciting huh? way to go mike!! hang in there the closing will seal the deal and time to celebrate!!!!!deal # 2 next in line!!!!!!!!!go for it mike!!

This deal has been quite the adventure! I am keeping fingers crossed that everything finalizes and closes smoothly for you. As we all know with real estate anything can happen right up to the last minute. Looking forward to your post that the its signed, sealed and delivered

I am very proud of you. I am happy to see you are making the moves, you are working for it and success is not far at all. Sounds like you have something good going here. Keep us posted on what happens, I am sure lots of good will come from this.

Jeremy

Good going Mike you did it. Great Job you broke the ice. And you have all that experience under your belt.

Bertha

Hi Mike,
Amazing! Great job. Persistancy breeds success. This is another example of having a great circle of influence! Continued success.......Lubertha

Hello DG Fam! Thank you for all the feed back and words of encouragement!

Well, yesterday was interesting and very frustrating lol. However, I have been doing my best to stay focused and not become discouraged. I know that even if nothing else I am gaining valuable experience thru this entire process.

Wednesday (yesterday):
I met with the Realtor to get everything signed and submitted now that our verbal offer had been accepted. While sitting with the Realtor, I receive a phone call. On the other end is the mortgage broker telling me not to sign anything yet as there have been some issues with numbers. My Realtor also had to run out of his office soon so we decided to postpone signing (Despite the fact that I had multiple exit clauses in place) in the interest of being thorough.

I left his office feeling frustrated. We have been jumping thru hoops for the seller over the past few weeks, now that we've reached negotiable terms I find out there is an issue with number on my buyers side!

So feeling a little confused I get on the phone with the buyer. She tells me that the mortgage broker just told her she was going to need to bring close to $15,000 to the table. Which doesn't really surprise me, but it sure caught her off guard. Largely due to the fact that she said from the beginning she did not want to drain her bank account entering a new home. We all knew this was the case, but we also thought she knew about the down payment. The broker has addressed this as one of the 1st key points.

Here is the math:
($339,900 x 3.5% = $11,896.50) Down Payment for FHA (Min. 3.5%)
+ $3,000 toward closing costs
= $14,896.50

Here is the problem, the buyer was (some-how) under the impression that, the 6% concession toward closing which we requested, was to be used toward closing costs AND down payment. Now, I certainly did not tell her this and I know the mortgage broker would not have either. But, she was under the impression that 3% went towards closing costs and 3% went toward their down payment.

I was very polite in telling her that FHA minimum requirements was now 3.5% and it had been changed around April 1st of this year. I also told her that I was extremely sorry for the confusion and that I would get to the bottom of things for her. Despite the fact that I have no idea what made her think this, I believe the customer is always correct. I was very courteous and told her I would speak with the mortgage broker and call her back.

After hanging up with the buyer, I called the broker. He said basically what I was thinking, that he was unsure what led her to believe what she did. At the same time we recognized that, no matter what it was that led her to believe this was the case, she did believe it. So rather then point fingers or get discouraged we tried to address the problem and not what got us there.

We spoke for a long while, going over numbers and thinking creatively, hoping we would see something we missed or miscalculated. Which we did not. We also went over possible strategies to make this deal still work (Which I had been doing ever since the 1st phone call telling me there was a problem).

We come up with three feasible options:
1. I can purchase the property myself using hard money then in turn sell the property to the buyers.

2. If buyers can raise the money to get into the property I could offer them a portion of the proceeds to help cover their expenses. Say $3,000. (I worded this nicely but I believe this might be illegal. Known as a "kickback.").

3. We can move on and look for another property.

The problem with option 1 is I will have to pay out a large amount in interest. If they where using hard money themselves I would simply do a double closing but as they are not cash buyers this is simply not a very good idea. Nor would it be very financially rewarding.

The problem with option 2 is as I stated, this may be illegal. This would have to be a separate arrangement between myself and buyer and could not be disclosed to title company or Realtors/listing agent.

The problem with option 3 is we have been negotiating on this property for over a month and the buyer has ALOT of personal interest vested in this property.

Now after this has all been said I get off the phone with the broker. By then it was about 10pm. I decided to wait to call back in the morning after the broker gave her a call back.

Thursday (today):
I am now waiting to hear from the broker so that I may call and discuss things further between myself and buyer. It is currently 10:15am so I should be hearing from the broker very soon.

I will be sure to update as things progress and we either reach negotiable terms or are forced to move on and search for another property. Whatever the case may be I greatly hope it all works out in everyones favor.

Thanks again for the support and good luck all!
-Mike Hutchins

Thank you! It is very exciting and can be very over-whelming to lol! I am REALLY hoping this deal makes it to closing.. I could REALLY use a celebration right now haha! I am just being patient and seeing how it all plays out.

Thanks again for the motivation and good luck!
-Mike Hutchins

Adventure is absolutely correct haha! I greatly appreciate your support, thank you!

As you said, anything can happen.. and it did! As you can see from my previous update lol. I am hoping this is just another hurdle and we will still be able to move forward. I am myself crossing my fingers and looking forward to hopefully saying I finished deal #1!

Thanks again for your words of inspiration and support! Good luck!
-Mike Hutchins

Thank you very much! I am certainly working toward success and motivated to continue forward. I know that success requires hard work and thru all of this I have learned alot. Even when I am not yet reaping financial rewards I am obtaining a wealth of knowledge.

I will be sure to keep updating as things progress! Good luck!
-Mike Hutchins

P.s- You are an excellent example of where determination can get you! I know there are many here who look up to you. The fact that you have accomplished so much already while being so young is extremely motivational.

I am 23 and struggle sometimes gaining trust as people think I may be young and naive. You set the example for the young people here. I know there are many younger then myself here,you provide living proof that age is NOT a factor so long as you are determined, motivated and professional.

Thank you for that! (Isn't it great to serve as inspiration simply by being successful!?)

Thank you kindly. Breaking the ice can be the hardest part. A few short weeks ago I was afraid just to pick up the phone, since then my confidence has grown by leaps and bounds.. and I haven't even closed a deal YET!

Be sure to TAKE ACTION! That is the biggest thing, more often then not you can become your own road block. Take one step at a time and before you know it you'll realize.. Wow, look how far I've come already!

Good luck and I hope to hear success stories from you in the near future!
-Mike Hutchins

Hello! Thank you for the words of inspiration! Persistent is one thing I am haha. I've made it this far I am not about to give up right before I reach success.

Talk about a great circle of influence, how can you go wrong with amazing people such as yourself and all the other outstanding people here on DG.com!? You guys are the ultimate support system! Any time I am struggling or confused, I come here. There is ALWAYS someone willing to help, whether it be advice or simply words of motivation.

Without the support of Dean, his staff, and everyone here this would be a long, frustrating and LONELY road which may not even lead to success lol. I much appreciate the opinions and feed back of everyone here!

Thanks again and good luck! (or continued success rather! )
-Mike Hutchins

P.s- I hope you and Sandra continue to KICK BUTT! I am confident that the both of you are well on your way to becoming more successful then you hoped or dreamed!

Congratulations on working this deal! You have gained invaluable knowledge and experience from it. That cannot be replaced nor taken away. Good job!

As far as the deal itself, don't force yourself into something unless it really is a winning situation for you. You'll have plenty of great deals to come. As far as the options you've listed above, remember that to buy and then re-sell you'll have 2 sets of closing costs in addition to the interest charged by the hard-money lender. Also, the financing your buyer uses may have FHA regulations saying they can't buy until you have held it for at least 90 days, which adds holding costs. But you're right, just make sure your numbers still work. Otherwise move on. Sounds like you have a knack for this, and I believe you have many great deals awaiting you.

Excited to hear more from you in the days to come!

Rina