OfflineHello DG Fam! I am working on my 1st deal and wanted to post my progress.
Over the last month I have been in communications with a couple looking to purchase a home. They where previously in a rent to own but where never able to exercise their right to purchase. Somehow the property was foreclosed on underneath them and they lost their investment.
Since then they have been very wary and unsure as to how they would be able to purchase a home. They make good money, have a solid work history, and a very low Debt-to-Income ratio, but little established credit.
I spoke with them and told them they may have more options then they know of and asked if they would be interested in working with a mortgage broker (Whom just so happens to be a very close personal friend of many years AND is an extremely motivated, hard working individual). Over the following 2 weeks they worked to qualify.
In the mean time, I began looking at properties which realistically matched their desired criteria. When during a conversation the buyer mentioned a property in which they where very interested. I obtained some basic information on the property, including the MLS#, then had my Realtor to pull comps for the property.
During this time I am working to establish a trusting relationship between myself and the buyer. I decide not to lock the property up under contract. As I am unsure if they will actually WANT the property and know that I have little personal interest in marketing the property outside of this particular buyer.
It is an absolutely beautiful property but it is not an amazing deal or anything. It is well worth the asking price and more, but I have no personal interest in the property.
As trust is built, I explain to the buyer what it is that I do. I also tell them that, even tho I would not typically arrange this, I would like them to view the property without me. Since we are on the same page, I ask that they politely ask their own questions and avoid answering too many. I know this effectively could have removed me from the entire equation, but as I said previously, I worked to establish trust.
2 days later, they view the property. I receive a phone call immediately after, on the other end is an ecstatic buyer who says they absolutely LOVE the home and want to move forward as soon as possible.
They also informed me that the homeowners have relocated to Taiwan and the property has been sitting vacant for the past 3 months. The house has been on the market for 140+ days and the last (apparent) activity was a 2 hour open house on April 19th.
I am hoping these factors will give the owner a sense of urgency. The buyer is content with the asking price, however we are worried they will not enough capital to cover closing costs at full price.
The asking price is $329,900, with comps running between $291k - $309k. However, it is a newly developed area leaving not much comparative data. Built in 2001 and sales history as follows:
Sales History Sales Price
2/5/2008 $325,000
10/26/2004 $368,000
That said, I decided to place an initial offer of $285,000.
Now as I said this is not an insane deal, the buyer however, does now have their heart set on this property. I figure if I can get the seller to:
A) accept (Great!)
or
B) counter and still knock some $ off of the principal, then I can easily stand to make 10-15k.
Is this INSANE? No. But, it could very well be the 1st step on my path to success (I hope this is the case!). I can absolutely use the money, but by far the biggest thing for me is EXPERIENCE.
All we need is to climb over that 1st peak, after that its all down hill!
I am now waiting (impatiently lol) for a response and/or counter offer. I will be sure to update with any progress. 
Thanks and good luck all!
-Mike Hutchins
Hello DG Fam!
I spoke again with the mortgage broker, buyer and Realtor a short while ago.
The broker spoke with the buyer and clarified numbers. He came back with the conclusion that we could still move forward if we could get 90 days to close instead of the 45 we previously requested. We would however, need to contribute the $3,000 to buyer after closing.
I then spoke with the buyer and concluded the same. If we could get them a 90 day window to raise the remainder of capital and contribute the $3,000 after closing then they would be able to close. The main goal is and has been not to leave the buyer completely broke after closing.
I then called the Realtor and explained the dilemma. I told him that we would need to request 90 days to close. We both agreed that this should not be a problem given the length of time the property has already been on the market and negotiations up to this point.
I am now waiting to hear from the Realtor as to whether or not the seller will accept terms. I will update as soon as I know more.
Good luck!
-Mike Hutchins
Thank you, I absolutely agree!
I am certainly still keeping my own well being in mind in all of this. I am trying to place my own 2nd to the buyers but absolutely will not push myself into a deal which doesn't make sense for ME.
As far as hard money, I presented that idea the wrong way. I said it was feasible but I did not mention that in my mind, it was really not an option. Right away I recognized it did not make sense for me to go about things this way.
Thank you for your positive feed-back, it is greatly appreciated and respected. I take anything you say in high regard. I am hoping to prove that I do have a knack for this and I look forward to (hopefully soon!) having a successful career in REI!
I will be sure to keep updating as things progress. Good luck!
-Mike Hutchins
Reading about your post has been an education in and of it's self. Sometimes the journey is more rewarding than the destination.
Congrats on all your hard work and .....
Thank you for your committment to update all of us at DG.
Thank you for the kind words! I certainly agree, I have gained an incredible amount of knowledge thru this whole process. It truly makes me glad to know that I can help others learn thru my experiences (or mistakes lol).
There are so many here who are committed to helping others, it would be selfish of me not to share what I learn. Besides it feels great to help others in any way possible!
Good luck!
-Mike Hutchins
Like Rina said, there will be many more deals. You do not have to forget about this one, but set your radar in motion for the next deal. Trust me, every disappointment is for a good, there must be something better in your future. Your DG Family love and support you always. God Bless.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
Thank you for the kind words of support, it is greatly appreciated. I absolutely am looking toward other deals. This particular deal will hopefully still reach closing, but I have a much bigger goal then simply closing this deal. Worst case scenario, it has been an excellent learning experience.
I am also aiming to move forward constantly. I am looking at another property and will hopefully be placing an offer in the next day or so. I have no intentions of stopping now.. I am too close to success!
Thanks again for the support. Having a family like we do here is such an integral part to our success. This site is like a recycling facility for knowledge. There is a constant supply of valuable information and resources being cycled as each new group of REI's become successful then in-turn pass the knowledge which they gained, onto the next new group.
I cannot believe the element of sincerity which we have here, everyone truly wants to help one another. With a team like this, how can you lose? If you are determined and aren't afraid to ask, then you WILL go as far as you can dream!
God bless!
-Mike Hutchins
Hello DG Fam!
I have not posted any updates in the last few days as I have not have news to update with. I have been anxiously waiting to hear back that our offer was signed and accepted.
I just got back from meeting with my Realtor and we FINALLY have our 1st ACCEPTED offer! I have the P&S signed and ready to go, along with the Investor Disclosure Notice.
This coming Sunday I will be meeting with my Realtor and buyers at the property so they can do an additional walk-thru. At that time I will get the new P&S signed by the end buyer so that we may submit that along with the Discharge of Agreement to Purchase, to be signed by the seller. They will also cut a deposit check to be deposited with Title Co.
So by Monday or Tuesday at latest, we should have all contracts signed and in place. Closing is set on or before October 5th.
Thank you everyone for your support and encouragement as this deal has progressed! You guys are all amazing! I will be sure to come back here and update as we move toward closing.
Good luck all!
-Mike Hutchins
Getting this deal done shows that you do have a knack for being a REI and that you were able to think a little different to make this deal come together. You and your team made this a win-win. Congratulations
Thank you very much for the kind words of congratulation! I'd like to think I do have a knack for REI. But, even if I don't, I'm determined to make it work for me haha.
Thanks again and good luck to you!
-Mike Hutchins
I posted this in my other thread, which I created after my offer was accepted. I wanted to also post here to get a greater response. I apologize for double posting!
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Hello DG Fam.
I wanted to update as I have yet another prospective obstacle. My Realtor called and informed me that his (not my) broker told him it is not possible to right up another P&S Agreement between seller and my buyer. His broker told him that this would change numbers for fees (commission, etc.) or something along the lines.
My Realtor did tell me that this conversation took place very quickly right before leaving the office and that he did not provide his broker with much detail, nor did he discuss the fact that I have a signed 'Investor Disclosure and Seller's Acknowledgement' in place. Which I reminded my Realtor of.
From my understanding the only problem which could arise from this, would be a problem getting the seller to sign on the secondary P&S because they may not want to pay the extra commission. But the fact that I have a signed Investor Disclosure, prohibits this from happening by binding them in contract and forcing them to sign all necessary documents, including secondary P&S.
The following is taken verbatim from the Investor Disclosure Statement:
"...It is understood by Seller that Investor intends to purchase Seller's property described below (hereinafter referred to as "the Property") with the full intention of immediately reselling the Property to another party. Investor will sell said Property to another party for approximately $10,000 more than then amount for which the Investor purchased the Property from the Seller. It is further understood that Investor intends to earn a profit in this resale transaction..."
and
"...Seller agrees to sign any other forms that are required to close the transaction and generally cooperate with the Investor to affect the sale..."
Meaning that seller is obligated to sign secondary P&S Agreement between themselves and my buyer. They also are aware of the fact that I have intended from the beginning to make approx $10,000 in this transaction and agreed to this.
Before I go any further I would like to provide a few details on this deal as it stands currently. I have a signed P&S Agreement between seller and myself for the purchase price of $329,900, along with the previously mentioned Investor Disclosure Statement and Seller's Acknowledgement.
My intentions are to get a secondary P&S in place for $339,900, signed by my buyer and submitted. Along with Discharge of Agreement to Purchase, releasing me from the original P&S between seller and myself.
What I'm wondering is, did I make a mistake somewhere? Was I supposed to write the original P&S for the same price as the secondary P&S for my end buyer?
I can't see this being a deal breaker. The buyers are definitely going to sign the secondary P&S. So with that submitted and my release from the original P&S, am I wrong to believe that I structured this correctly?
I certainly hope this will all go according to plan. I am meeting with the buyer tomorrow morning to get the secondary P&S signed. That way we can submit that along with the Discharge to be signed by seller.
My Realtor is on the same page as I am, but he will be unable to speak with his broker again until Monday. I am hoping that when he fills him in on the details, everything will be understood and good to go.
Any feedback on this would be greatly appreciated! Thanks ahead of time to anyone who responds!
-Mike Hutchins