OfflineI submitted the asking price of 407K on the REO. The ARV is close to 800K. I drove the 222 mile round trip and looked at the house and have pictures.
The bank countered and said there's multiple offers and they will accept the "highest and best" offer by Friday, August 9, 2013. I'm thinking I should submit another offer for 410K.
These are the banks conditions:
1) Earnest Money a minimum of 10% ($41,000) of purchase price, paid in two days of acceptance.
2) Seller won't repair (in writing)
3) Buyer inspection contingency expires in 3 days
4) August 26 close of escrow. $100 per diem
5) Buyer must see property first
6) Seller's choice for services title and escrow.
I'm not sure about all this particularly the earnest money. I gave a copy of my check for $1,000. Upping that to $41,000 and paying it in two days of acceptance makes me very uncomfortable. The only thing I could think of is signing a profit sharing contract with my cash buyer where I'd make 20% and he'd make 80%. This way he would provide the down payment and fund it with his money and use his company name. The contract we sign could protect me. It seems unlikely this could all happen by this Friday.
What are your thoughts and suggestions on this?
Thank you,
Greg
There SOMETIMES are multiple offers; sometimes not. But here's what I've learned. It is BEST to just AVOID multiple offer situations and STAND YOUR GROUND. Move on to the next deal. There are plenty here. And, yes, you will put time and effort in on a lot of properties that go NO WHERE. This is TYPICAL of this area because agents are now trained here about 'seminar investors' and the EMD request is usually THE AGENT, not the bank (they'll never admit it) (unless its a HUD)(Fannie/Freddies are usually 3% here).
Unless this is a HUD, the EMD is always negotiable.
I'd counter with the same price, advise them I'm a long term investor that's been doing this a very long time, tell them my EMD is locked up in 20-30 properties and if I put 10% down on every one I would be locking all my money up in EMDs; since I'm doing so many deals I need at least 10 days to do THOROUGH inspections; if you get to per diem, you can always ask for an extension and that all per diem is waived. WHEN YOU GET YOUR BUYER and you are past your contract date, make sure your buyer puts in a much higher EMD added to escrow and waalaa, they will magically waive all per diem because they see you are serious about closing.
Southern CA has a lot of niches and tricks that its taken me 3 years to learn by trial and error. It is not going to be as easy as other less populated areas. You say you drove 222 miles round trip. Where are you located? You may want to start closer to home. When you're starting out, that is easiest.
Seller's choice is COMMON for REOs and short sales. I usually call the company their requesting and ask them about their services. I've actually found a few good escrow /title companies this way familiar with how the REO closings go here (typically adding a buyer). But some of the companies **shudder*** HORRIBLE!!!!! Slow, attitudes and clueless.
The idea of profit sharing is good. If you already have the buyer, why not ask the fee upfront and birddog it to him and do a finder fee agreement (payable only if the deal closes)? Make $10K and move on and let him deal with the hassle of the offer?
Tammy,
That was a lot value information you shared with me. Thank you for taking the time to go into such detail. Your experiences and knowledge on how the market works in California are greatly appreciated. This is a good learning experience for me. I hope to work with you in the future. I'm in West Los Angeles and was attracted to this deal because the ARV was so high compared to the list price. Good luck and congratulations on your latest success. I'm always reading about you. You're a true inspiration especially to those who live in California.
Thanks,
Greg
One of my goals is to become a mentor here in Southern CA. If you're not in this crazy market, its really hard to understand the specific nuances of the market.
Even the best of the best have admitted to people they won't do deals here in Southern CA. Just sayin'
I knew that saying "where there's a will there's a way" was true. I'm in San Diego and the market here is 'something else". I like that you are open to mentoring here in SoCal. I'll be in touch via PM. Oh on a good note I ran into a contractor today who buys and flips, has access to a hard cash lender (up to 500k and only requires 20% down). I told the contractor I birddog (no shame in my game) and he told me I could get paid upfront or on the backend...
I've got two properties on my list and am heading to CL and other sources to see if I can locate some more!!
For those who are still on the fence, afraid or just procrastinating, it's time to stop and put your dang foot in the water (trust me I did and it's not that cold at all). GOD speed all!