Forums » General Real Estate Investing » First house under contract

First house under contract 11 posts by 6 users

Alex L.

Banker
Raleigh, NC

Posted: 10/11/2008 at 09:10PM

I now have my first "deal" under a 2 month option contract.

I have the home under contract at 212K; I'm marketing it to sell at 220K. Not really a wholesale but more like trying to find an end buyer willing to pay 220K. Any thoughts on how to try and get it sold?

I'm also getting ready to put a home under option contract at 118K and going to market it and sell it at 130K. Should I sacrafice a few thousand in profit and use a seller's agent? Can I use an agent when I have someone else's home under option?

Thanks

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Barbara G.

Real Estate Consultant
St Petersburg, Florida

36 posts

Posted: 10/12/2008 at 08:06PM

Hi Alex,

I guess my first question is What is the average length of time on market for a house to sell in your area? A two month option is pretty short, but not impossible.

Second question, Is the house vacant or occupied? If it is vacant and in good condition, I would start my marketing using the five day round robin auction method. You will find out very quickly if the market will bear a $220k price tag. You may not sell the property, but you will garner a list of buyers for homes either in that area or price range or both which will help you market any future properties you auction. Also, if the auction method doesn't work, you still have plenty of time to try other, more traditional marketing strategies.

Both of these deals don't seem to have very much room in them but then again, you are not looking to make a killing which is a very good strategy in this market. On the second property, the deal looks too skinny to use a seller's agent.

You don't say how much money you are paying for the options and what the liquidated damages are if you don't exercise your option. That is another consideration of the deal.

If houses are moving fairly fast in your area, you may be carving out a very nice niche for yourself. Let us know how you do.

Barbara

Alex L.

Banker
Raleigh, NC

59 posts

Posted: 10/12/2008 at 08:27PM

Barbara,

Thanks so much for the reply. Not very sure of the average time it takes to sell a home in my area. I do know, however, that I'm not in too terrible of an area; Raleigh,NC.

What exactly is the round robin auction method? The option's are only $10 options so not much at risk at all. I don't have much money to spend on marketing, as I'm still in college and cash flow isn't where I'd like it to be, so what do you suggest to do? I'm not opposed to spending any money on marketing, just want to know what ways are most effective?

If I were to use a seller's agent on the 2nd property I mentioned, using the following numbers: $130,000 x 3.4% seller commission= $4,420 fee.

$12,000 profit- $4,420 fee would still leave me a little profit. I'm hoping this might be a good niche for me! Any help would be much appreciated

Robert B.

Real Estate Investor
Baton Rouge, Louisiana

41 posts

Posted: 10/12/2008 at 09:28PM

Yes Barbara, Please explain this round robin auction method.

Bryan W.

Real Estate Investor
LaFollette, TN

35 posts

Posted: 10/13/2008 at 06:03PM

The book that explains it is "How to sell your home in 5 days" Effros is the author. I have used it personally 3 times. 2 times with great success once without.You will however find out quickly if you are overpriced and what the market will actually bear!

Alex L.

Banker
Raleigh, NC

59 posts

Posted: 10/13/2008 at 06:07PM

Bryan,

Did you just have investors show up at the auction style open house? Or were there home buyers bidding as well?

Alex L.

Banker
Raleigh, NC

59 posts

Posted: 10/13/2008 at 07:35PM

Also, would this still work even though the house doesn't have a whole lot of equity?

Bryan W.

Real Estate Investor
LaFollette, TN

35 posts

Posted: 10/14/2008 at 03:35PM

Mostly retail buyers show up. The whole premise is to advertise it really low to attract a large pool of buyers and then they bid up from there. You will only get a fair market value this way(which may be very low right now). It sounds like your deal is a little skinny but the book is worth the price....

Alex L.

Banker
Raleigh, NC

59 posts

Posted: 10/14/2008 at 03:39PM

Thanks so much Bryan.

Mark B.

Real Estate Investor
Stratford, Connecticut

11 posts

Posted: 10/18/2008 at 12:23PM

Join your local investors club and get on their website. Besides being in contact with folks in the business in your area, many of them have an area to offer your deals to other members. Good luck.

Dave K.

Real Estate Investor
Georgetown, MA

174 posts

Posted: 10/21/2008 at 08:44AM

220k buying at 212k is slim.

220k * .03 (commision) = 6.6k

8k-6.6k = 1.4k - cost of marketing and legal/paper work fees.

You'd be lucky to break even and thats if you get your ask.

I think you need to focus on properties with more of a margin.