Selling a deal?

Question

Hey ther guys!

I'm new to this forum and to the concept of doing business in Real Estate. I'm looking to make as much of this as possible. I've attended a few seminars and I feel as though this is something that can be interesting to do.

I am aware of a few ways to make money in this business. However I have also been told there is a way to make money by simply setting up a transaction. For example I've heard the following scenarios are possible...

Scenario 1:
Let's say i find a Nice property for about 150K and it has an estimate value of 200K. I can negotiate a deal and get the owner to sign a letter of intent saying that either i, or someone i assign the contrcat to can purchase the house at 150k. I take it to an investor or RE agency and sell th deal for an easy 5k-10k. So I walk away with a few thousand and the other person will buy the house at 150 and resell.

Scenario 2.
I find a property for 150K, and i find someone who is willing to pay 200k. I buy the house for 150 and sell it for 200k

Now. As far as Scenario #1. How would one go about doing that. What kind of paperwork would i need to say that i own the right to the deal, and how would i go about selling the deal? Who would i sell it too? Is it possible to sell it to a RE agency?

And for Scenario #2. Clealry this is possible. But how would i do this in a way that i would not have to place a penny. Is there a way to recieve the 200K first so that I can pay the 150 to the primary seller? Is there another way of doing it rather than having the money first. And in Scenario 2, i don't mean buy it for 150k, and then sell it for 200 in like a year from that point. i mean I would only buy the property for 150K, if I could find someone to buy it for 200K

Thanks guys in advanced. I really hope to become friends with this online community. You guys seem great, and i have no doubt at all that I'll learn a lot from you guys.

Sid Bengeloun · Answer

Hey Guys! Thanks for all your feedback. As far as the numbers are concerned. They were just for the sake of the example. There is no 150K property, and there is no me selling the property for 200K. hahaha.. I wish.. But i just used it for the sake of the example. You guys are great.! thanks! I have been looking for smaller digit deals, but they are hard to come by. Its easier to come by higher priced properties....=/

Alan Brymer · Answer

I wouldn't even start thinking about dollar figures and prices right now. What you're trying to do is do a simultaneous close on a house--getting a contract for less than you can sell it for to either a 1) Investor buyer under market value or 2) a homeowner for around market value. Just look for houses you can buy far under what they are worth, but could sell for somewhere near the median price range in your area.

Dustin Phillips · Answer

Sure let me clarify... Playing ball is simpley means finding a title company that will do the double close with your buyers funds. Most will not. If you do not have one yet, you are going to hear "Thats illegal" a lot. However, its not illegal as long as you are not defruading a lender. Simply move on... Ask other invesotrs in your area who they are using. To your second question, yes... But again I have been in closings where its been tense and the seller was not happy about what I was making, but we get through it. I will say that with $50 grand, just go the double closing route, but use the assignment when you can... Hope this helps...

Eddie Ziv · Answer

Sid, My only two cents in this conversation is, don't aim too high in your first deal. Instead of buying a 150K property with the hope to sell it for 200K, go for $40-50K property that has a ARV or straight value of 80K-120K . Those properties are easier to finance from your buyer prospective, and if you sell it to an investor as a rental, it has a better chance for positive cash flow. Research the local area with regard to average income, ongoing mortgage payment, monthly rental and other such factors. Be very careful with terms such as "Market value", "Projected value" etc. Just because a given property was sold for certain amount of money three years ago, doesn't mean it would sell for even half of that in today's market.

Sid Bengeloun · Answer

Hey Dustin! First off Thanks for the help! It's been really insightful. I am a little bit confused though. What do you mean by "have a title company that will play ball"? What is considering playing ball? the double closing. And what type of company would that be considered? Also if i just assign the deal wouldn't it be not in my best interest telling the buyer that i am getting the property from the owner for 150 and selling it for 200?? Thanks again! :D

Dustin Phillips · Answer

Hi Sid, Its late here so bare with me, but lets walk through the two. Scenario 1- You will need an option agreement. Basically you say to the seller look I like the property but I'm not really sure if I can sell this. I want to put an option to buy on your home, and see what I come up with. That gives you time to find the end buyer. However, many buyers are not crazy about locking up their property without cash, so you can offer an option with the first right of refusal. Same thing but if the buyer finds a buyer it gives you the right to buy it or let them sell it. As far as selling it to an RE agency, um no. Realtors will list your home, but are not in the business of buying your home. Now some Realtors do buy, but I would not count on that. You need to find cash buyers first, and just ask what they want and go find those deals... Here in Indy I call my buyers every week and ask what they are looking for. Then I focus on finding those deals... Scenario 2-Just do a double close. Then you can collect (via close) the "$200k" from your buyer and then close with the seller for "$150k". You just have to have a title company that will play ball and accommodate this type of closing, and your buyer will have to have cash, Hard-money, portfolio loan, or if its a private seller just assign the deal and skip the double closing. So: Find Your Buyers/What do they want Find a title company that will play ball market and find deals put deals under contract sell(double close) or assign deals collect money repeat! Now above is a general overview, but just take it one step at a time and don't let the process over-load you... Good Luck!