GOT OWNER TO SIGN "AS IS" PURCHASE CONTRACT THEN WHAT?

Question

Im assigning the "AS IS" purchase contract to a buyer. I have some questions

1. On the  "AS IS' contract, do I put  my name on the buyers line, the investors name?

2. The owner put on the contract that she only accepts bank wire for final payment, can the investor go to escrow and have it bank wired to the owners bank?

3. The owner put deposit held in escrow is $10,000. How did she determined that? is that too much?

We have a deal for $119,000 cash. She posted for $123,000 and I talked her down to $119,00. For a 2 bed 2 bath condo with 1400 sq feet in great condition. I'm planning to sell it for $140,000. Is that too much? How do I determine if thats too much or too low?

Morry Eghbal · Answer

Oky, now, go through the property and adjust for the repairs if it is more than $4,900 which I assume it is than adjust it....You can see how crucial it is to get the deal at the right price.

I can almost guarantee you will spend $10K so you really need to get this property for the low $90s,

If not this one, keep on looking, "opportunities are like buses one goes the other one comes."

Morry Eghbal · Answer

champion there is not enough money. don't do it. you need just 10% carrying cost to sell it...if you do it might just be a learning experience....unless you already have the buyer and there is no agent or commission or repairs involve.

simple rule.

multiply the price by 70%

140,000 X 70% = $98,000

here is the break down

10% cost of sell

15% profit

5% repairs.

hope this help...from a guy who bought fixed and sold over 1500 houses.

Barry Smith · Answer

Since this is a wholesale forum, I'm wondering about a few things you did not mention.

1) What is the After Repair Value for a retail buyer... is it around $200K (using the 70 percent rule)?  If the condo is in good condition, it doesn't sound like there is much money needed for repairs.

2) How much of the closing costs are you paying?  Half or all?

3) Do you have several comps in the complex to support the $200K ARV?

4) You say you "want" to sell it at $140K, that would be roughly $21,000 wholesale fee on a condo? Does that mean you already have a wholesale buyer lined up because this condo is a great deal that is really worth $200K plus fixed up, and you can sell it to the wholesale buyer for $140K, leaving them maybe a 25 percent margin minus 5 percent for minimal repairs? If that's the case, this wholesale buyer should be the one putting up the $10,000 deposit.

5) What are the Home Owner Association (HOA) fees?  Have you factored that in if you can't sell it fast?

If the Condo is not worth $200K after repairs, and is only worth $140K, this is not a wholesale deal because you'd be buying it at 85 percent of value and there is nothing left for a wholesale buyer to make money on after repairs.  No incentive for a wholesale buyer to get involved.

I'm not sure about your Florida market, particularly with condos which I hear are very easy to get and not easy to sell, but in general...if you are going to leave the wholesale buyer with the property worth 70 percent of the ARV minus repairs, you need to buy the property at 65 or 60 percent or less of the ARV so you can take that 5 to 10 percent out as your wholesale fee.

Again, if this is not a wholesale deal, this is the wrong forum.  But if you are doing this as a retail deal, and the condo is only worth $140K fixed, and there a several comps in the complex to support that, you are paying way too much at $119K.  That's 85 percent rule and, in my opinion is too risky a deal, because it does not include repairs, buying costs, holding costs, marketing and sales costs, HOA fees, etc., provided you don't already have a buyer.

But, at $119K, if you ALREADY have a buyer locked in ready to pay all cash at $140 now, get a contract with that buyer at $140K, have them put up the $10,000 deposit to you, you put the money in escrow, assign the contract to your buyer and have escrow send you your check when it's all said and done.

Just my opinion.  Hope it works out.

Curt Davis · Answer

Normally you would have a contract between you as buyer and seller.  If you find a buyer you would have your buyer sign your assignment contract which shows how much you are getting the property for and what you are making.

This transaction should be done with a closing attorney.  Your end buyer would wire in the funds and then the closing company can wire the funds to your seller when completed.

$10,000 is a large deposit.  Are you having to put this down? You better make sure you sell it fast if you are putting the $10k down.

Good luck

Terrence Smith · Answer

How's it going @Chantal Moss ?

Honestly this deal looked like one to walk away from, but your getting some good advice here. Hope your taking it serious and protecting yourself.

Chantal Moss · Answer

Hey Morry is this correct?

140,000 X 70% = $98,000

here is the break down

10% cost of sell   $98,000x.10=$9,800

15% profit             $98,000x.15= $14,700

5% repairs.           $98,000x.05= $4,900

Andrew Davis · Answer

@Chantal Moss

Congratulations on the deal!

There are lot's of ways to determine comps other than the MLS.  I'm in the Orlando area as well and would be happy to help you with this deal.

Feel free to reach out via private message.

Chantal Moss · Answer

This is a wholesale deal

1. How do I determine the ARV?

2. My investor paying for closing costs

3. No I dont have any comps nor I'm  a realtor that have access to the MLS. Is there any other way to get comps of the area?

4. How do I determine how much the condo is really worth?

5. The HOA fee is 302 month, inlcludes insurance, water, trash, exterior maintenance, basic cable

Chantal Moss · Answer

On the contract on number 17* deposit held in escrow by $10,000 ("Escrow Agent") in the amount of (checks subject to clearance)

Can I have the investor pay the $10,000?

The seller didnt mention about me paying a down payment. I just told her I have an potential investor who can buy the property.  The seller filled in the $10,000 on number 17 of the "AS IS" contract. If I'm wholesaling the property for 140,000 do I include the $10,000 escrow deposit from the investor?

GOT OWNER TO SIGN "AS IS" PURCHASE CONTRACT THEN WHAT?

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