Off Market 3 Family for Sale

[Rich Hupper]

Hello Biggerpockets

I was door knocking the other day with a friend of mine and we found a 3 family outside of Boston. ( there was a sign in the window with a phone number ). The property is not listed for sale on zillow, the MLS, Trulia, or anywhere for that matter. During the phone call asking price was not discussed.

The owner has owned the property since 1985. The property has no mortgage and no deed recorded at the registry. The owner has agreed to meet me on Friday to tour the property. 

I do not qualify for a loan to purchase it however maybe the seller would agree to an assignment wholesale.

Similar properties in the area are selling for 540k. ARV would probably be 600k. However because the area is in the ghetto you probably would not want to spend a ton making it look pretty.

The 3 units are 3 bed 1 baths. Low end 3 bed 1 bath units in the area go for $1700.00/m. High end go for $2100.00/m.

If I am going to wholesale this unit what do I need to bring with me at the meeting? ( I would want to lock this down with some sort of agreement, if the homeowner and I can agree on a price )

If I could get him to agree to $400,000.00 I think I would have a great deal. 3 families in this area are in HIGH demand. 

What do wholesalers usually bring with them  at first time meetings?

I know I need an Affidavit and Memorandum of Agreement for the registry, an offer letter and a check. But what else?

Who would hold the deposit in escrow my attorney or the sellers.

Important dates in the offer? How far out should my closing date be from acceptance? How many days for home inspection/due diligence?

What language should be in the offer? 

"offer subject to seller allowing wholesaler to show the property"?

"offer may be assigned to a third party buyer"?

"offer subject to seller allowing wholesaler to market property"?

If I find a buyer to assign the contract to, how do I assign the contract? Is there a form for this?

Also if I get him to agree to a purchase price for $400,000.00. How much would I make on the deal?

Thanks for the help.

[Ray Hurteau]

@Rich Hupper - can you give a more specific location? also, if houses there are selling for 540k, why would you say the ARV is probably 600?

Your name/entity and/or nominee is all you need to write on the buyer line of an offer to purchase to be able to wholesale it.  

you can tell him that you find properties for other investors in your network, so while you won't be the one closing on it, one of your partner's will.  talking about assignments and fees will generally confuse the seller and potentially cause it to not happen.  keep it simple. 

That's all you need at this point - you still need to see if he would agree to a number like 400k.

depending where it is, i'd be interested in looking at it Friday with you.

the seller's attorney could hold the EMD once he signs the agreement. also, the EMD can be any amount, so it doesn't need to be huge - if they question it i tell sellers that 5% is the typical amount because in a normal transaction the listing agent puts that amount into escrow so they know they can collect their 5% broker fee. since there's no broker, it just needs to be $1 or more for it to be a valid, enforceable contract.

put a condition in there like subject to buyer's partner's inspection (not a home inspection) or approval

explain that you would like to close in 60 days because you/your buyers get bank financing but will not put a mortgage contingency in there - in other words, you know you'll get financing or wholesale it by that time

if you do get it under agreement, you want to market it immediately.