No buyer... Should I cancel this deal??

Question

I have a rehab property under contract at 41 cents on the dollar with approx 15-18K needed in repairs, and my last day of the due diligence period is next Friday.  
I’ve tried quite a bit to find a buyer, but no bites as of yet.  Here are a few things I’ve tried:

-	Send e-mail blast to buyers list.  Rehabbers and other wholesalers.
-	 Post about 7 different ads on Craigslist, and repost the ads that have aged.
-	Used SellPoint to blast the property out to about 17 various listing sites, including Trulia, Yahoo Real Estate, Local.com, eHouseAds, Lycos, etc..
-	Sent a separate direct e-mail and/or called everyone on my buyer’s list to see if anyone had any friends, partners or buyers that would be interested.
-	Networked with members here and on other REI forums.
-	Contacted members that I’ve met at my local REIA… and planning to attend a meeting next week. 
-	Dropped the price quite a bit, down to a 2K assignment. 
-	Called the court house for the next auction, but the next one will not be until end of this month.
-	I had bandit signs out, but they have been taken down.

The property is in a rural area and several of the callers were from the area and knew the house, but were not interested.  Others do not want to work that far from the city.

I am fairly new and this would be my first deal.  Through my marketing of this property, I have added many to my buyers list, but no one for this particular property.

Lesson learned from this experience is to only contract a property in the areas where my buyers want to buy.  This will be the last one in a rural area unless I have a specific buyer for the area.

I truly do not want to cancel and would take a lower assignment if needed, just to get the deal closed. What am I missing? Does anyone have ideas that I haven’t tried or should I just cancel this one and move to the next?

Jon Holdman · Answer

You say you have had callers who knew the house and weren't interested.  That's a big red flag that the value is not there.  Will did the math, and if  your numbers are correct, its an acceptable deal.  I think he missed your assignment fee, though, which makes this a 69% deal.

But if your numbers are off even a few grand this is no longer a deal.  The fact comps are hard to come by is a big negative, too.  That means an appraiser will have trouble finding comps.  It also means just one sale could have a big influence on the eventual value, if there is a lowball sale that would crop as a comp between when the rehabber bought it and when they finally get a sale.

Marlena Young · Answer

The numbers above include the assignment fee.  I initially had it listed higher with wiggle room for negotiating, but have come down on the assignment to get it moved.  I'd rather take a $1500 assignment than having to cancel.

Re-negotiating the contract may be the solution.  However, before doing that, I'm going to call the rehabbers that live in the area that have passed over the deal to see what they would be willing to pay for the property.

One thing I have noticed, is that there is not much negotiating on price from other investor buyers.  Most requests are on terms, in regard to owner financing.  Is it common for investor buyers to Not negotiate price with the wholesaler?

Kevin Torrence · Answer

Marlena place an ad in the largest newspaper in your area. Example:

Handyman Special! Must see 3bd/2ba 2car garage Won't last long, my loss is your gain. Call Now for details 555-5555

Make sure to answer your phone, do not use voice mail.

Will Barnard · Answer

There continues to be a lot of advice here regarding how to find buyers for this deal. That is obviously not the problem or issue at hand, it is the numbers of the deal.

As I stated before, such a deal will need to be around 65% and at face value presented, it is at 66% (plus your assignment fee as Jon pointed out). If other buyers familiar with the area have already passed on it, it is likely that all others will as well and ONLY because of price. So, to get this deal done, you will have to re-negotiate the price so that you can create enough spread to make it a worthwhile deal.

Sharon Vornholt · Answer

Marlena - Why don't use ask for an extension of time to close and continue looking for a buyer?

Also, I agree with putting up some signs. Go to a sign shop and get some blank corrugeted signs. Make up some "Must sell - Cash" signs with your phone number and put them up in the area. You might shake out a buyer.

One more thing, have you listed it here on BiggerPockets? I once found a buyer here.

Justin Silverio · Answer

Instead of contacting people you meet at the AREIA events, ask to present the deal in front of everyone at the next meeting (if its before the due diligence period ends).

David Wedemire · Answer

These are all good suggestions. I would see f you can assign to another wholesaler and take a small profit and move on to the next one.

Marlena Young · Answer

Thank you all very much, I greatly appreciate your feedback.

Since this property is in a rural area, good comps are very hard to come by.  However, by extending the radius a bit (5 miles), I was able to find a recent sale at $78,000 similar to this property.

There is another property for sale by another investor 7 miles away for $17K more than what I have this one listed for.  However, there is more land associated and from the pictures the condition seems to be similar but actual is unknown.

Delondon Dear · Answer

Don't close the deal just yet. Slap up some signs all around your city with the house details on it. Have the calls go to google voice.

Then text message all the cell phone numbers the details of the house. I would make a video of the home and have the link in the text message so they can see the home without going to it.

No buyer... Should I cancel this deal??

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