Making offers?

Question

Is it not just plain dumb to make an offer on a house that you haven't seen the inside of completely? Or is it common? I see alot of these "we by houses nationally" do it and I assume they can't see majority of these houses? I'm asking because I got a call back from a absentee owner who seems decently motivated. I know this may not be a capture, but for future reference should I make sure to see the house before with a contractor or just learn to estimate repair?

Deadrick Colbert · Answer

I don't ever look at a property unless my offer is accepted. I don't have time to go looking at every house, I need to be making offers.  Have contingencies based on the home passing your inspection and that will cover you.

George Beale · Answer

I agree with Sarah S.  The companies that do wholesaling nationwide will either go to the property physically (fly, drive, train etc) and do their due diligence, or they will hire a Bird Dog, or put an ad on craigslist for someone to go and take pictures, etc.

Depending on the situation, the seller could also do this for you, but just ensure that they send you photos of everything.

Another thing to keep in mind, is if they tell you that some repairs are needed, don't just take their word or guess on what needs to be done and at what amount.  Look for contractors in that area and have them go out and look and send a report to you.  Most contracting companies will go and provide you a FREE estimate.

Wayne Brooks · Answer

Apparently, making offers sight unseen works for some.  But, as a listing agent, we won't sign one if the buyer hasn't seen it.  We'll respond with an acceptable counter offer, but not executed.  Depends on which side of the fence you're on.

Brandon Cao · Answer

Junior Salters@
These are all very interesting replies.  I just walked around Philadelphia this past two weekends and I looked at 7 or 8 properties.  I would say 4 of them were really enticing from the pictures and the statements provided.  Before I got to giddy and since I'm small time (this would be my third property), I made sure to get my realtor and schedule a showing at each property.

I will admit I did really like 2 out of the 8 homes upon a walkthrough, both of each I eventually put down offers.  Unfortunately, I would say ~60% of the properties upon walkthrough showed problems that were not apparent from the pics.

For example, one had a missing ceiling panel with mold and an unusually damp basement (although containing a sump pump).  Although this could be captured from a home inspection.  What a lot of people here are not telling you is that the home inspection could cost you upwards of $400.  In my arena that's no small fee.  Also, The real reason I felt like I needed to walkthrough was for the  neighborhood.  Turns out many of the homes were dilapidated in the area and did not look like an "up and coming" area.

Another example, I saw a quadroplex property that from the description just needed some drywall and finish up the utility lines.  Although this was true, it turns out the house had a resident inside.  A homeless man took shelter in the house, which could be alleviated by eviction or other means.  I however, was looking for less of a headache and also saw that the house would require more than $20k in repairs more than my pre-walkthrough estimate.

I just wanted to let you know there is another side to the story.

Best of Luck!

Brandon

Ryan Logsdon · Answer

Junior Salters I won't look at a property in person until my offer's been accepted.  I wasted too much of my time with that when I began.

Just write the normal contingencies into your offers, and you'll be safe.  You can spend your time inspecting the property after the 1st round of negotiations.

Check out the first 3 of these 4 contingencies:

http://www.biggerpockets.com/renewsblog/2010/03/31/contract-contingencies-and-4-rules-for-using-them/

I also require 2 additional contingencies:

1. that the seller cannot admit new tenants without my written approval (ie: a family member of theirs)

2. that the seller cannot adjust existing rents without my written approval

Sarah S. · Answer

The only other thing I can offer is to Google the address and see if it has been for sale within the past few years. Won't tell you the condition but will allow you to see the basic house layout at least. I'm betting owner will find a way to let you in or hope so anyway.

John Thedford · Answer

If you have a savy agent that would work. I am quick to sign a contract but I always have weasel clauses. I always have a professional home inspection done before I close and if it doesn't measure up well I can always bail out. I knew I was going to buy one house the minute I pulled up outside..and that one gives my best ROI.

Junior Salters · Answer

Sarah S. Thanks! I definitely have to call the owner back and see if there's a way I can get in the house. He does live in TN, but his daughter stays in Charlotte, NC which is only an hr away so that may work!

Sarah S. · Answer

I am still new to this,too but if I stand correct, those buying nationwide are doing so with the guidance of bird dogs who physically go out and take photos, see property, etc. I have met some who will buy without seeing but I assume those are the more experienced investors. I, myself wouldn't place an offer before seeing unless certain I can flip or unload the property in another manner. Contractors in my area do free estimates so I now have some of them willing to be called as needed to give estimates. I prefer to leave things to those who are expert in their areas such as contractors.

I will be keeping my eye on this thread as I am interested in other answers to. Never can have too much knowledge to apply and learn from. Good luck!!!!

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