All Forum Posts by: Octavia D.

On my way home from work I walked by a small mini "FSBO" sign and decided to walk afar off and contact the owner by text, since my phone doesn't have voice recording. I saved the conversation and wanted to know if I asked the right questions and spoke to the owner in a normal "I'm a buyer" context rather than a "I'm an investor" context. What questions should I have asked, what questions shouldn't I have asked, also to note recently the sign was taken down and I saw a mini u haul next to the owners town-home. I guess they found a buyer, if so then i'm glad she won't have to worry about the mortgage anymore and can move on; ok so here's the conversation I had with the owner through text messaging. (my personal thought's in parenthesis)

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-------- Saturday (7/11/15), 5:34pm ---------

Me: Hello, I saw you're sign at the corner. May I ask why you're selling and for how much?

Owner: $199k, upgrading our home

Me: You just want to move, am I correct?

Owner: Yes. are you interested in buying or are you a realtor?

Me: I'm not a realtor but i am interested. How soon are you trying to move? :) (trying to keep it friendly and cool using smiley faces, not sure if it worked LOL!)

Owner: No rush, just when we get the right offer (not-motivated, got it, well ..... eeek!)

Me: Ok .........  are there any repairs that you think needs to be done that i need to be aware of?

Owner: No, it's in really good shape, there are pictures on zillow if you want to check them out. (ooooh, so she's been to a realtor?)

Me: LOL! ok cool, I was just about to ask you that. :) is you're price negotiable? (not sure if the LOL!'s worked either LOL!)

Owner: slightly but not much

Me: What's the least you'll accept.?

Owner: $196k (divide by .70 = $137,200 - $10k rpr - $20k pft, compared to comps = NO DEAL)

Me: Ok ....  do you still live there.?

Owner: Yes we do

Me: If I wanted to move in soon, how much would you accept now, that will be enough for you to move.?

Me: You still there?

Owner: $196k is the lowest we are prepared to go now.....just put on market and getting slot of interest.

Me: Oh ok, ...... you recently went to a realtor am I correct.?

Owner: No, no realtors. ( you just said you put it on market.?, hmmmm ...... ok!)

Me: Oh ok, ....... is the home in you're name?, I just want to make sure i'm buying from you and not someone else.

Owner: Yes

Me: May I ask what's you're first and last name?

Owner: I'm not comfortable with these questions.

Me: Ok, i'm sorry i just wanted to know how to address you in these texts. Is it ok if I have you're first name.? :)

Owner: Brenda

Me: Ok Brenda, my name is Octavia :). You told me that the home is in you're name so I assume that there is no mortgage on the home that's on record. am I right.?

Owner: No, we have a mortgage, it's in my name 

(so how does one have the deed in their name yet owe $$ to the bank?, I checked to confirm that the home is in here name, it is but how is there a mortgage on it also, doesn't the banks name also have to be on the deed or does she owe money to someone else.? )

Me: Oh ok, what source helped you determine how much you're house is worth.?

Owner: Sales comparable's 

(for some reason, I think i'm speaking to another investor, unless home owners have gotten more smart at discovering their homes current worth and is trying to get as much as they can off it, makes sense.)

Me: Ok, ...... is it ok if i asked what bank you have a mortgage with and how much you owe?

Owner: i'm not providing that (I'm not even sure if I should have asked that)

Me: Ok, it's ok :), I was a bit hesitant on asking you that due to it being too personal. i'm sorry :). Is you're price enough to pay off the mortgage at least.? (smiles, smiles and more smiles, keeping it friendly. LOL!)

Owner: Of course

Me: Will you accept any type of flexible payment.?

Owner: No

Me: Ok, ....... so you want $199k for you're home based on comparable sales but will accept $196k that will be enough to pay off you're mortgage which is great. Also you still live in the home and is in no hurry to move out and will not accept any flexible payment that would be enough for you to move out. Am i correct with everything.? :)

Owner: Yes (what do you guys think so far.?, of course i just kept ooooon going)

Me: Will you accept partial payment now and the rest later.?

Owner: No (Thanks for confirming to me you're previous answer)

Me: Ok, i'm going to check a couple of things based on the info. you helped me understand and i will contact you if I want to go ahead and buy you're home.? is that ok.? :) 

( I felt like i lied when I said this, because I don't have money to buy it, yet I do want to live in one of the town-homes in the sub-division the owner lives in, yet my goal of course was to wholesale it but also practice my speaking .......... or texting skills to try and not sound like an investor.)

Owner: Yes

Me: Ok cool, oh and one more thing, if i contact you back and decide to go ahead and buy the home home. How soon will it take for you to move out.?

Owner: About 30 days 

(so if I had one week to move out of my place, I would have to stay in a hotel for you to be ready to move out around the same time it takes for the money and everything else to go through ................................................  a realtor and title .............................. right!)

Me: Ok then, it was nice talking to you Brenda and i'll check  out the home and how many bedrooms and baths and such it has from the zillow website. :)

( I did and what I saw was the result of a possibly lazy home owner or realtor, 1 picture of the home, last year, nothing else ................................................. very motivating LOL!)

------- THE END! --------

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Thanks guys for you're constructive criticism, advise, tips and any other comments you want to leave me regarding this. Sure will help me out a ton on understanding better what i did wrong, what I can improve on and what should be done next time.

Why do a Title search when it's already been recently done by another?

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Many explain "double closings" as going through title twice and paying all the fee's again. My question is why is the title search, inspection, appraisal, etc. necessary when it's already been done before the transfer of title? 

Yes some sellers can lie about their property and have read that asking a seller for their reports of recent title checks, inspections and such is not allowed and one has to get their own done. Probably so the title companies, inspectors and others involved can keep making money when checking a property (regardless of how many times they know it's clean). 

Or someone might ask for something specific when checking title on that property that hasn't been looked at. My point is.........what's the point LOL! and are there some (recent owners or rehabbers) ok with giving a new buyer recent reports of the properties title and inspections so as to avoid all the fee's.?

Octavia

...................30 minutes later................

Oh my goodness LOOL!, I actually forgot to finish this post due to talking in a chat on my phone hehe. Sorry.

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Can I use an escrow account vs. local bank / credit union to hold my profits & cash-flow?

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I know that some recommended credit unions over banks due to the interest made on them and them being easier to work with. Yet I don't really care about making interest on my profits or cash-flow and noticed based on research, that a lot of credit unions are acting like banks by giving out loans (other peoples hard earned money). Is it possible to just have an escrow account to hold my funds in or is there really no difference.?

Octavia

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I'm not going to use the word "commission" when stating that (though I was thinking of it but wasn't sure if I should) based on ur response on that hehe. I'm just wondering if it would be ok to do it this way because the seller is going to see on the hud-1 settlement how much profit I make off it anyway (if I use a title company), so why not just be upfront with them and have signed proof from them that there ok with it. Also i have no funds to purchase a property, so this will be wholesaling "as is where is", because i also don't have money for any down payment on any owner financing deal either. I'm basically learning how to do this with empty pockets. Not because I'm cheap but because I just don't have the money, unless I will a lottery scratch-off LOL.

Is it ok to have the seller sign the "assignment agreement addendum" I will have with the end buyer?

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Knowing many have wholesaled deals with the seller finding out about their profit from the Hud-1 settlement forum and going crazy mad over it, wouldn't it just be easier to be straight forward with the seller and let them know what you can do to help them, how I will get paid from it and have the seller sign the "assignment agreement addendum" I will have with the end buyer as proof that there ok with it.? Basically explaining that not only will the seller get their money but that I'll also get a profit "commission" for my help, making it a win win for everyone, I mean there going to see it anyway on the hud-1 settlement statement and I really don't want to do no double closings.

Thanks guys

How do you wholesale and set up an owner financing deal with another investor?

I saw an ad on craigslist for this:

$ 179k (fixed offer)

2 Story House

Built: 1991

4bdrm,  2 half Bath............. (3bdr, 2 half bath on redfin)

2 car garage 

2500 Sqft............... (2253 sqft. on redfin)

No repairs

Big yard with fence

Storage

30% Owner Financing

_______________________      (the rest below is from my due diligence)

(( Sold comps, 3-6 mnths ))

View Here

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(( Numbers ))

$179k divide by $135k = 1.32% (ARV)

$135kx.70% - $5krpr - $3kpft  - $6k cushion = $80,500 (MAO)

$80,500 divide by $135k = 0.64% (ARV)

$80,500 x.30% ownr. finanace = 

$24k (owe left to seller/investor)

$56k dwn. (paid from the end buyer / rehabber)

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Do I offer $80,500 with 30% dwn. or just all cash?

Where can I find a seller financing contract addendum to do this?

The Investor didn't tell me if there's a mortgage on it or H.O.A, so I'm going by what i got so far. 

How is owner financing set up and what's a good % to accept from a seller/investor?

Thanks again guys for you're help.

OOps! hehe, I forgot in our text conversation that he said his offer is fixed and I just offered him the $80,500 with 30%dwn. Well that's my loss LOL! if this was a possible deal according to you guys. At least i'm getting more practice on these numbers and recognizing a deal. I also never got a response from him after that heheh.

How much equity in a home do most go after, whats the range?

I've read that the equity in a home is where everyone's profit comes from because it's basically money the seller put in the house out of pocket vs. a banks money (mortgage). So what's a good % of equity do most try to find and what's the least that won't be considered? I also read somewhere that if the mortgage is more than the value of the home then the house is overpriced and there's barely any to no equity in it (none of the sellers money), is that correct?

Octavia

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Giving partial escrow payment to Seller, Is this ok?

I know many say to not do this for many reasons, but is it ok to give part of the escrow payment to the Seller and have most of the remaining amount in escrow, just to help the seller have some cash in hand now while they wait for their home to close and to show them that I really want to help them.? Of course i'll have them sign a receipt and make a copy to give to the Title Co.

I also have a early termination penalty clause for me and the buyer if either one of us cancels the deal early, Is that fair?, and can someone check my contract for me to know if I need to change anything? i know many here are not attorneys and that i should pay one to get my contract checked, but i don't have the money so I figure maybe those who do deals in Texas wouldn't mind helping me out by seeing if there's something I need to change or add.

Thanks so much again, guys

Octavia 

My Purchase And Sale Contract For Real Estate

and

Seller / Buyer Termination Of Contract Addendum

(regards clauses 7 & 8 of the Purchase contract)

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Thanks so much Ryan, you've helped me much on making sure I correct my wrongs, it's really been great help for me to get these numbers right and to recognize a good deal. 

As for the profit being included in the 70%, is that the rehabbers profit?

As for me talking to a seller on the phone, I haven't build up enough momentum yet for that hehe!, I've always been the quiet type when in public or just around people in general. I prefer text conversation because it gives me time to think of what to ask or do next rather than having the seller on the phone think I've hung up due to me not saying anything LOL!. I also like to keep record of the conversation to remind me of what's being negotiated and how it's coming along. Eventually i'll start talking by phone, but for now i'm taking baby steps hehe!.

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I also have other posts I did that i haven't gotten any responses from yet, not sure if i put them in the wrong posts forum, check them out if you like.

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Thanks Gideon, I will surely include the extra numbers to play it safe and so that the rehabber / end buyer will have all their costs covered, but I noticed you based these deductions from the ARV and not the asking price, do I make these deductions using the ARV from sold comps.?