All Forum Posts by: Andrew Taylor

That area is Braeswood / Westbury. High-end, old money, sort of constantly gentrifying. Lots of property in that area gets bought, torn down and rebuilt because the location is great and the land value is high.

If other houses in the area say they didn't food, then this one is likely a first-time flood. It'll sell but likely at a small discount. I'd make sure your borrower gets a mold certificate - that'll help come resale time.

Brenda, I'm sorry it's taken me so long to reply. For some reason I didn't get a notification that this thread had activity. Contract wording happens far above my pay grade, but just based on my understanding of the purchase-flow process, I would think "due diligence" is the same as "inspection and resolution period." The flow is, request an offer > receive offer > home inspected > offer revised > closing.

Title insurance is, again, way outside my wheelhouse, but I believe it's reflected in "net to seller."

No appraisal is necessary; we perform our own appraisal function. We are purchasing houses with cash.

No repairs are discussed until after the home assessment, because OD doesn't know what your home needs until after we take a look at it. The initial offer you receive is based on a number of things, but mostly on recent comps and your input re: the home's condition.

OD will happily work with your agent. Their commission will be reflected in the "net to seller" summary. We frequently buy homes from sellers whose agents referred them to OD. We are not out to put Realtors out of business.

If seller doesn't use an agent, then no commissions are paid to anyone. Not quite sure I understand this question.

The "request representation" phrasing is interesting, as OD doesn't staff or recommend Realtors for sellers' use. We will recommend a Realtor when a buyer wants to purchase a home from us and prefers to have representation, though.

Hope that helps.

Cost of sales means commissions, listing fees, closing costs etc. I generally guesstimate about 10% of ARV for this number. You also need to include the cost of money in either your construction or holding cost line item - i.e. points paid, interest payments etc.

Yes, if the property is being advertised as lot-value only, then the comps should only include vacant land in the area. Disregard the structure completely, and maybe even seek a further discount due to cost of demo/haul-away.

In this scenario, I agree with Wayne. You need to forget the whole "lot value" thing, particularly since your contractor now says the house can be salvaged. Get a repair estimate from him, work your numbers and see if the deal makes sense.

@Sarah S. Lot value means just that - the value of the land only. I would be looking at comps for vacant lots in the area. Don't forget to budget for demo of the existing structure - that's likely to cost more than you anticipate both in terms of labor and removal of the debris.

Your calculation should look like this: LotCost + DemoCost + Construction Cost + HoldingCost + CostOfSales = Total. If ProjectedARV - Total = a number you're happy with (i.e. expected profit) then you move forward.

(Actually, if ExpectedProfit is a number you're happy with, then go back and re-run all the numbers. Twice.)

Fair warning: I'm an Opendoor employee in Houston.

There is an absolute *ton* of misinformation in this thread, almost all of which is directly attributable to typical Realtor FUD (fear, uncertainty, and doubt - a common sales tactic). I'm at the tail end of lunch and don't have the time to craft a long-winded point-by-point response, but I will say this...

OD does not charge fee+commission+repair costs. We charge a fee comparable to a realtor's commission up-front, based on the information a seller provides about their home (and recent comps, trends etc.). We are constantly striving to lower these fees for our customers.

OD's repair cost asks are, again, comparable to what any buyer will ask for when their TREC inspection is completed. We shoot for "clean, safe and functional," when doing the assessment. We do not scope new flooring or paint or other finishes based on taste or cosmetics. We will happily buy and sell a home with funky colors if it's clean/safe/functional.

When sellers request an offer from us, we provide a side-by-side cost comparison based on using OD vs. traditional listing. Because our closing costs are lower than using a traditional listing, it is frequently less expensive to sell to OD than to list with a realtor, all else being equal.

Finally, sellers really need to question the claim that "Realtors have your best interests at heart, but OD is out to screw you." Studies have shown that realtors routinely hold out for more money when selling their own residence than they advise their clients to hold out for. Why? Because the commission structure (50% to seller agent, 50% to buyer agent - split 50/50 between broker and agent) means that a $10,000 bump in sales price for the seller only nets the agent $150. Why recommend against a lower offer when it delays the agent's payment and only adds a tiny bit to their bottom line? (See a write-up about it here: https://www.nytimes.com/2005/02/20/business/yourmoney/why-a-real-estate-agent-may-skip-the-extra-mile.html.)

That's all I've got time for now, but I'm happy to answer whatever questions you might have when I've got a little more time.

No, it wasn't rented. We just didn't move in until our lease was up at the rental we were living in. 

@Ashish Acharya Thanks for the response. We purchased the property in 2013, moved in in late 2015 (we were leasing elsewhere - this was the only property we owned during that time), moved out in late 2016, and sold it in mid-2017. 

Does that satisfy the 2 out of 5 requirement? Also, how do I determine return of basis vs. capital gain? Or does that even matter if there's no CG taxes?

We sold a property last year and are carrying the note. Buyer has been making monthly payments and is due to make the balloon payment in a few months. I'm wondering what the tax implications are for both the payments I've collected, and the balloon payment when I receive it.

If it matters, the property was our primary residence at the time of sale. I assume I need to declare the interest collected on my personal tax return, but I'm unsure of how to handle the sale proceeds when I collect the balloon. We're planning to pay some debts with the money and invest the rest.

Thanks in advance for your advice (and my apologies in advance if the mobile app removed all the line breaks and made this one huge paragraph).

@Bryan Lutz Please DM me your contact info.

Thanks!

@Sammy G.

@Nick Logan

@Sarah S.

@Ricky Bass

Would you guys mind sending me a PM with your contact info? I'd like to start trying to get something on our collective schedule, but need a more efficient way to do it than '@' mentions. Thanks!

(Sammy, wasn't sure from your post if you were interested in participating in the group, or just making the Meetup suggestion. If the latter, please disregard.)