Hello,
I will try and keep this as short, but detailed as possible.
My experience with RE is at best limited to the BP podcasts and a little reading material, as I have only decided a few months back, that I would like to enter into this field.
I was out on a run today and happened to go through a sub-division. I stopped briefly to hold a conversation with an older gentleman and one thing led to another, with him disclosing that his home was to be auctioned in January 2015.
This led me to investigate a little further and this is what I got.
Outstanding debt: 80K. However, note that with auction charges, attorney fees etc, the bank (which is actually a Govt. agency) wants to settle for $100K.
Repairs: The home needs a bit of work. I did not get enough information as he had to leave. However, he seemed like a reasonably trustworthy person and actually was the one that disclosed to me that the home would need repairs worth $30K. This figure would apply to the work being contracted out and I plan to get some sort of an inspection done.
Other Expenses: If the home gets sold at the auction, he gets nothing. I asked him what he thought would be a fair amount, if I had to pay him to get this deal closed before it went to the auction. He told me that is he got $10K, he would be ecstatic!. I acknowledged his response, without portraying any type of commitment. In saying that, this gentleman has had the need to let his house go due to a very sad situation. If I had to pay him this amount, I would still end up getting a decent deal and so will very likely not negotiate him down, as I can see that money lifting a huge burden off him.
Property Value: Running comps to what has sold recently (3 months) and what is on sale as of now, the average price/sq. ft. is: $116. This is a 1637 sq.ft home and so that would appraise it at: $189,892 (ARV).
Property Details: Built in 1988, 3/2.5, 2 car garage, 1637 sq. ft., single family home. The home is within a sub-division, which is situated in a very high demand area due to good schools, low crime and a middle class, young family type demographic.
Calculations:
Bank Pay-off: $100K. I plan to negotiate this down with them, as they will be saving on costs to take the property to the auction and on time value as well.
Repair Cost: $30K
Payment to Owner: $10K
Closing Cost + Other Expenses: $4K
Total: $144K (Market Value: $189K; Savings: $45K)
Since I have not done any deals, how can I go about making this a successful one.
I thank you in advance for your opinions, guidance and suggestions. From a newbie that wants to dip that first toe in the water, it is all very much appreciated.
Regards,
Sam
NOTE: I have other questions connected to this property that I will post tomorrow in the appropriate sections. I will post the link here (if it allows me to edit the post) or in the comments section. Alternatively, please find the posts via my profile.
