How Should I Proceed ? Reo / Rehab
I found a house that is Insurance Co owned. Good area, prices still rising, golf course lot location. I had a contract to buy for 220k pending inspection. Initial cosmetic rehab estimate was ~60k. Resale expected ~330k / ~40k profit within a few months.
Inspection showed that the house is riddled with termite damage, to the extent that the back 1/2 of the house- crawlspace supports, piers, joists etc need to be replaced. Estimate to repair termite damage is 90k. Obviously I am out of the contract.
I resubmitted an offer of 100k "AS-IS" and that was rejected. House is back on the market @ 220k.
Because I notified them in writing of the extent of the damage, the owner now has to disclose that information to any prospective buyers.
How should I go back to the seller to try to buy this house ?
Thanks !
I am fairly new to REI but from what I know I can recommend (and if I am wrong anyone please feel free to correct me) not to purchase for more than 30% below ARV minus repairs and Loan reinstatement fees.
Just my 2 cents.
After the sale occurs we have a 12 month redemption period in my state. I was told buy an attorney that more than 95% never redem.
That means your owner has 12 months to find a buyer for 90k and they probably knows it..You have to wait them out or move on. Why would anyone give up free rent for 12 mos. for just 10k? Moving cost and rent on a new place would eat that up over the course of a year.[ Edited by mrare68 on Date 02/11/2005 ]
You must mean, "Fairy" not "ferry". You had me thinking for a minute, though.
Is this ferry a foreclsoure cruise ship? or is it a fairy? :-?
Jk[ Edited by jllaco on Date 02/13/2005 ]
I forgot to tell you how to buy from the owner. If the owner is willing to work a deal, ask him about all the loans and the back payments, leins, etc. Figure out what the property is worth. Calculate the equity. Make him an offer for his equity. For example. Home is worth 500k and has 350k owed. You might want to offer him 50 - 75k for his equity. I like to pay in 3 payments, 1 - 2k when they sign the deed, more when they move out, and the rest when i resell it.
Have them sign a auth to release, fax to the lender, and change where the statements are mailed.
oh, one big thing, after you come to an agreement with the owner, have him sign a EPA Agreement. In CA you have to wait 5 business days after they sign that before they can sign the deed. Durring that time make sure you order a prelim title report.
After researching the comps more I found that the low was $165 and the high 210K for that neighborhood and home size. It looks like a short sale is the only way to make any profit. Since I have no experience in this I will research the SS board.
Thanks for your help.
J