Help Please, This Might Be The One.....
Any advice from the experts would be appreciated: I read an ad in the paper that said "Owner being transferred. Must Sell!! 4-2 1/2-2, less than 2 yrs old, seller is motivated. Bring all offers! Will also do a lease purchase"......they are asking $133,000 for it. What i need to know from you guys is how would i structure this offer to the agent/broker who is handling this....he says that the owners have given him the power to dispose of the property anyway he wants, just as long as he sells it........i'm presenting the offer tomorrow (and this house i would keep as a personal residence)........how would i offer this without coming out putting any money down upfront?.....do you guys think that this could be done?....it's a very nice house and i don't mind paying what they are asking for it, i just wanna get it......so would you guys help me out?....PLEASEEEEE!!!....this would be my first deal and i want to get this deal done badly!
I'd do it however it would work for you. Deal with the agent. Know what you want out of the deal before you enter into negotiations though. By your post, you sound a bit emotionally attached- that's not good. After knowing what you want in the deal, tell a trusted friend and bring your friend with you to make sure you don't buy something just because you can.
Ron
You need to take it easy so that you don't become more of a motivated sucker than this guy is a motivated seller. Have you checked for comps in the area? If you are really new, then you should probably go get a buyer's agent tomorrow at 7am and talk to them for a few hours and have them structure the deal.
If this guy is really motivated then you need to take a breather and use this to get a really good deal. Get the agent to pull some comps and get thier opinion on the market value. Don't EVER offer the asking price of a motivate seller unless you really know that it is a good deal (like 50% of FMV).
Use your head, work the numbers and don't fall in love with the property--the seller's agent will see it and will drive a harder bargain than if you play it cool.
Good luck!
iglooman
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My recommendation:
First thing tomorrow morning:
1. Contact your mortgage broker and get pre-approved. (This will tell you what kind of down payment you will need.)
2. find a buyer's agent.
a. Have him get comps
3. Check at the court house for the mortgages on the house. (Or have your agent check.) This will give you a better idea of how low can you go.
4. Remind yourself that good houses are easy to find and that if you walk away from this one, you'll walk right into another one.
5. Once you know how much you need down, arrange for the seller to pay the down payment. (If there's not enough equity in the house for this, Run away.)
For example, if they have a mortgage for 100K on the house and you're approved on a 10/90, offer them 110K and they gift you the down payment. (Of 11K)
I think you can do it that way. Somebody please correct me if I'm wrong. Your mortgage broker will also be able to help you with this.
Good luck. Hope this helps.
Ronnie
You know, this ad sounds strangely like the kind a sub2 guy would put in the paper........
what do you mean this ad sounds like one a sub2 guy would put in the paper?....it was in the paper, that's where i found it, but this broker "claims" that he's not too familiar with sub2s, a sub2 is really the route i wanted to take with this one, assuring no money upfront/out of my pocket......how can i best explain it to him.....
Getting emotional about a property will really not work for you. Do your homework on it.
Many of these "seller" motivated or "urgent" need to sells are investors. I have also run into agents that use the tactics to get offers on the property and pull in an "emotional" buyer.
Tax rolls are among the first find out who the sell is and other important info. You need a buyers agent if dealing with another realtor. After you get comfortable in this business and know more of what you are doing then you can probably do with out but My reccommendation is not to now.
And.....calm down. The market may or may not move so fast that the deal will disappear. But you are better not to get roped into a property that is over valued or you end up paying full price for.
my 2cents
Remember that agent's (Realtor's) get paid at a closing (official meeting to via documentation & funds to transfer the property). As the investor, it is your responsibility to teach the parties involved WHAT you want to do. This may require a pen and yellow note pad to illustrate your goal, then cleverly request that they set aside conventional transaction logic to adopt your method.
I like the analogy of purchasing a car at the dealership. Salesperson greeting followed by pre-qualifying the buyer, buyer agrees to test drive, salesperson creates emotional attachment to car, in the showroom negotiation begins, salesperson asks buyer to make an offer, buyer offer is attractive and reasonable, salesperson returns with counter offer, buyer is in shock, buyer makes $100 concession counteroffer in disgust, 20 minutes elapse and manager emerges, again creates emotional attachment to ensure it has not been lost, buyer receives another counter offer, (no paperwork yet!) buyer is tense (looking at the car) but hopes to strike a deal, buyer begins to detach the emotion says to manager, "Other dealers in the area, not fond with negotiations thus far, etc.) and stands firm on the first counter offer, manager escapes to obtain senior management approval, 10 minutes later manager returns with "Good news" they accept!, (Now the paperwork begins!)
Although every transaction does not go this way, but you are summarizing in the right direction.
When agent(s) are involved there are two solutions.
One, the agent is paid upfront just like in a traditional closing. Not good for the buyer (possibly more cash needed by seller)
Two, the agent(s) commission is tied to the actual sell of the property (the exercising of the deferred closing). This does not impress the agent much, but it's better to have the commission 12-18 months down the road than none at all. The deal can be sweeten with upfront $$$ incentive. Inquiry if they have another listing soon to expire. (motivated seller)
If buying and there is only one agent involved, put down a flat rate fee for the agent (usually 3% of the listing price if it is at or below FMV). That way, the agent is guaranteed to make at least what they would normally make (split with another agent) and probably more (if seller decides to accept a lower offer).
Example - property listed at $100K, I offer $80K with a $3K fee to the agent. Seller saves $1.8K (Regular realtor commission rate @ 6% of $80K = $4.8K). Agent makes $600 more than they would have originally ($4800/2=$2400). Win-Win-Win deal.
As for the home, present your written offer:
Contingencies: Home inspection and title search, etc.
Down Payment: $xx.xx
Sales Price: $xxx,xxx
With the following terms: Discussion of existing financing - subject to - the existing loan stays in the seller’s name
Deferred closing of xx/xx/xx
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Classimg, how about going that extra mile and laying it all out for me, would you show me exactly "how" you would word this offer????........i think the deal could be done......but how would you lay it out?....thanks......R