"Flipping" Of Properties
I am brand new to Real Estate. A friend of mine is desperate to sell his house. I already own a house, and don't want to buy his, however I was wondering if I could somehow get in between him, the seller, and a potential buyer so I can "Flip" the property and make a profit. It has an appraised value of $175,000 and he will sell it for about $157,000. Any comments would be greatly appreciated. 8-)
You may be able to put an extended contract on the property for 157K and try to sell the contract for, let’s say, 167K. This scenario would potentially put 10K in your pocket. 167K would insure that the property is eye catching and will not leave you holding the bag. However, I’m not sure of the legal ramifications so I would contact an attorney or real estate agent first.
I personally only trust appraisals to be within 10% of what a property will sell for. I've seen far to many properties that will appraise for $200k that the owner is finally glad to get rid of at $150k. After all, an appraiser to a large extent is simply another person who has looked at several houses in the area, who has an opinion of what your house is worth. Certainly, this could be an easy 5k for you, but it could just as likely be a 5k loss if you don't get what you expect, not to mention all the fees involved in buying and selling a house. It's just another opinion, but I would look for something with more room for error. Just my two cents.
I agree with davmille, to a certain extent. Putting a contract on house is serious business. However, the post did indicate that the property has already been appraised and is a solid value. With a friend selling the house and no seller agent involved, an earnest deposit will not be necessary nor will you be stuck owning the home if you cannot find a buyer (assuming that your friend will allow you to back-out of the contract).
As long as the friend is willing, I would definitely consider contract scenario and consider it as a finders fee. Again, I would look into the legality of the transaction first.
Perhaps someone else here knows better than I.
A second (or third, as the case may be) on "davmill".