You And The Seller Have Agreed On Price QUESTION
OK you have found a property you negotaited with the seller and have agreed.
I am curious, what do you use loack this deal until you can get contracts drawn up.
Or what sort of Basic form do you use to loack up the deal.
I mean you dont want to leave there them in agreeance to a price and they havent signed anything.
I hope I am making myself clear, what I am wanting is to see what you all use or Write up on the spot if its that situation.
You know those situations where you have a great deal, and need to bind the deal subject to your Outs in case you need them.
Mark
P.S. If you got a General Form I would love to see if you are willing PM me
Mark,
If you have an agreement, and no contracts with you, then SHAME ON YOU!
NEVER leave room for another investor to come in and grap YOUR sale.
Mark- You need to have contracts on hand and ready to sign any time and any where. If you do not you can not lock up the deal. Good luck.
The question was what do you use.... not what I have or what I use....
I am curious of the practice of others...
Never Mind... its not that big of a deal and I agree and most assuredly I would never leave them without something signed.
I however, have been in situations where I didnt have a prewriten contract and I wrote it out on a legal pad.
My post was questioning what do others use. It never hurts to see and learn possibly other means to simplofy the process.
Mark B
Mark- I have many different contracts I use for different situations. I definately would not stake thousands of dollars on some writing on a note pad. Have all your ducks in a row before your ready to sign up.
Max,
I wouldnt stake THousands of dollars on a note pad either. But as General contracotr for over 25 Years, I have writen both Construction as well as real estate on a Pad...
It was not meant to be the end contract only one that binds them.. I have placed contengencies that allow an Attorney to transfer the terms of the agreement to paper work drawn up by the attorney.
BTW, I wrote a contract up years ago on a legal Pad.... the people tried later to contest it in court. What they were doing was trying to get out of paying me..... However they lost we one and it was all on a simple legal pad. The judge ruled it was a Binding contract of which they set their signature to.
However, all of this I am speaking of does not have anything to do with the intent of this thread.
That happens I guess!
Mark B
Great- I'm glad that it worked out for you. But I personally would prefer a real contract. I always keep them on hand. And I would guess they would be less likely to wind up in court. At any rate, what is the exact contract your looking to obtain?
Get a standard purchase and sale agreement, or what ever the standard nomenclature is in your area. They have the basic verbiage, and you fill in the blanks with the numbers, and check boxes to determine who pays what etc. Fill one out on the spot, and get it signed.
I think what's being asked here still hasn't been answered. Look in your local stationary or office supply store for real estate forms.....purchase aggreements, lease/option, ect. Office Depot possibly. If you still can't find them, call a local real estate agent and ask him/her where you can find them. They may have an idea and be willing to work with you since it might be beneficial to them to make another contact. Don't think of them as competition. They understand that. [ Edited by maggyldy on Date 06/27/2004 ]
Thanx Jeff and Magg
Ok, lets take this a step further now change direction.
Lets say you have the contract filled out we will use an example
House ARV $75000
Price 27000
Repairs 13000
I would love to make 10K but that might be pushing it on this deal so Ill lean to your experinces what profit would be acceptable ..... I know what one investor said was fair but I want to see what others think
With these basics in mind, its all on contract and the contract is assignable ofcourse...... How do you market this to other Investors.....
Would you simply tell them the numbers what the contract purchase price is and then tell them what you want for it....
What exactly is your approach?
Mark
If I'm using a broker I have him yout the std. state form
I'm I'm buying direcly, I have a fill in the blank program which allow for additional free form clauses.
On your number question, did I misunderstand? It looked like 35K was the profit.
Profit margin get discussed here along. For some people if the 20K of repair aren't hard to do, take less profit. I haven't a deal this good looking in a while.
Every wholesale deal is unique, but from what read I think the $10-12k is fair. On numerous bus trips and seminars on rehabbing, buying a house for 70% of the ARV always seems to come up. Your potential buyers may have this in mind as well. For a $75000 ARV, they could buy it for $39500, and repairs would put them at $52500. This gives them a 30% profit for a smaller rehab project. With a contract for $27000, a $12000 assignment fee is realistic.
If you have just a few buyers you approach, ask them what they want to make out of the deal. If they want a $15000 profit, your assignment fee fluctuates up another $7500.
If you have access to a list of buyers, throw out the properties details, maybe even the address if the current owner complys, and have them get back to you by a specific date and time with an offer. I let my buyers bid, sometimes they come up with very creative ways with the transaction.
Always explain to your parties invovled that you are in business and will be compensated for your time and expertise. The closings go much smoother when everybody is informed, and you are solving problems or creating opportunities for both parties.
Quote:
On 2004-06-27 14:52, gmoney69 wrote:
Every wholesale deal is unique, but from what read I think the $10-12k is fair. On numerous bus trips and seminars on rehabbing, buying a house for 70% of the ARV always seems to come up. Your potential buyers may have this in mind as well. For a $75000 ARV, they could buy it for $39500, and repairs would put them at $52500. This gives them a 30% profit for a smaller rehab project. With a contract for $27000, a $12000 assignment fee is realistic.
If you have just a few buyers you approach, ask them what they want to make out of the deal. If they want a $15000 profit, your assignment fee fluctuates up another $7500.
If you have access to a list of buyers, throw out the properties details, maybe even the address if the current owner complys, and have them get back to you by a specific date and time with an offer. I let my buyers bid, sometimes they come up with very creative ways with the transaction.
Always explain to your parties invovled that you are in business and will be compensated for your time and expertise. The closings go much smoother when everybody is informed, and you are solving problems or creating opportunities for both parties.
Gmoney,
Good point and great approach. It would open up a possible increase of profit.
Ok, then lets say the Buyer/Investor I flip this to wants to goahead with the deal using the numbers you sugested.
Do you normally just assign it over to Him ..... and collect at the time of the assignment...?
Your thoughts?
MarkB
Me, personally, I would see if I could have the seller hold the note and I would repair it myself. I only know Florida law, so in FL; if the seller can hold the note for 3-6+ months, get the deed and make his payments while you fix it up. You own the house "Subject to" his mortgage. Due on sale and acceleration clauses in the mortgage may be triggered, but I have NEVER had to deal with this. Even if it does, you can fix up and sell this home (can't be more than 1 months work, even if you are actually doing the work yourself, with a $13,000 repair bill) before the mortgage company can get their stuff together on the mortgage. I would fix it and sell it, making a bigger profit than assigning it. You may even buy it yourself after it is repaired and own a rental house you know EVERYTHING about it. Why give away $25000. This way the house continues to make money after it is completed, and you have been cashed out.
If you want to assign it, the FL standard contract by the Florida Association of Realtors, there is a box that you check that allows the contract to be assigned to another party. The assignment fee and paperwork for that fee I have a local real estate attorney draw up ALL paperwork. He has a title company as well, which most real estate attorneys have agreements with title company, and PAY him for his expertise. That way I am not spending 90% of my time trying to figure out the best and cheapest way of doing the deal, and out finding more deals. Try to find a local Real Estate Investment Group in your area, an attorney who is a member understands real estate investing.
Tell the attorney what you are trying to accomplish, and have his office coordinate the closing and title company to do the figures. Sometimes a title company will execute the paperwork too, but I choose an educated attorney who can provide solid paperwork every time.
You will pay for the attorney, but what do you care, your assignment fee is now clean and DONE, go find your next deal.