I’ve been horribly lazy in posting pictures and updates recently — I still owe BEFORE pictures on The Ticket House, The Easy House and The Puzzle House, and now we have another under contract that I don’t yet have any pictures of. And I haven’t even mentioned the rehab underway on The Ticket House or the selling status on The Full House.
My goal for the next few posts will be to catch up on pictures and the current status of all our houses…and stay tuned for some hopefully very interesting posts on what’s going on with The Puzzle House, which should be a challenging project for us…
In the meantime, we now have our 32nd house under contract. This house was a short-sale that we put a low-ball offer in on a couple months ago, and then forgot about. A month after our offer, we were tremendously surprised to find out that the bank was going to agree to the price (hence the name), and have been waiting another month to formally get that approval. All was going smoothly until a couple days ago, when the bank negotiator was ready to kill the deal — he claimed that because we were the buyers and the buyer’s agents on the deal, that there was a conflict of interest and that this wasn’t an arms-length transaction. Without going into too much detail, let’s just say that I’m 99% certain he was wrong about how he was interpreting the bank’s short sale rules (the closing attorney agrees with me), and there really wasn’t any reason to question the deal.
That said, the negotiator is in charge of the process, and it really doesn’t matter if he’s right or wrong — he’s going to get what he wants. After some compromise on both sides, we agreed to find another agent to represent us in this transaction; while we’ll lose the commission on the purchase, we get the deal, and it’s still a good deal without the purchase commission. Today, without any notice, we got word that we could close whenever we were ready. It’s going to be a busy next couple days, but we’ll likely close on Thursday of this week.
This rehab is a basic interior cosmetic renovation with some exterior repairs and paint. We expect renovations to come in around $20,000, with a resale in the $100-110K range. I’ll post a breakdown of the rehab budget before we start work, which ideally would be next week, but given the short notice, I’m not sure that I’ll have the contractors to start that quickly (we’re also starting The Easy House and The Puzzle House next week). So, this one may have to wait a week to get started on the renovations.
If you’ve been following along, you’ll notice that we now have three houses under contract to purchase and it looks like we’ll be buying all three this week, so starting next week, we’ll likely have a lot to talk about…
I don’t understand how there’s a “conflict of interest”. It’s not as if you are the buyer and also the agent for the seller. As the buyer’s agent, your job is to best represent the interests of the buyer, which is obviously exactly what you would do. Weird.
Hi, Scott-
I know you’ve mentioned problems with initial appraisals coming in
a bit low before & after 4 flips with no problems there the
appraisal has come in lower than expected on my latest project. The buyer’s agent & I
are shocked. Only one other house has sold in this smaller neighborhood
in the past year. Other than reiterating updates & sending comps
from the adjacent neighborhood, what steps would you take?
Hi Kim –
Once the appraisal is done, there isn’t a whole lot you can do other than work with the lender/broker to appeal, making sure that you provide as many comps as you can and doing whatever you can to support the value in terms of condition. Unfortunately, there are going to be times when appraisers are going to see things differently than you will, and all you can really do is provide any hard data you can to support yourself. Sorry about the bad situation.
Hey Mike –
Yup, pretty much everyone (the listing agent, the closing attorney, us) agrees with you…but the negotiator sees it another way, and he can’t be convinced. So, we stopped arguing and just gave him what he wanted…
You gave a rehab budget and an ARV range… did I miss the purchase price anywhere? Also curious what it was listed at just so I can correlate how “low ball” relates. Sorry, I’m a numbers junkie.
I have a general HUD question. Do you have to go through a broker for every HUD home purchase?
Max –
The only way to submit HUD offers is through the HUD website, and you need to a licensed agent (and registered with HUD) in order to do that. So, in short, you do need to go through a broker/agent to place an offer on a HUD property.