Recently was contacted from a new 'investor' that was so excited to get into real estate rehabbing & wanted to get started right away. We discussed what his goals were & how much money he had to work with & what his time frame was. Let's get going NOW.
I came across a few properties that would work out so I sent him one townhouse that was small but needed major work. The return was there but did he want to do the work & was he really up to this challenge? Many so called 'investors' think that a few HGTV programs and they can do it too. But really, this is not for everyone. He was definately interested in the property, I showed it & he wanted to put in an offer.
That's when the problems began - when you start talking about money when you haven't got much of a relationship with someone. Let's just say that the property was listed at $50,000 and he immediately said with hilarious gusto 'Let's offer them $25,000'.
Indeed .... let's not bother with that as this is a definite bargain. Possibly I need to go over the comparables again that I told you about of $135,000 & $150,000. Those were also rehabbed & in perfect new condition & they would set a good baseline on what you should anticipate with work & material in this property.
So of course there are multiple offers and this is a blind bid on the bank's website. All were told to make their highest & best offers by Monday at noon which we did.
My 'Investor' was a little shaken up over the multiple offers & I assured him that he wasn't the only investor that was looking for the same properties to rehab for a profit. Do you want 'in' on the game? The 'Investor' surprised me with going WAY OVER the list price which I submitted to the bank.
We ended up winning the multiple bid & were sent the contract from the bank to sign. I could tell that again, my 'Investor', was starting to get nervous about this whole scenario & wanted to know if he could now change his bid to $60,000. Advising him that that wouldn't be a good idea considering we were in a multiple offer situation & you came out on top with your price of $70,000.
So $70,000 is the winning number here, get it?
A phone call comes later in the day and my 'Investor' says that he doesn't want to pay the winning bid amount any longer & that when we have our home inspection he wants to put in notice to the bank that the house needs $10,000 more in repairs. We'll just get a $10,000 credit from the bank.
Really? Who's going to go along with that little charade?
I expressed that the outcome of that strategy was less than perfect (less then zero success) but HE would have to submit the home inspection stating those repairs. I wasn't going to do it. I would attend the home inspection on his behalf but I wasn't about to write any report or be a party to a falsified inspection.
So, as it ended up my 'Investor' got cold feet and wouldn't sign the paperwork. It's all for the better for both of us I'm sure.
So I sent a followup email stating that the deal was dead and nothing further was required as no money had exchanged hands and the contract wasn't signed.
My 'Investors' reply: Call me when it goes down to $40,000.
Think I'm going to call?