Saturday, January 16, 2010

Challenging Week

Well, I thought I had the property sold to someone that I know and trust. However, he couldn't find money for some reason or another, so said I should shop the deal. That took about a week, but it was actually very helpful. We got an inspection and we got an estimate from a roofer on what the roof would cost.

Therefore, I pitched the deal at our local REIA meeting, to IRR. I was mobbed at the meeting. All 25 of my flyers got snatched up and 8 other people left me emails or cards. I showed the house to 4 people the next day and accepted the first guy who offered to give me a check. That's where the problems started.

While the buyer seemed to be very eager to buy the property, he had to work with hard money. The hard money lender was awesome. Their appraiser said the ARV (after repaired value) of the property was up to $300,000. A screaming deal when you look at the buyer's purchase price of $150,000 plus his estimate of $27,000 in repairs. Well, they approved the buyer, but the buyer didn't like the terms of the loan, so backed out. He told me at 10:17 Thursday morning. Closing was supposed to happen Friday at 3:00.

Thursday morning I started calling everyone I could think of who had shown interest in the property and who might be able to come up with cash to close the deal on time. The hard money lender called people too. So, I showed the house to a couple of people on Thursday at 3:30. One was the man who had been going to fund the loan for the hard money lender to the first buyer. I'll call him funder guy. The second was partners - one of whom could come up with cash in the short period of time needed.

The funder guy and his wife looked around and left, saying that he would call me later. The partners stayed for 3 hours. They did a very thorough review. They talked about just letting them take over the contract and give me a note for some part of my fee... I wasn't comfortable with the options they were offering because at this point, I would really like to just sell it and move on, so I promised to think about it and call them if I decided to go ahead.

The funder guy called me later and agreed to close on the property on Friday for $145,000. So, I was on the phone with him all Friday morning, sent him documents, my rehab contacts and all that. He signed the assignment contract, after getting me to take out any non-refundable part, since we were doing the deal in just a few hours... and met the realtors and the seller at the property.

So, I'm driving to Golden for the closing, which is a half hour drive and the buyer calls me up 5 minutes before closing time. He tells me that the seller pays $140 a month for trash and between $50 and $150 a month for water (I'll just call it $100 to keep it simple). He thinks that this $240 a month changes the value of the property by $30,000 to $65,000. He steps out of the deal. When I get to the closing offices, where my realtor is, they're on the phone... negotiating a much, much lower price than the one we had agreed to. I told my realtor to tell him we'd get back to him.

We called a buyer who's been interested in the property the whole time, who buys around 10 houses a month and asked if they wanted it since it appeared the deal had fallen apart. They do!!!! So we got the seller to extend the contract, which wasn't an easy thing, let me tell you, because they were highly annoyed at being put off again.

This has been the most trouble I've ever had closing a property. I'm trying to keep the deal alive, but am very worried that it's not actually going to work.

Until next time.

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