Wednesday, October 25, 2006

Denise Got Her Flip Back

Here she is. 254 South Royal Ann in Orem. She's in Cherry Village, our neighborhood. I had been watching the house because I noticed that the owners had had a previous MLS listing in May for WAY too low a price as a "short sale". Well, in this good market, there is no reason to short sale...they had lots of equity.

So, I decided to talk to the wife and we saw her out and mentioned the previous listing. I told her that I wanted them to stay in Cherry Village for a while and I would buy their house and let them rent it for 2 years until their cute twin girls were out of high school (they are friends of the kids). She was adamant that the foreclosure had been taken care of and she would be silly "to let her equity go." Well, I think you can guess what happen...just that. I noticed the dreaded "trustee sale" in the paper about a week later and made arrangements for financing in case it made it to auction.

While we were in Disney on vacation they arranged a deal for an "investor" to buy the home from them. In exchange, they understood that they would have a lease option to buy the place back and would be staying in their home. It was all arranged by a sortof family member they thought they could trust. Well, they didn't get the paper work on the lease and ended up selling the home for just what they owed on it. Didn't get a dime of that infamous equity (they sold for $185,000 and it's actually worth about $240,000.) and the "investor" kicked them out as soon as he thought he had some buyers.

We found all this out little by little and felt badly that we weren't able to help them before they did this foolish thing. At the least I would have given them $220,000 so they would have some cash. We ended up buying it for $238,000 as is. Once it is fixed up we'll sell it for $275,00 - $290,000. A family just two houses down listed their home, similar in sq. ft., for $339,000 which is excellent for me.

Lesson Learned:

I've been seriously looking into working the preforeclosure market because at least I would give them SOME of their equity unlike most scam artist/investor types. I learned the hard way that the preforeclosure people make more money and don't have to lift a hammer.

An agent is not your agent unless you have an agreement signed with them. If you don't have that agreement they have no fudiciary responsibility to you and can make all kinds of promises.

Get everything in writing. My friends didn't get the lease signed at closing and were left out in the cold. Handshakes don't cut it anymore.

Tuesday, October 24, 2006

Sold All American!

We put the condo under contract in 10 days but the buyer's fell through. They weren't qualified (even though they assured me they were actually qualified for more). I don't know why their mortgage person wasn't straight with me the first time I called. Anyway.

Right after that deal fell through I got a call from two buyers. They were both interested and both saw it the same day. I ended up getting an offer from one. We had a little bit of a bumpy road because she wanted to give us a grocery list of stuff to fix and then wouldn't close at the end of the month when she had all her financing in place. We refused to show it to her daughter (petty I know) because she was going to stretch out closing another 2 weeks. But, it was all resolved. We sold it for 156,000 (I gave them a choice of 2,000 in closing costs or a price reduction.)

When all was said and done we only made about $6,000 on the whole deal. It would have been better to hold onto the condo and sell it to a contractor for $140,000 than to remodel but the experience was probably worth it.

I swore to my friends that I would never do another flip though....but guess what?

Lesson Learned:

Never buy a house that is totally outdated or badly remodeled. Fixing the bad DIY projects was worse than starting from scratch.

Don't believe buyers when they say they are qualified. Call their mortgage person before you sign the contract. Unqualified buyers waste your time and you may miss a potential QUALIFIED buyer by messing with them.

Use the 14-day ForSaleByOwner kit in Home Depot. For $14 dollars you can expose your house to thousands of buyers. I got tons of calls and "hits" on my listing. Cheaper than a newspaper ad and much more effective.