Sep
5
Good Idea or Huge Pain in the Neck?
September 5, 2007 |
Interesting development with House #2 the last few days, which I haven’t yet encountered. Our realtor is the listing agent for a house directly across the street from House #2, and was driving by yesterday when he noticed a couple peeking in the windows of the house he’s listing. He stopped and talked to them a bit, showed them around, and they actually ended up expressing more interest in House #2, which I currently have under contract.
They said they were looking to spend arond $150K, didn’t immediately have to find a house, and wanted to know if I’d be willing to meet with them and discuss my plans for the house, as our realtor told them by basic backstory, that I was buying it to renovate and re-sell, etc. He gave them a card and told them to call back if they decided they were really interested, yada yada yada. They called back this morning, still very interested, and we set up a time this Saturday for everyone to meet, kick the tires of the house, and discuss things and see if we can come up with a scenario that works for everyone involved.
Lots of potential pitfalls here, but I can’t see what harm could come from meeting them, and I wanted to check out the house again anyway and get some specific measurements for some interior stuff, as far as fleshing out renovation plans.
One obvious option (depending on their interest level) would be to simply wholesale the property, pick up a little cash, and call it good. This isn’t a completely unattractive option to me, especially with House #1 on the market, as I’m not 100% comfortable with picking up another fixer while that one remains unsold. 90% comfortable, but not 100%. I’m pretty confident that House #2 will generate a nice profit, but it’ll take months of labor and a decent outlay of cash. It’s not a screaming great Oh-sweet-Jebus deal at the price I’m getting it, so wholesaling it and making a bit of extra money wouldn’t be the worst thing in the world, as far as leaving potential profits on the table.
A hybrid sort of wholesale deal might also work, as far as agreeing to sell it to them at a reduced price (compared to what I’d list it at if I did all the planned renovations) after completing a set list of repairs. I could offer them different pricing options based on different levels of repairs, acting more as a contractor than anything else (except I’d be the legal owner of the property). This could obviously turn into a huge nightmare, depending on their level of pickiness and involvement in the renovation process, and is not my most favorite of the options. If they were willing to pay enough, though, I could probably deal with the inevitable headaches.
The most attractive scenario for me would be one where we discuss what they’d want in the house, I stick to it as much as possible, and give them the first shot at it when it’s back on the market. As long as they don’t want custom colors or features that would impact the re-sale value for other potential buyers, I could really care less what color the walls are (within reason), tile color, fixture style, appliance models, etc. Again, danger lurks here as far as their involvement in the whole process, but it could work out, if everything was made crystal clear at the beginning (including I had ultimate veto power and decision making authority over everything).
So who knows. While the lure of potentially having a buyer already lined up is a pretty attractive one, I have to keep in mind the reality that such things sound better in theory, and often blow up badly in practice, due to all the moving parts involved.
