So, I went door knocking yesterday to scrap up some more leads. The first one was a nice guy that was receptive to my pitch. It was a nice house. I got his number and told him that I would call him in a week or so if he couldn't work anything out with the banks.
I was surprise at my second door knock, when I said, "Is there anything I can do to help." She said, "yeah, you can buy my house!" Awesome..
She let me in immediately (great sign) and this was her story. She was behind in 4 months worth of payments, and she just wants out! This is a good neighborhood and her house was in good condition.
So when I asked her, how much she needs, she said, " I need my investment back. I need 18k"
Hmmm.. I told her I probably wouldn't be able to get her that, and showed her the numbers if she sold w/ an agent. Its difficult to get all your money back when you bought it a year ago. She immediately asked me what I could offer and I told her I need to confirm some comps and I will talk to her the next day.
So, I went home to do some DD, and saw her this morning. Before I started, I asked, " If you like my deal, are you ready to sign the paperwork today. " Yes, she said. Good, so I gave her my pitch to show her again that if she sold through an agent she would need money to bring to closing. And she needs to sell the house no later than a month from now before she will be at high risk to lose the house. I told her that I will buy it "as is" and give her moving money. When I told her I could give her jsut $1500 cash for her equity, she immediately said, "No!" and just put her head down shaking and saying , I can't do this!! I need 18k. This blew me away as much as her reaction to my offer to her. Obviously, showing her that she would lose money selling it conventionally did not sink in. Here's the numbers..
"As is" value: 125-130k
Offer: 108+5k+closing costs.
I want to leverages off of the current market conditions, so if I bought it, I would lease option it and make over 20k in one year or 32k in two years.
She's kind of in denial.. If she works fast and does it right, she could sell it on her own and make more than I could give her, but its risky because of her situation. No where close to the 18k though... If the buyer backs out at the last minute, she will lose the house..
Anyway, I talked to her about for an additional 20 minutes to bring out some more motivation, but she was not interested. Even telling her that if I bought subto I could give her more money, she was not interested because it was so far from her expectations. So, I wished her luck and told her I hope it all works out for her. She mentioned she could get a loan from her son so thats probably her ace card.
I thought she was a 9 on motivation, but she still wanted retail so I guess I was wrong. After that, I took the rest of the weekend off and saw a movie w/ my wife.