My wife’s tremendous marketing ability has led us to a potentially new business model that may help us grow our business. After selling The Yellow Stain House last week, we had at least one (and probably many more) real estate agents that were a bit bummed because they had clients that very much wanted move-in-ready houses in the sub-$100K price range. What we’ve found is that there are very few of these types of properties on the market, but a relatively large buyer pool for these houses.
Specifically, many of the foreclosures on the market are under $100K, but very few are move-in-ready, meaning they would literally need no work for an owner/occupant to move into. The ones that are move-in-ready tend to be price higher than $100K (sometimes much higher), disqualifying many buyers who are only approved up to (or only want to spend) $100K.
After having an agent get very upset at her last week because we accepted another offer on The Yellow Stain House, my wife called this agent back and questioned what specifically her buyer was looking for. Apparently, this agent has an elderly buyer who can only spent $95K, but who very much wants a house that she can move right into. After a bit of back-and-forth, we came to an agreement that we would find a house that — with some rehab — would meet her move-in-ready and sub-$95K requirements, and that would also leave us a little bit of profit. Essentially, we’d buy the house, fix it up, and sell it to her client at the pre-negotiated price.
Of course, we need to ensure that it’s a house her client likes, and also ensure that we have contracts in place to protect us from her buyer backing out (unless it’s a project we’d be undertaking anyway), but assuming the protection is built in for both sides, it’s a win-win for both the buyer and the seller, as well as for the agents.
We spent much of today looking at houses that would meet her criteria (including many that we’d been looking at anyway), and we think we’ve found one. The buyer likes the house very much, and we believe that we can make the numbers work if we can get a slight discount on the list price. Unfortunately, it’s a corporate-owned property, not a foreclosure, so there’s less negotiating room with the current seller; but we put in an offer this afternoon, and we’re waiting to hear back.
Our profit is likely to be small in this project — if it goes through at all — but given the situation where we have a buyer contractually locked in before we even purchase the property, even a small profit is worth the effort. And unlike wholesaling — where we would flip the property to another investor without doing any work — we also have the satisfaction of getting a property ready for someone who will be thrilled to make it their home.
Hopefully we’ll know more later in the week…