House #22: First Contract

February 23, 2011 · 2 comments

The Trifecta House has been on the market for about a week now, and we’ve already received three offers (and several other great showings where the agents indicated that may put in an offer). Two of the three offers were good enough to seriously consider…

The first offer was a good offer, but unfortunately, the buyer had some minor credit issues that would likely have dragged out the closing and would have introduced some risk into the deal. She is working with our lender to resolve those issues, and we’re hoping to work with her, if not on this house, then perhaps on The Leak House, which will be ready in a few weeks and will be almost identical to this one.

The second offer was also very good, but there were some major concerns about the buyer’s mortgage broker being able to get the deal closed in less than 90 days. In fact, the first conversation with her was so bad (she essentially told my wife that we must be doing something shady because it was illegal to rehab and resell to an FHA buyer in less than 90 days), that we almost nixed the deal from the beginning.

Ultimately, she did her research and realized that flipping in under 90 days is perfectly legal these days, and even checked with her underwriter and decided she’d be able to do it. By that time, the damage had already been done (my wife refused to take the deal with her as the broker), but the buyer and his agent really wanted to get this contract negotiated. So, after about 48 hours of continual negotiation, we came to terms, with the buyer using one of our preferred lenders (our main lender said he couldn’t get the deal done, unfortunately, but another that we had worked with in the past and liked said he could).

The buyer has 7 days for their inspections and we’ll need two appraisals on this property (we’re well under 90 days), so I’m not going to get too excited until we’re a little further through the process…I’ll keep you updated…

2 responses to “House #22: First Contract”

  1. Luis says:

    Mortgage lender stupidity does not surprise me anymore. The frustrating part is really dealing with the shear ignorance of so called “professionals” . So not only do we have to be good about flipping houses but we have to be able to educate lenders and agents. Unfortunately I run low in patience but I know you guys are good at “finessing” some situations.
    Like you I have considered doing this lower margin flips where effort and time in and out are low but I have found that if one thing goes wrong then you really don’t have a lot of room to absorb it. Would you agree?

  2. At least the broker went back and researched the situation and admitted she was wrong. I know many people who would not do such a thing and insist they are correct because they have been in the business for x number of years.

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