Assuming that you have working an “absentee homeowner” and your offer has been accepted, it’s time to get the ball rolling! You want to get Title opened as quickly as possible to determine any findings not disclosed by the seller. Try to use the same Title Company so as to develop a relationship with them. Some Title Companies can do a preliminary search for a fraction of the cost. If you’re making a “blind-bid”, you have no idea what problems lurk inside, so you want to keep what you invest into it to a minimum. Hopefully the homeowner was upfront with you, whether he lived in the property or not. If your offer was written with a few days for inspection, be sure to take an experienced contractor or handyman with you, unless you know what to look for. If noticeable things are discovered during your “walk-through”… you may want to amend your offer, unless your offer is low enough anticipating such findings.
Homeowners are a bit more flexible than banks (REOs) are. Homeowners and the real estate investor alike, try to keep a Realtor out of the equation. Realtors know the law and the procedures involved in a real estate transaction… but it comes at a fee. The fee can be anywhere from 1% to 10% of the sales price, depending on the type of real estate transaction it is. Sometimes It can also be done for a flat fee. Absentee homeowners, bank foreclosures (REO & HUD), probate, tax foreclosures, bankruptcy and divorce are a few of types of real estate that can become distressed.
Whatever your situation, once you have opened escrow at Title, it’s time get your “ducks in a row” and work towards the closing date so that you can take possession of the property. The five major components to any structure are the foundation, electrical, plumbing, hvac, and roof. Everything else is cosmetic and can be upgraded, cleaned or repaired. If the property measures up, double check your intended rehab costs in your pro-forma sheet. Inform your banker or hard-money lender so that your money is accessible for closing.
Once you have taken passion of the property, work your rehab and try to stay on schedule until completed. Get the “buzz” going as soon as you can, at least one or two weeks before completion. This will increase the amount of foot traffic you can generate. Once you have it sold or rented… it’s time to do it all over again!
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