Everyone knows that the business of real estate wholesaling, or flipping houses, is to get a property under contract with a motivated seller and then quickly finding a buyer to assign the contract to for a fee. Hopefully a hefty fee. It’s a relatively simple concept. SOMETIMES, though, there’s some “Not So Good” things about it (as with anything). This article will discuss the shit that happens and what to do if you can’t get in the house to show it to your potential buyers.
So let’s project ourselves into the future. We’ve just gotten the seller to sign our contract, and you’re itching to get some buyers over to see the place. You’re standing on the front steps of the house, and you’re waiting for the perfect time to ask the seller for a key. She’s talking away about all of the memories that she has here, as a kid growing up, and how sad she is that her mom passed away. Then she gets all teary eyed and thanks you for making her life easier. This was a hard thing for her to have to do. Just as she’s wiping the tear from the corner of her eye, you enter your script
YOU : “Mrs. Seller, I’m in the business of buying and selling houses, and to make things go as smooth as possible, I’m going to need to be able to show people the house before closing. Is there any way that we can put an extra key in a lockbox on the front door? I’m happy to share the code with you.”
HER: “Well, I’d rather not have people in and out of the house. I’d rather hand over the keys at closing”.
YOU: ” Well, shit”
Ok, so you dont really say that. But you think it. NOW how are you going to get access to the house to let your cash buyers come tromping through all hours of the day?
This is where it gets tricky. Just ask the seller if she doesn’t mind meeting you at the house when you need to show it to someone. In most cases, she will agree. Then schedule the shit out of her the first week. After 3 or 4 visits, you can mention to her how easy and convenient it would be if she let you put a lockbox on the front door. Hopefully, she’ll say yes!!!!
Second scenario: There are tenants in the house. These aren’t just any tenants though. These are your utmost loser tenants. They don’t have jobs. They smoke weed. They stink. All of that rolled into one.
How do you work around this issue? You can’t let the deal go. I mean, after all, this is probably one of the main reasons the seller wants to sell this piece of crap house is because of the tenant. Here’s a technique I’ve been using lately to handle this:
I first make an attempt to get in the house, both by communicating with the seller as well as the tenant. If that’s not successful, then I explain to the seller that this is going to be a challenge. So I negotiate a “sight unseen” price. The seller, in most cases, totally understands that I have to come in with a low offer due to the circumstances that I have no idea what the house looks like inside. I also don’t know if the tenant is going to destroy the place when we have to kick em out.
Then, I have the seller agree in writing to proceed with an eviction on the tenant, and I refer them to a local company that handles evictions (Florida Landlord Network). I know that the process of eviction takes about 6 – 7 weeks in Freakville, so our contract states that the closing will take place within 30 BUSINESS days after the tenant has vacated the property. On some occasions, I may ask for more time than 30 business days to close. I can always close sooner, but I’d rather have longer on my contract.
This has always worked out pretty well for me. I’m sure there are instances that this just isn’t going to work. If you have to meet the sheriff out there to escort them out of the house. The eviction will cost about $500 from start to finish. If they leave before the final judgement of eviction, then it’ll cost you $350.00. You can use the cost of the eviction as a negotiating tool, by offering to pay for the eviction if the seller agrees to your terms. It’s a little risky, since you don’t know what you’re going to find once you get inside. If you get the house at a steep enough discount, then it really doesn’t matter.
Have you had to deal with problem tenants? LIKE this POST if you did, and leave your comments below to tell me what you did to handle them.
Property M.O.B.: Your Guide to Wholesale Real Estate
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