House Purchased!

I'm back in action again! I was out grocery shopping with my wife on Sunday morning, when I got a phone call from Joe, the person who emailed me last week about a house he had under contract. That deal had fallen through when the seller cancelled the contract. The house was now available again.

I drove out to look at the property that afternoon and after that, met up with Joe. He suggested we meet at a Starbucks in Scottsdale and, when I got there, I realized this was the same Starbucks I had met a Realtor at a couple years ago when I sold my first house. Interesting coincidence!

The house looks in OK shape. It's in a Hispanic neighborhood that is pretty well-kept. Yards were nice, although there was a lot of dead grass in them. Some houses were very nicely maintained, others, just so-so. Several new cars were parked in driveways and on the street. The owner was still in the house, so I couldn't go in, but the outside looked OK. From what the Joe told me, it needs new paint and flooring, some work in the bathroom, and some minor drywall work. It has EVAP cooling and could use a new unit. The house was built in 1952. The roof looked decent. There was a one car carport that has been converted into an additional room, including plumbing for another bathroom. The house is a 3 bedroom, 1 bath with about 1,500 square feet. The converted carport adds another 400 square feet. The price is $138,000 and comps are in the $170,000 to $185,000 range.

When I met up with Joe and his wife (who is also a real estate agent), I got a bit more info about the property and the seller. The seller's husband has been arrested for a drug-related charge and she is a witness against him. She wants to sell the house and get away. She cancelled the first sale because her lawyer told her she couldn't leave the state. Apparently, now she can. She just wants $45,000 out of the sale and can leave as soon as she gets the money. Luckily, she has a disclaimer deed from the husband which clearly states the property is solely hers and he has no interest in it. (I've verified this.)

The house is a fixer-upper. If I wanted to go all out, Joe thinks I can put in the additional bathroom and sell for close to $200,000. I'm not sure if I want to do that simply because I'm a bit leery of holding on to this one for too long, given the rapidly declining market. Putting in a bathroom would require getting a contractor, which almost by definition, means the project will run over budget and longer than planned. Once I get inside and have a detailed look, I'll know more. (FYI, I have seen pictures of the inside and it doesn't look too bad.)

So I gave Joe a check for $500 earnest money and we signed an assignment contract giving me all his rights in his contract. Escrow will open today and will close on Friday, making this the fastest close I've done so far. Joe and his wife are getting $10,000 from assigning me this deal - their contract with the seller is for $128,000 and I'm paying $138,000. The sales contract is pretty standard and the sale is contingent upon my approval of the title report. This means even if the report shows everything is fine, if there is anything I don't like on it, I can cancel the sale. Otherwise, the property is being sold as-is.

While talking to the buyer, he asked how I got involved in this business. I told him my tale and we discovered that he actually knows my old co-worker! When I said he was a principle of BuyAZForeclosures.com, he mentioned the guy's name and I said yeah, that was him. Turns out, Joe has flipped some properties to BuyAZForeclosures before. It's a small world! We also talked a bit about the types of properties I look for and he'll keep an eye out for me. All in all, this was a good deal that included some good networking!