House flipping my first deal

by S. Smith

Hello,

I am not sure how this works, but I have an offer on my house of 20,000. The house needs a lot of work its old and I believe it has asbestos and lead paint. We are not really sure, but I asked the buyer what he had planned for the house and he stated, he wanted to push it down to make parking room for his business next door.


We purchased it for 5,000. and the home was built in 1950 it is also commercial property.The home is appraised for $45,000. Could you please tell me how this needs to go down? Will I have to draw up a contract and we both sign and take it to the closing table? Is this like a outright sale?

I don't have a clue how to make this sale. I don't want to get screwed because, I understand there is some hidden fees such as closing cost and taxes. So if I flip it I still stand a chance of netting 15,000 from it. Please direct me on where to go after the offer is made. I want to do this on my own without the fees of a realtor.


Thanks,
S. Smith






LM says: Smith, the first thing I see here is that if the house is appraised at $45k why do you want to sell for $20k? Depending on the date and validity of the appraisal you might want to use that to get a bit more money from the buyer. I am not saying you have to get $45k, but how about $25k...food for thought

On the other hand you say it's old, has lead and asbestos (both of which you can test for to find out for sure)and needs a lot of work. If it really is in as bad a shape as you say then $20k might be all you are getting ;-)

Next, YES this is a sale... you will need a contract. You might not need an agent but you will need either a closing attorney or a title company, depending on the state where you are in.

I understand you wanting to save money by not using an agent but if you really have no idea how to do this and you are in a state where a selling agent typically gets 3% commission, that agent could save you a lot of work and grief for just $600....think about it.

The first thing you need is to get this offer down on paper. AKA a contract...that specifies the property, the purchase price, earnest money if any, closing date, form of payment and any other conditions of the sale.

Otherwise you will at least need to go to the closing attorney/title company and they can put together a sales contract and give you an idea of all the fess and costs associated with the sale. They are not hidden, you just need to know what they are and they can tell you. On a $20,000 sale they will not amount to much so given that you bought this thing for $5k I would say that it seems realistic that you can walk away from this with a $15k profit.

As for what the buyer wants to do with the property; that really does not matter to you as long as he does it AFTER the sale. So if he wants to tear it down, once he owns it, he can do it.



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