Flip This House #5

Parent Cafe
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More About Day 1

I have been very busy and focused on loading photos in the little bit of time I have available.

But, let me tell you more about Day One !!! On Monday, I went to the property at 12 noon to meet the agent to get the keys. I knew that we should not start work on the property until we had final confirmation of the recording of ownership. However, I had 2 guys standing there ready to start work and they started unloading my truck with all kinds of tools and cleaning supplies and toilet paper. On Day One, I had already spent $800 at Home Depot and we hadn’t even touched the house!

I turned around and told the guys that we couldn’t unload anything into the house and the agent said "When I walk away from here I have no idea what you are doing’ wink wink

He then told me how difficult my purchase became inside their office. The other offer came in $59,000 over my offer but the Sellers made their own conscious decision to select my offer with no interference from the agents. The other offer had a 5 day inspection contingency and they just could not deal with more people crawling around the house and performing all kinds of inspections in the house. It wasn’t about the money at that point, it was about closing as painlessly as possible. My offer was clean and done, no possible issues coming up in the transaction.

Evidently, when my offer was accepted, the other agent in their office was very upset, his client wanted the house really bad and took the issue all the way up to ownership/broker of the agency. The broker had to get on the phone and make a personal phone call to the Sellers and speak to them directly to ensure that the Sellers had chosen my offer over a higher offer. Evidently it was quite the office politics.

I couldn’t get any information from the listing agent about Who the other offer was from, but they did tell me that it was not the person that I thought it was. Oh well, guess my sleuthing was not as good as I thought it was.

So, at this point I know that there is one other investor that really wanted this house bad and was willing to pay almost $60k over my offer.

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More about Day One

When I was at the house speaking to the agent he kept saying that they had already ‘loaded’ the listing to the MLS. I told him that it was not on the MLS, but I really didn’t care. About 15 minutes later they loaded a listing into the MLS for this property as ACTIVE with one photo of entry yard, a full description of how wonderful it was and it only needed a little TLC! What a bunch of baloney :slight_smile:

Meanwhile, I am not personally aware that the property is for sale on the Internet and I run off to do some errands.

My lead carpenter starts calling me saying “There’s a lady at the front door and there’s a gentleman at the back door that want to buy the house. What do you want me to do?” So the lady is coming through the house all excited because she can raise chickens in the back yard and do a minor addition. According to my lead she called her agent immediately while standing in the living room. She left her phone nbr. I don’t know about the other guy.

I return to the property and there’s people parking all over the upper lookout lot. Peering into property, walking around. Finally, I go out and ask everyone if they would like to view the house. Big rush into the house. This is approximately 30 minutes after they listed house for sale. Some of the people said they got an automated email from the MLS and others actually said they saw it on Zillow??? At this point I realize that the house is somehow ‘for sale’ on the Internet but I’m going to milk it to do some market analysis on whether there are potential future buyers for this house.

Finally, at 2pm we received recording confirmation. Agents went into the MLS and updated the listing as SOLD.

During the 1 1/2 hour period that the house was listed for sale, there were at least 6 people that came to the door and walked around the property. The listing agent received 14 calls during that time period from agents begging to get a showing immediately for their clients. They were all told that it was SOLD and waiting for recording confirmation. One agent went so far as to try to send in a ‘backup’ offer just in case the transaction didn’t close.

Amazing!! obviously many people think this house is as special as I think it is. But, I know that most of those buyers were not going to buy that property in its current condition… unliveable! no running water, broken sewer lines

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AND More about Day One

Just as we are having the giant geyser water gush in front yard (above slope), the listing agent calls me. This is probably about 2:30pm in the afternoon. He says “Would you like to entertain an offer of $1.2 million for the house in current condition”. I’m not sure that I hear him right and tell him that I will need to think about that for 24 hours. Can they give me 24 hours to consider??

At this point, some of my key investors come walking down the path watching water gushing in front yard and all of us running around trying to find water meter and my phone is pressed to my ear trying to get the Water Company to come do something for us and I am surrounded by neighbors who are trying to help. Wow… don’t we look professional !!! Surely they want to lend money to this unorganized mess. Who buys a house and doesn’t know where the main water shutoff valve is??? Evidently I do :slight_smile:

The day does not wind down until after 5pm. I was able to see the beautiful sunsets from the house, which were a treat. I get to my home office and I call the agent back and discuss with him that I am very concerned with entertaining this offer because I feel it is a moral dilemma. How would those sellers feel when they find out that I turned the house around, without doing anything, with a total promise that I would not bull doze it, and sold it the next day for a profit? I need to think about it. I asked about who the buyer was. All he would tell me was ‘another agent from their brokerage from another office’.

Called several people to discuss the situation, long talk with my agent. All of them said… business is business… go for it. It is not unethical. I was also a little upset because my agent worked hard to help me analyze this purchase, and many other potential purchases over the last 2 months. She was not going to get any commission out of this. That listing agent was going to get double commission from my purchase and another selling commission for the sale. And then I started worrying about how I was going to keep my crew employed. on and on thinking about everything

In the end, it was a deal I could not pass up. I sent an email early this morning (about 18 hrs into ownership!) laying out my terms. I was insisting that they had to pay a referral fee out of their commission to my agent. I can guarantee this really pissed them off, but my agent counseled that it was a standard practice and she kept reminding me that I held all the cards at this point. But, my biggest concern is that these buyers had no idea about the condition of the house… since the listing stated ‘needs a little TLC’. I said that they needed to ask some serious questions to these buyers before we went any further. Nothing is in writing at this point…

Do they know that the house is not liveable in its current condition?
Do they understand that it will be very hard to get a bank loan on the property, although I would do everything in my power to help with the appraisal?
Do they need to get a loan for the purchase?

Now, I’m all excited but in a dilemma about whether we should continue to demolish anything, especially kitchen and bathrooms because you have to have a working kitchen and bathroom to get through an appraisal. Everything is up in the air and the workers don’t know what to do.

Four hours later I get a short email back “Buyers have changed their mind”. Ugghh… what a roller coaster. No explanation, just a bunch of jerking my chain by the agent. I would not be surprised if they were offended that I would dare negotiate the commission and just didn’t really pursue further.

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WOW!! That was quite a first day!

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Day Two… and it continues

Now we are back on track and I have spent all morning with my draftsman at the property measuring everything so that we can get a drawing of As Is to start planning what remodel/additions we are going to do. I am now back into a rush to get plans ready for permit submission.

I get a phone call from my agent who says that another agent has called her and wants to talk to the owner. For some reason, a local Point Loma agent thought that Julie (my agent) was also the owner of these flips. I recognize the name… it is the agent from same office who represented the other buyer that offered more for the property. I call her up…she says that she has a ‘client’ who would like to purchase the house. She heard a rumor from her office broker that I was considering selling the house immediately. I am very confused at this point because I had not heard back about the other offer and I thought maybe she was the same offer and she was trying to go around the prior listing agent and offer to me directly. I had to ask a lot of questions about what she heard and finally revealed to her that I had already received a large verbal offer. This is a different offer

She starts calling her client and I realize that this is the same guy that was offering to the sellers. She calls me back later in the day and says that he would like to buy the property, close in less than a week for $1,010,000. I explained to her that I would feel that is totally unethical and just cannot do that. Besides, I would need to pay her commission and there would really only be about $30k in profit. However, who wouldn’t want to make $30k in one week???

I gave her a long explanation about how my reputation is very important to me in such a small community. I told her that I just could not do that to the Sellers… turn around and sell it to the other guy the very next day??? It just isn’t right.

Wow!!! wonder what tomorrow will bring

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YUP.
Par for the course, unfortunately, when dealing with agents who can make used car salesmen look ethical.
Just remember the name of the listing agent and vow never to do business with him/ her again.
And also remember- VERBAL offers aren’t even worth considering- they should be looked upon as a complete waste of time.
In the future- ONLY consider written offers.

Tell everyone wanting to do business with you to “put it in writing”.
that will save you lots of angst…

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I think they didn’t even want to bother writing up an offer without getting a confirmation that I would even entertain selling it. I’m not sure who or what changed their mind. I might have some time tomorrow to ask some more detailed questions to the listing agent.

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At this point I might just put up a Coming Soon sign in that lookout parking area and see what happens!

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You lead such an interesting life, coralbrook. And I love watching!

790

Oh my! Lots of drama!

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"I might have some time tomorrow to ask some more detailed questions to the listing agent. "
A word of advise- DONT EVEN BOTHER.
The past is the past and the agent CAN’T be trusted.
Move on…

792

Agreed on the agent

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And another interesting bit…

The nice home on S a n t a C r u z went into contract today … 3 days on the market! I thought it was overpriced but I guess not

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yippee!
more $$ for you!!!

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I agree, if offer is not in writing, don’t waste time and energy and have angst over verbal “maybe” and remember names of questionable agents. Sounds like they abound.

796

All those shenanigans sound really smarmy. A friend here had clients pull a stunt where they cancelled their contract with the listing/selling agent and then bought/sold directly like the next week. The agent successfully sued the client for their commission.

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I can’t wait to hear what the house on Santa’s Cruise sold for.

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Oh yeah, get those comps going! Seems like you may get more potential buyers sniffing around now that there’s a story spreading about the property maybe being available. Even if it isn’t. Of course, passing up a 3% profit overnight is a different league than 10 or 15%.

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Back to Work

Yesterday I spent a long time with the draftsman measuring house for the As Is plan. We are moving fast and I’m going to meet with my structural engineer today to discuss 2nd story potential. Actually it is more like 3rd story because the garage/basement is already underneath the main floor of this house. We took some detailed pictures of the big stem wall/foundation in the basement area and hoping the structural engineer can just give some advice at this point. I don’t want to go down a really expensive path, I need to be smart about what we can or cannot do with this house. There are a lot of codes and regulations and they are going to give advise.

For some reason I’m stuck trying to get someone to figure out what I can do with the slope. That is one of my highest priorities. Shotcrete/Gunite company comes out and they are ready to get started - I have a quote from them. BUT, my agent keeps telling me that I need some kind of piece of paper for future buyers that is confirming that Shotcrete is an acceptable solution for erosion control. I know it’s an acceptable solution and everyone knows it is a good solution, but I cannot find anyone that is going to put that in writing. Gunite company is telling me that I have to have an engineer. Soil engineer came out and he says it’s OK, but he won’t write a letter. Now I have to find some structural engineer or something to come look at it.

Today I am going to climb up on roof (very carefully) and determine where the money shot view is so that we can angle new addition correctly. I really want to keep the living room exactly as it is, and the bedroom wing. Hopefully the 3rd story addition can go on middle of house towards back alley to preserve the integrity of the house.

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Hopefully you guys can find the ‘listing’ that went up on Monday and read the agent’s description, it is pretty hilarious.