. That idea could be a tried an d regularly used idea to others. No matter. It is new to you. Like a pre-owned car. Others drove it daily. For you it is a new experience.I recently had a choice to either nurture a new idea or kill it. The opportunity came by way of an old, expired offer to purchase an REO in Scotch Plains, NJ. The deal was "dead", yet long after the clearly stated expiration date the listing agent called. He informed us that we could but the house for our originally offered price of $236,000. At the time of the offer, in May, the asking price was over $345,000. Why was the old, dead offer resurrected? What changed? An alarm when off in my gut. The agent informed us that the new asking price was $200,000. Why did he think we would now pay $236,000? The agent added, almost in passing, that the previous buyer backed out because the house needed over $50,000 in work; BUT houses in that area have sold for over $600,000! When I asked for comps to back up the $600,000 claim he quickly backed off on that number. Now, why would a fairly new house built in 2005 need that much work? Surely it was poorly constructed in the first place.
But, eager to move the deal forward I emailed a potential end-buyer/rehabber
. After reviewing the numbers sent, he was interested. We set up a time to conference regarding the particulars and how we would go about doing business together. Here entered the New Idea. My "New Idea" was to go into contract on the REO as a joint-venture partner with the end-buyer. Then the end buyer would "buy" us out of our interest in the deal. That way we would eliminate the need for a double closing, saving on the closing costs. The end buyer gets the property for less money and we still make our desired profit.So how did this once dead, now resurrected deal end up "mutilated"? Turns out that the repair costs were over $100,000, not $50,000. Basically the cost to build the house in the first place. So this deal would be better handled as a tear-down; offer the value of the land minus demolition and other costs. Since there are few looking to do new construction
, we let this one go. But the deal served as the catalyst for us to establish and clearly define a relationship with an active rehabber.investor.
