As an Investor your exit strategy when purchasing a home is very important.  As an Investor you should have more than one exit strategy for example:  buy, fix and then flip or hold, wholesale during the contract inspection period or purchase and flip “as is”.  Every Investor should have a formula when purchasing a property.  Recently I partnered with a student on a house in Tampa, Florida.  The student was in my mentor program and it was her first deal.  She found the house by sending a yellow letter to the Sellers.  The Yellow Letter said “Hi, I am interested in buying house for CASH at 123 Main Street.  Please call me at 321-555-5555. Sincerely, Student’s name”.  The Student received a call from one of the Sellers and she filled out the Seller Information Sheet.  We did a conference to the Seller and built more rapport.  The Student made an appointment to go to the house and take pictures of the houses.    She emailed me the pictures of the house so we could look at all the repairs necessary and make an offer on the house.

During my conference call with the Seller and the Student we found out that two elderly women (sisters) inherited the property and that one of the women still lived in the house.  The house was approximately 1100 square feet, built in 1920 and had a separate 340 square foot house on the lot including a one car garage.  The houses and garage were all wood frames and were termite infested and had major wood damage due to termites and water.  In addition, the plumbing, flooring, windows, doors, kitchen and bathrooms all needed to be updated.  The houses already had updated electrical boxes and could be considered a 3 unit.  The Buyer would have to confirm with zoning if a 3 unit would be allowed on the property.  The driveway of the house is very narrow and the houses were right next to a commercial car lot with a solid brick wall.  The neighborhood at the time of our first offer was selling in the $200,000 range.  We also found out during our call that there was two houses filled with furniture and personal items that would have to be moved in addition to a one car garage stacked to the top.  The Sellers were elderly and they needed help paying for the move of the personal items and additional time to move the items out of the home after the sold the property.

After reviewing all the pictures and discussing all the repairs, we made an offer on the house for $35,000, we would pay for the closing costs, give $2,000 over and above the purchase price to help with the moving of items and give them an additional 30 days after closing to move the items.   This offer was made in late 2016.  We found out that the sister that lived in the house was really not the Seller that would make the final decision.  The Sister that didn’t live in the house was the Personal Representative (PR) of the Estate.  She also received offers from other Investors which were higher than our first offer.   I had not personally seen the houses nor had I driven the neighborhood.  My value was based on houses that had sold no more than 6 months ago and no further than .5 miles away.

We submitted a higher offer of $66,000 to the Sellers.  We found out that the PR had already met with her attorney on another Investor’s offer which was lower than our offer.   I normally will not increase my offer to my best offer without personally going to the house.  However, due to the fact that there was another offer that the Sellers were going to sign that day, we submitted our offer.   This offer was submitted in September of 2017.  We discussed with the PR all the terms and conditions of the offer.   The PR liked the other Investor and the Seller who lived in the house liked my Student personally.

My Student followed up constantly with her Seller and the Seller had to follow up with her sister (PR).  We had gone back and forth so many times and they had said they were going to sign our offer and send it back to us, however, we never got it.  It got to the point that as a seasoned investor that I knew that the Sellers were playing games with us and shopping our offer.   The PR Seller contacted me in late December of 2017 and started asking the same questions again regarding our offer.  I sent her an email that stated this is our highest and best offer and they need to make a decision with the offer and quit wasting our time.  My Student almost had a heart attack from my email.  Every Investor should know when to do a “take away offer” and that was what my email was.  We didn’t hear anything from the Sellers until February 2018.

In February of 2018, both Sellers signed the offer, made minor changes, and I signed the contract again.  My contract had a 10 day inspection period.  Due to the major damage on the home and termite damage, we had a home inspector and a termite inspector.  I personally went to the house to do my own inspection and drive the neighborhood.  The inspections on the houses and termite inspection showed all of the above damage as mentioned above.  When we submitted the offer, we did not know of all the damage as I made offers based on the pictures of the house.

My Student and I drove the neighborhood and found out that there was a lake down the street, and the values of the houses were from $200,000 to $300,000.  Prior to driving the neighborhood and seeing all the other houses that sold and were listed for sale; our intention was to reduce our offer based on all the damage.  However, after looking at all the above information we accepted the house at $66,000 and set the house for closing.  Total cost of repairs would range from $75,000 to $95,000 should we decide to retail the house.

We had to help the Sellers go through all the items in the house, pack them and delivery them to Seller’s new house which was 1 hour away.  It took my student and I along with my son three times to take all her belongings to her.  We set the house for closing and changed possession to the closing date.

My 3 man rehab crew was busy with two other houses in the Orlando area so we decided to list the house for $109,900 cash only with my agency.    We received 7 offers and settled on an offer for $117,000.  My Student had spent approximately 40 hours on this property during the 2016 to 2018 time frame.  We owned the house for a total of 14 days and have made a profit of approximately $40,000.

I hope this article helps educate you on making two offers at the same time opening the doors for more deals.

Happy House Hunting!!!

Kimberlee Frank

www.ForeclosuresGoneWild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

www.SellFastRealty.com

Like me on www.facebook.com/foreclosuresgonewild

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When purchasing properties it is always best to order a Lien Search which costs about $125.00 to $150.00 as the search shows any open permits, liens for cutting grass, violations for exterior repairs, tax information on the property and water utility debts.  The Lien Search is separate from the Title Search and open permits and/or code violations that are not a lien yet on the home do not show up on just a Title Search.  You must have a Lien Search that will contact all parts of the City and have them advise if there are any code violations not yet filed as a lien.

I have been purchasing properties from individuals who have inherited a home from a family member, like a mother or a father.  Individuals who inherit homes that have no debt on it and there is only one heir, usually take longer to file an estate, go through the house for belongings, repair what is needed and then either rent it or sell it.  I have found if there are multiple heirs to the property, the probate to the estate, repairs to the home, are normally done within 6 to 9 months once they start the estate process. I believe this to be true because the heirs want their money now and don’t want to wait.  However when there is one heir to the estate, it takes them years to grieve and settle the estate.  During this time, they may not be able to keep up with the yard or exterior maintenance which then allows the City to have the lawn mowed and give them violations due to the condition of the property.  Unfortunately, since there is never an estate done right away and/or a change on public record of the new owner or their physical address, all notices are sent to the home and/or attached to the door of the home.  The mail is usually returned because the house has been tagged as vacant from the Mailman so the violation never gets to the heir unless they find it on the door.  If they do not go over to the home for months, they don’t ever receive the notice.

Recently my partner, Kristen, and I entered into a purchase agreement to buy a home from an heir.  Her mother had died in 2010 and she herself is 70 years old.  We ordered title work and a lien search only to find out that there was a lien on the property due to the condition of the pool, (green and mucky), torn screens on the enclosed patio and that one of the enclosures did not have a permit.  Many investors would take title to the home with the exception to this lien.  The investors will buy the house and they will request the City to reduce the lien.  Each City has their own way to handle reductions in Code Liens.  Prior to purchasing the property I would highly recommend that you check into how you can have the Code Lien reduced and removed from the title to the home as closing with the lien may mean you accept the home and the total amount of the lien is due and payable.  The City of Maitland informed me that if the home was sold to another person without first having the Seller apply for the reduction and receive it, that they would not negotiate with the new buyer/owner because they were well aware of the total amount due on the property and therefore no reduction would be granted.  Other cities that I have been involved with are willing to take a discount on their code lien violation for hard costs paid by the City to cure the violation.  The City of Sanford will allow a reduction; however, they do have a maximum amount that they have agreed to charge for a violation which is $2,500.00 no matter what the lien amount is owed.

The problem with Code Violations fines they will not stop accruing interest and fines until the problem has been resolved.  Fixing the screens and tting the pool in shape is an easy one.  However, the issue of a permit for an enclosure is another.  Many homes that I have purchased the Sellers have either purchased the property in its present condition like enclosing a garage without a permit and/or adding an enclosure on the house without a permit years and years ago.  So what do you do?  You then make a decision to either remove the structure and/or obtain a permit to confirm that was built up to code.  I  just fought with the City of St. Petersburg on a pre-existing garage that was built prior to 2001 which they had an application allowing us to apply for a permit on a pre-existing structure.   This is called a grandfather clause which allows us to obtain a permit and not have to bring it all the way up to 2017 code.  The application for a pre-existing structure informed us of everything needed to show that the house already had this done prior to purchase and/or prior to the year they have on their application.  This particular enclosure was put on prior to 1984 and prior to the Seller’s mother purchasing the property.  We looked for a survey but couldn’t find one and since the title company is no longer in business, we were unable to find out who did the survey as the survey would had reflected the enclosure on the drawing.  The City of Winter Springs does not have an application for a pre-existing structure.  So … the enclosure was torn off the home allowing the City to come back out to the home and see that everything is up to code based on their violations and they now can stop accessing the fines of $500.00 a day on the home.

I am presently dealing with the City of Winter Springs wherein I am assisting the Seller on the Petition to Reduce the Violation.  After weeks of waiting, I received a call from the City informing me that the lien of $176,500 for the above violations can be reduced to $17,650.00 which is 10% of the lien amount.  In addition, they said that the Seller could not sell the home to an investor and she has to sell the home to a homeowner who will be homesteading the property.   I was shocked to hear the amount that they agreed too and in addition, requiring technically a deed restriction on her new buyer.  I informed them that they are being unfair to a Seller with a First Violation and being unreasonable requiring her to sell a home to a homeowner due to the condition of the home.   Also based on the fact that she has already entered into a purchase agreement to sell the home and that the Buyer did all the repairs to the home prior to closing.  I informed them that they are discriminating against investors who are fixing up homes and increasing their taxes.   I requested a copy of their ordinances which informs you of their policy when it comes to negotiating liens.    I looked at the ordinance and right there in front of me it mentions that should an investor purchase the property with this lien on it, they can obtain a reduction on the lien but it will be based on the purchase price of the home and potential profit that they would receive from the sale of the home.  It also mentions in a paragraph about selling to a homeowner too which is what they are requiring.  I then prepared additional facts regarding the argument as to why the City should reduce the lien for more than $17,650.00 and not put a deed restriction on the home to sell to a homeowner.  I am now waiting to find out if my argument is acceptable.  If it is not, then a hearing can be held before the City for consideration.

I really feel bad for Sellers who are going through a hard time grieving the loss of their parent and unable to even walk into the house.  Cities should not take advantage of Sellers and make them pay an unreasonable fine amount.  It is the Sellers’ responsibility to give clear title to a Buyer and the funds come out of the Sellers side not the Buyers.  Yes, many of you would have said “ok” to the lien reduction only if they remove deed restrictions and close the transaction.  However, I believe that the amount is too high and I will fight a little harder with the Seller’s help to reduce it to a reasonable number, remove the deed restrictions and then will close. All investors should do the same and help protect the sellers.

I hope this article helps educate you on how dealing with the City for code violations and/or liens is very important.

Happy House Hunting!!!

Kimberlee Frank

www.ForeclosuresGoneWild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

www.SellFastRealty.com

Like me on www.facebook.com/foreclosuresgonewild

Like me on www.facebook.com/sellfastrealty

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