Laura McElroy Victory

 

Laura McElroy Victory

Inspirations Solutions for Home and Property, LLC in Baton Rouge, LA

Type(s) of Victory: Reached a personal goal, Reached a business goal, Implemented an individual system, Started using a system, Found a great team member, Got my first deal under contract


This was the first time I had a bid accepted. It is a 4000sf 5B/3.5ba REO I found on Zillow. The other homes in this area are selling for 100-150.00/sf and need updating. There are two small mansions of new construction on either side. My realtor found the price of one to be 650k. There are a lot of foreclosures in the surrounding neighborhood making this neighborhood very transitional. Bank is asking 200k; The home has been in foreclosure twice in over 2 years so utilities were not on. The home is a very dated, 70's style, with vaulted and completely paneled great room. It has a keeping room that has a 7-8' high coffined ceiling; The great room and dining room floors are sunken approximately 4". It has termite damage and mold. After a hard Louisiana rainstorm there was a pool of water on the great room floor approximately 10' wide. The 2nd story roof was done improperly causing leakage thru walls, mold and rot. The 5th bedroom is an addition that does not appear to be to code because it has an outdoor egress of a wooden stairway that is rotten and falling down. The in-ground liner pool is in poor condition and has concrete decking surrounding it that creates elevation issues causing rain water to flow into the home. The backyard is not completely fenced. The entire home and backyard can also be accessed thru broken garage access doors and a faulty back door. The home is an eye sore and a huge liability. My first offer was 150k; They asked all bidders for final and best. My second offer was 180k. I lost the bid. The winning bid was approximately 203k. Two higher bids fell thru. Again we were asked for best and final. I offered 206k to win the bid and move to the contingency phase. My goal was just to win the bid to learn what it would take to win and to learn the next step of the process. My only contingency was to pass inspection which I knew it would not. I did have to place a 20k deposit which was a little scary for my first home. My realtor was very helpful. I was able to have several contractors come thru the home and an inspector. I met each of them and they each taught me a lot. I was also able to get bids on work and begin to determine how much things will be costing for future deals. I have stored all bids in this property file for future reference. General contractor quotes were 175k and higher. They did not include the in ground liner type pool, improving the landscaping and elevation issues, fencing, or installing new windows of which there were 28. My realtor stated the bank would not take less than 200k. I told him that I wanted to email the REO agent directly. I emailed pictures showing the extent of the damage and also informed the REO agent of the liability issues. He did not answer my email. This process took approx. 3 weeks. Even though my contingency period was only 10 days, my realtor gave me access to the home several times during the bidding process so that I could get contractor quotes. My gut feeling was that this home was only worth 150k due to the extent of damage. At the end of my contingency period, the best comp in this neighborhood that was same age and dated style but in better condition, went back on the market. It had been pending at 550k. The price had already been lowered. This concerned me because all the other homes in this neighborhood are selling for approx. 100/sf. Many are just as dated but in better condition than my house. Because my best and really only good comp did not sell, and because the project was so large and involved so much risk for my limited experience, I rescinded my offer. Even though a deal was never completed, I learned a lot from this offer. 1. Make offers and negotiate after you win the bid. 2. Check the comps throughout the entire process 3. Its okay to rescind your offer if the numbers are not working on the deal analyzer 4. If the numbers do not work, lower your bid. If they say NO, NO MEANS NO NOW . IT DOES NOT MEAN NO TOMORROW. This home has gone pending three more times and not sold. It is pending again now at 200k. 5. Since this bid, I have attended the REO/Short sale boot camp, completed several FB courses on repair estimates, Deal Analyzer, foreclosures etc. I learned a lot that may have helped me close this deal at the right offer of 150k. I also learned listen to the contractors. It is very worthwhile to find GOOD EXPERIENCED contractors, at least initially, because they will teach you the right way to do things and the bad short cuts some people will take. Since, this deal, my efficiency has improved, my system has improved and my negotiating skills have improved. Of course ALL of these need a lot more work! At the REO/Short sale boot camp I also learned to stay with MY numbers that I know will work... and to be stubborn ( "LISTEN LINDA" Youtube video) and persistent when dealing with banks..ie "FOLLOWUP FOLLOWUP FOLLOWUP... and NO MEANS NO TODAY. IT MAY NOT MEAN NO TOMORROW! Lastly, I found out my lawyer neighbor of approximately 10 years, is one of the BEST real estate attorneys in Baton Rouge. He insisted that he review the REO contract for me, on CHRISTMAS EVE, before I signed anything. Super nice guy! How lucky is that?!! My plan is for my husband and I to take him and his wife to dinner to repay the courtesy.


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