HAVE A PREQUALIFIED BUYER? DONT GET TO EXCITED

HAVE A PREQUALIFIED BUYER? DON’T GET TOO EXCITED!


As real estate investors we are constantly faced with dilemma’s. Where to find the deals, where to find the money, where to find the buyers. Well now it is getting even tougher with new laws constantly trying to be passed, limiting creative financing and now even laws limiting how much you can make. We all heard the new FHA guidelines on how you can only resell a home for 20% more than purchase price within 90 days. Well this is a story about a bank that just killed one of my deals and it was conventional financing.
I had been searching REO’s in the charlotte area for a while and kept running across these real junkers. Finally after repeatedly seeing this home being marked down I decided to take a look. It was not a foreclosure but a owner occupied home in beautiful condition. The woman selling the home was going into assisted living and just wanted out. She was ready to accept almost any offer.
Well my search was over I presented a cash offer with no contingencies and we had a deal within hours. I knew I had a great bargain and started my marketing to resell this property at a higher price. Things started out a little slow but it was winter, then at the end of March a retail buyer had come along and loved the home. After a little negotiating and haggling we had a deal
I couldn’t have been happier. He was pre approved and loved the home. I had marked the property up 35% and was still giving him a great deal. What could possibly go wrong? I figured this one was in the bag. I knew the property would appraise, I knew there was nothing wrong with the home, I had owned it for more than 90 days and it was a conventional loan. No FHA guidelines to contend with.
Well here’s where it goes sour. We as real estate investors may have to refuse offers because of who they are using for financing. He was pre approved with a national bank ( we will call them BOFA) so this property went under contract and the loan process was started. Everything was going great. The home inspection went great and so did the appraisal (it appraised for more than contract price) , title search was fine and we were ready to close.
NOT SO FAST!! During their research they had discovered what I had paid for the home and called up the buyer and told him the deal was off. They had notified him of what I had paid for the home and let him know it was unfair for me to mark up a home 35%. So they rejected the appraisal from their OWN appraiser and decided to do their own in house appraisal with homes from another neighborhood of much lesser quality that they had never even seen!! Needless to say they determined the house was only worth what I had paid for it, and they were not going to lend a penny more or get a second appraisal. They had determined it is impossible to get a good deal on a property, yet they sell them for pennies on the dollar every day.
I am pretty unhappy about what had happened but know I will resell this property. I think it is unfair and wanted to share this story to anyone trying to sell a home and the hurdles they may come across in this crazy real estate market. There is still plenty of money to be made in real estate, so don’t get discouraged. I just want everyone to be aware of who to accept offers from. Just because they are pre approved and have great jobs and credit, be aware of the bank they are using to fund the deal. I have seen this bank and others revert to crazy lending practices. Keep your head up and happy investing