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JerseyJeff

Lping Furnished Homes

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I may be meeting with an owner tomorrow to sign an agreement so prompt answers are appreciated.

 

He has a home that he has ben renting as a vacation type home. It is fully furnished. How do I account for this in the agreement? What needs to be put in the contract to 1) cover the things during the rental, and 2) include them in the sale of the house (just say everything is included)?

 

Please help me with the wording and what needs to be in there.

 

Thanks,

Jeff

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Jeff, I have run into a few deals where the homeowner wants to put forth a package deal and toss his unwanted furniture into the mix. I'm against it, as I see it as an obstacle, not a plus. There was a similar conversation about this a while back here. Personally, I think you should try and dissuade the homeowner by making him understand his belongings hinder the deal, rather than help.

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MC,

 

In that post you wrote

The furnishings are worthless to most buyers. Most people purchasing a property either have their own furnishings, or are planning on buying some. Not too many fokks want to buy the seller's stuff, unless it is something special and unique. If the seller wants to throw it all into the deal, at no cost, that may work. If the buyers don't want any of it, you can always have a garage sale and pocket the cash. On the other hand, if the seller is trying to tie the furnishings into the sale, and tacking on a few thousand in the process, tell him its a no go. All that does is muddy the waters, kind of like when you try and trade in a used vehicle when you go to buy a car at some dealership. There are numbers being thrown all about and you don't know what you're getting for your trade in and what you're paying for your new car.

The purchase price for this house will be $750K so I don't think the furniture is playing into the price all that much. The furniture is also very nice (although beauty is in the eye...and the buyers may not agree).

 

I can sell it as it's $750K and the seller is throwing in the furniture. You can do with it what you wish. The only problem, big problem, is that this is a lease purchase, so I have to protect against them coming in and throwing out the furniture, and then not buying the home. The seller will have an empty house then. I'll try to push no furniture if that's my only recourse, but he's leaving for Europe in a week for three months and I wanted to get the agreements signed ASAP before he leaves. If I tell him he has to clear out the house, he may not have the time, and/or might say, I'll just keep renting it because he doesn't want the hassle.

 

Like I said, if an empty house is my only option, I'll tell him that, and let the chips fall where they may. But, it isn't like I have(had) a hundred deals lined up after this one, so I'd hate to let it go.

 

Thoughts?

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UPDATE:

 

Called the seller and told him I looked through my (imaginary) database of buyers and spoke to my (you) partners and I don't have anyone who would be interested in buying the home furnished because they might have their own furniture, might not like it, etc. He said it is only a year old and putting into storage for a year would be a hassle and cost money so he'd prefer not to do that. He said if the buyer is interested, he'd consider putting downstairs in the basement in a utility room as storage. I'd still like to have something in the agreement to cover the furniture. Is the "maintenance and repairs" and "property condition" clauses in the two agreements enough to cover it or should I add something additional? Also, can someone confirm that I'm using the right agreements - The Residential Lease Agreement and the Option to Purchase agreement are signed between me and the seller and then the Assignment of Agreements (the one that is plural because there's two of them) is signed by me, seller and TB at the time of assignment. Correct?

 

Thanks,

Jeff

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Also, can someone confirm that I'm using the right agreements - The Residential Lease Agreement and the Option to Purchase agreement are signed between me and the seller and then the Assignment of Agreements (the one that is plural because there's two of them) is signed by me, seller and TB at the time of assignment.
First things first. The agreements for a CA are the CA Residential Lease Agreement, and the Option to Purchase Agreement. These are completed between you and the homeowner. To complete the puzzle you would use the CA Assignment of Agreements. This one is signed by all three parties involved. Any uncertainties about the paperwork, Jeff, shoot me a PM.

As for the furniture, since you don't appear to have the luxury of time to sort this out, the furniture stays. The homeowner needs to protect his interest in this stuff. For starters, I'd recommend a videotape walkthrough of the entire property to show exactly what is included when the prospective t/b's move in.

Then, in writing, a listing of all the furniture that is included, along with a paragraph that the t/b's are responsible for all furnishings, and if the option isn't exercised it must all be returned in like condition.

Don't let this curveball throw you, Jeff. It can be done. And for a $750K property you can/should expect a nice chunk of option consideration to keep the t/b's in line. And the likelihood of them exercising the option goes up considerably in the higher price ranges.

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Well, I'm one for one on meeting with the seller/having the contracts signed. He put up a fight, and called his realtor mom in for backup, but in the end, I won them over.

 

Ok, it wasn't that bad, but he did throw a lot of questions my way, and did question some things in the agreements, and his realtor mom did make an appearance, and there were many times I thought the deal was dead, but in the end, after 1 hr and 45 mins of hard negotiation and selling, he signed. It's funny, when he said his mom was stopping by, I was like okay. Oh, she's a real estate broker and she wants to meet with you and look over the agreements before I sign, I was like, no problem (AGGHHHHHHH....after an hour dodging bullets he goes to the pen for the lefty!!!) She must've been very happy with my answers and the agreements because after 20 minutes of Q and A, she gave her unwavering approval; her son soon signed away. Who would've thought a realtor would actually be beneficial in closing the deal?

 

Well, my major marketing push will begin tonight when my three darlings go off to sleep.

 

I have a pretty good idea on how the conversation with the TB's should go when they call, and the info I need and need to put forth to them, but, what should I say my involvement in the deal is? I'm not the owner, broker, or realtor. Principal; huh, what's that? Property management company? Independent consultant? Some guy off the street? Any ideas?

 

I'm sure I'll have a lot more questions as the days go by, but we'll start with this one for now.

 

I thought I'd be a lot more excited when I got to this point, but I guess now that I'm here, I realize there's still so much more to do.

 

I'll keep you guys (and gals) abreast of any updates/changes. Thanks for all of your help thus far.

 

Jeff

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Forgot to add the terms.

 

CA - 1 year lease starting on January 1, $750,000 purchase price, $2,400/month rent, 50% rent credit.

 

3 / 2.5 / 2 - 1 acre.

 

I think the purchase price is a stretch, but him and his mom think it's on par, and appreciation in this area is about 20-25%. Comps were real hard to get for this one, but my inexperienced guess would put it at $675ish, so this may be an issue. He had the home appraied Friday, and should have numbers on Monday, though who knows if I'll see the paper, not that it matters now anyway. It's in an area thats close to the vacation spots (as far as I know), but comps did show about a dozen sales of 3 / 2's w/in the last 6 mo's there. My big selling point is 50% credit on a rent price that is very low. I've had owners tell me that want $2,500 on a home that's $350 - 400K.

 

We'll see what happens.

 

Jeff

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Congratulations, Jeff!! I know how hard you've been working for this. I'm proud of you for sticking it out this far! :lol:

As for the price, you definitely want a look at that appraisal. Make the homeowner understand you are working with him, not against. And pricing a property well above the market only serves to have the homeowner get angry, (it'll be your fault, of course), and will cause you frustration and wasted time and marketing dollars. The terms are key, Jeff. Be sure the market will accept them.

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MC,

 

My apologies if my posts were misleading. The deal is official. I have the signed agreements. I'll see what I can do to get a copy of the appraisal; I'll sell it to the seller, assuming he hit 750, as this will be a great selling point to the potential TB showing them the price is legit.

 

I have a pretty good idea on how the conversation with the TB's should go when they call, and the info I need and need to put forth to them, but, what should I say my involvement in the deal is? I'm not the owner, broker, or realtor. Principal; huh, what's that? Property management company? Independent consultant? Some guy off the street? Any ideas?

Thanks,

Jeff

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My apologies if my posts were misleading. The deal is official. I have the signed agreements.
No, it wasn't at all, Jeff. I was multitasking. Which for me means doing three things simultaneously, and doing them all poorly. After I replied to your post, I went back and reread it and realized you had already answered the very question I was asking, (which is why I went back and edited my post :lol: ).
what should I say my involvement in the deal is? I'm not the owner, broker, or realtor. Principal; huh, what's that? Property management company? Independent consultant? Some guy off the street? Any ideas?
You might not even be asked. But if you are, no need to feel guilt about anything. I tell 'em I own a property management company, and the homeowner asked me to help them with their property. That's all that is necessary. Less is more.
I thought I'd be a lot more excited when I got to this point, but I guess now that I'm here, I realize there's still so much more to do.
Indeed. Stay level headed for the time being, Jeff. What do you anticipate as far as option money goes, and what kind of split, if any, did you agree to? And what is your marketing plan?

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After I replied to your post, I went back and reread it and realized you had already answered the very question I was asking, (which is why I went back and edited my post  ).

I saw you edited your post. Now it looks like I'm a crazy person answering questions that weren't even asked. :lol:

 

I tell 'em I own a property management company, and the homeowner asked me to help them with their property.

This is fine but, if I'm helping the owner out, wouldn't that mean I am brokering real estate? I know I have an agreement, so legally this shouldn't be a problem, but it seems it's how it would be perceived. I need to be working for my interests, not his.

 

This was the answer I was thinking anyways, so we'll go with it.

 

Indeed. Stay level headed for the time being, Jeff. What do you anticipate as far as option money goes, and what kind of split, if any, did you agree to? And what is your marketing plan?

 

I'm figuring at least $15K for option $$. I know the deal can probably get more but I'm just looking to cash out, and get my first deal done; besides, $15K isn't bad for a first deal, or any deal for that matter. I'm hoping my eagerness holds on for at least this. I'll let the TB's speak first and see what I can get.

 

The seller realized he's not getting any security deposit, and was pretty steadfast on that, so I told him I'd give him one-month's rent from the option money, and he was more than agreeable to that. So, he'll get $2,400, I'll get the rest.

 

Jeff

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Forgot the marketing plan.

 

It's on a cul-de-sac in a private community so I don't think a sign in front is going to do much.

 

I plan on hitting all of the free FSBO/FRBO sites, as well as allthelistings.com, and craigslist, etc. We'll see what that gets me initially. If nothing, I'll go have a sign made for the front, flyers around the neighborhood (it's about a 45 min drive from my house), trying to avoid shelling out $275 for a one-week ad in the newpaper, but I may not have a choice. Any other ideas?

 

I also thought of checking current listings (I know not a good way to do comps, but again, at this point it doesn't matter much) and $750K seems about right...

 

Only time will tell...

 

Jeff

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....but, what should I say my involvement in the deal is?  I'm not the owner, broker, or realtor.  Principal; huh, what's that?  Property management company?  Independent consultant?  Some guy off the street?  Any ideas?

Jeff, first of all.. "Congrats"!!! :lol:

Secondly, is very rare that a TB asks me what I am or what my role is in the deals (only my competitors and agents pretending to be TBs call me asking me those questions... that's how I can tell they're actors trying to still my knowledge :P .. believe me, I get lots of calls like this), I tell them the truth! ... I'm an Independent Real Estate Consultant, end of story. After they hear me say that, it amazes me how they open up to me almost instantly and feel comfortable talking to me...

Why I Never respond that I own a Property Mngt Company?

Because if a TB is gonna pay me $15K + consideration, they're gonna wanna know who the heck I am, the name of my property management company, the address ect so they can run a check on the biz. But when they hear I'm an independent RE Consultant they really want to deal with me and don't ask any more questions. (but this is only my personal experience here, I don't deal with $2K, $3K or even $5K consideration amounts, therefore my respond of being a RE Consultant DOES make a big difference in my case.. I'm sure this is not always the case elsewhere, but just my $15K + personal opinion ;))

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Bev,

 

Being you say you are a consultant, are you incorporated/LLC? I'm curious if you sign your agreements with an LLC, or do you just use your name, Bev "Dominatrix Option Raider"?

 

Jeff

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