Oxford defines “anatomy” as a detailed examination or analysis.  I recently purchased a property in Grapevine which I plan to rehab and blog an anatomy from start to finish.

It was Tuesday, Oct 10th, 2006, when I was driving an older area of Grapevine looking for opportunities.  I noticed a property with phone books on the front porch, door hangers and an overgrown lawn - all good signs of a vacant house.  I parked the car and approached the house – sure enough, vacant.  Upon closer inspection I could see it had foundation issues and had never been updated since it was built in the 60’s.  I used my smartphone to search the Tarrant County Appraisal District and found the owner in Grandview.  I ran a quick 411 search and called.  Nobody home, but I left a message.  Later that day, I sent a post card asking them to call me as I was interested in purchasing their house in Grapevine.

On Friday, 10/13 I received a call from somone who had power of attorney for the owner and was interested in selling it. Unfortunately, they had just signed an agreement with a Realtor to list it.  This clearly wasn’t good news as the Realtor had likely set their expectations for a price and the seller would need to pay realtor commissions.

When I called Bill, the realtor, he said he hadn’t listed it just yet but they wanted $130k.  I knew that was too high (for me) as the ARV (after repair value) was approximately $170-$180k but needed a $30k-$40k rehab.  I decided to go ahead and look at the property.  Bill said I could come by anytime that afternoon since he lives next door.  “AH HA!  This is my chance,” I thought.  He obviously had a personal interest in finding an experienced and trustworthy investor to purchase, rehab and sell the property for top dollar.

As I met Bill, I made sure to show a personal interest in him, his neighborhood and his house.  This was as much about convincing Bill that I was the right buyer as it was about me viewing the house.  As we toured the house, I was taking notes and commenting on all the work the property needed.  I made it clear that I had was experienced with rehabs, had cash to purchase and was planning  a top-dollar rehab.
Once I had established my credibility, I told Bill that I’d only pay $100k for the property due to the amount of work necessary.  He said, “they’ll never take that but we may end up somewhere in the middle.”  I told him I’d think about it, and left.

The next morning I decided take my best shot at the property for $100k.  I wrote up the offer as-is, cash, no seller contributed closing costs, no warranty and closing in 10 days.  I requested a 7 day option period to get a foundation estimate - noted in the contract as the only contingency.  I knew that this deal was all about how Bill presented the contract to the seller so I included a cover letter (to Bill) with the detailed budget for the $40k rehab.  I reminded him that they may find a buyer to pay slightly more, but it could take 6-12 months in its current condition. I also included copies of two handwritten testimonials from previous sellers to help establish my creditability and trustworthiness.  I dropped the contract off to Bill and he said he’d get back to me on Monday.

Monday morning I received a call from Bill.  They accepted the offer with just a change to the closing date.  He made it clear that he is trusting that I’ll keep my word on rehab - obviously he went to bat for me.  I told him that I wouldn’t let him down.  We closed on 11/1.