Learn about Real Estate by one of the premier Real Estate Investors in New Jersey. Each week Joseph J. Zoppi will be talking about investing in real estate including buying and selling houses and apartments. Understand how the economy, the Fed and world events impact real estate and how to adjust to these dynamics.
Templar Real Estate Radio Show for January 16, 2021
The following program was paid for by Templar Real Estate. The views and opinions expressed on this program are not necessarily those of the staff and management of WMTR. As always, it is advisable to consult a professional before making a major decision.
It’s time now for the Templar Real Estate Talk Show. Here’s your host for the program, Joseph J. Zoppi.
Joseph J. Zoppi:
Hello, welcome to the Templar Real Estate Talk Show, my name is Joseph J. Zoppi, a real estate investor, consumer advocate, author, and managing partner of Templar Real Estate Enterprises. You could reach us at templarcashforhouses.com, that’s T-E-M-P-L-A-Rcashforhouses.com or you could call us at 973-240-8593 and we could answer any questions you may have, or you could email us from our website as well. If you wanted anything discussed on the air, we could try to accommodate you or any questions you may have in general.
For first-time listeners, my company is a real estate investment firm, we buy houses for cash, we purchase apartment buildings, we do joint ventures with other real estate investors, we loan money for rehabs and provide transactional or gap funding. We work with individuals that want to invest with us in single-family houses up to apartment buildings. We do not speculate, we’re very protective of our money and our investors’ money. I’m not a real estate agent, I have individuals that are on staff that are agents that will sell your house through the traditional Multiple Listing Service.
This show will go over everything there is about real estate and those things that impact real estate. We’ll talk about our rehabs, some of our investments, what went well, what did not go well, and especially how we learned from them. We’ll talk about the economy, interest rates, we’ll discuss trends in the real estate market. Real estate is one of your biggest investments, so it’s important you know as much as possible about it.
I will provide you with my opinion, it’s only my opinion. I ask everyone to do research on everything that they’re getting into. Again, especially when you’re dealing with lots of money, do a lot of research, and as I always say, if you’re going to get someone’s recommendation, please ask lots of questions because that’s the only way you’re going to uncover what might be good for you or what might not be good for you. Again, some of them might have a temperament for a certain type of person whereas another one might not, so that’s very, very important. Some people want to ensure that the person that’s coming maybe to their house is always on time and very punctual. Other individuals say, “I really don’t care if they’re 10, 15 minutes late,” but some people want someone early or exactly on time. So, maybe it’s something as simple as that. Maybe it’s something like, an example would be someone that always has to reschedule. Sometimes, that’s not an issue, sometimes, it bothers people, especially if they’ve arranged their schedule accordingly, so you need to ask lots of questions and once you do that, you maybe get a better understanding of who the person is and what type of service they do provide.
I want to say a shoutout to some of my favorite listeners, Paulette, as you hear every week and also, Jim and Janice, I’d like to do a shoutout to both of you as well, thank you very much for all the kind comments you had sent me.
Also, I’d like to talk to you about, as I always do, about private investors. So, I talk about that sometimes. If you’re interested in investing in one of our projects, please give us a call, either single-family houses up to apartment complexes and we have different types of rate of returns. You’ll get paid depending on the situation, everything from once a month or at the end of a project, it really depends on the project and depends on what the investment is. So, that’s all spelled-out and we go over everything ahead of time. I’m also looking for, always, I’m looking for single-family houses, some multi-family houses, and especially apartment buildings. I prefer 100-plus units but if you have something smaller, like 40 or 50, we would like to look at those as well. I will always provide a finder’s fee for any of those situations as well as be very discreet in terms of not using your name if you don’t want that. So, I want to make sure that’s very, very, very clear.
The other thing is that we buy houses for cash. If you need to sell your house fast for cash, please give us a call, we’d be more than happy to work with you, come by, take a look at the house, and just talk. There’s no obligation and we love seeing houses, we love talking to people, and maybe, there’s other suggestions we could provide as well, it depends on the situation but we’re always open and we really encourage you to give us a call.
Last week, I talked about a couple of things. One of them had to do with oil tanks and I went into some detail on it, and I’m going to continue with that a little bit, but that dovetails into a negotiation we had, so I want to go through the negotiation and how we went about it, what we did, what we didn’t do, and why we did certain things.
So, I brought this up a couple times and I always try to update you on certain projects that we’re doing and the negotiation we are doing that’s associated with it. So, we had a house, we did a full rehab, it was about a $150,000 rehab. We don’t usually like to do rehabs that large, it’s just one thing after another, it’s lots of problems, and we always want to make sure that everything is done to be properly done and not cut corners, and we will sometimes not do certain things and that’s just for a budgetary or for an aesthetic perspective but if there is a problem, we’re going to fix it for the most part. There might be some minor problems. You’ll never be able to fix all problems in a house that’s dated and has some years on it. You just can’t. If you want everything perfect, you have to go to a new house and even then, you’re not going to get everything fixed anyway. So, we strategically select certain things that should be done and some things that shouldn’t be done and really aren’t that big of a deal.
So, we had the one house, we had it listed for $435,000, it went under contract within two days. The buyer, she came back with a number of things that the attorney requested and we had no issues generally speaking when we are in attorney review. After the inspection, a number of things came up. We also had some problems with water, some seepage coming through the roof and we were obviously more than happy to fix those things, and also there was a little problem in the basement, and we had originally notified them with that, so after going back-and-forth, the attorney was becoming more and more aggressive and they wanted guarantees on everything, and you really can’t guarantee that there will be no water ever coming into the house no matter what. It’s just, you can’t do that, and he was pushing for a guarantee, and then he was pushing about stating that a lot of litigations are based on water intrusion and things like that. We started thinking about this and it was just a very aggressive tone and was talking about litigation and things like that, so it was a big concern of ours, and then one of the things that they requested is that we had redone the basement completely and he wanted all the vinyl waterproof stripped tightly removed, and that would’ve cost upwards of $4,000, $5,000 because he said there was possible mold, and it was, again, the leak was extremely small and we were going to put in a sump pump to resolve that, but he wanted that as well and we just canceled the contract. It was just becoming too difficult to deal with. As a result of that, we left the house on the market for another week and then we reduced it to $425,000.
We had another young couple come by and a lot of times, we have young couples come by and they look at the house, they say, “This is great,” and they can’t afford it. We had one that said, “We want to do it,” but they only wanted to put 3% down so we really didn’t want to pursue that any further. We had another one that came by and they loved the house. Again, it was asking $425,000 and they offered us $400,000, and we didn’t even counter on that one. The numbers are too far apart, we were going to pretty much stay close to the $425,000 number, so we just didn’t really do any additional discussions on that. We spoke to the agent and she understood, but we just kept it at that, and we had the house on the market for a couple more weeks, two or three weeks after that and they came back again, that same couple, and offered us $420,000 and the agent said they looked at a lot of houses and it was like, 14 houses and they still liked ours the best, so they came up to $420,000 and we were fine with that, and they wanted one concession and that was because it didn’t have a glass door for the shower. I said before that the new pros to showers, no glass doors and more open feel. There was a $500 credit for that and we said no problem with that, so they were going to get $500 credit and we would’ve accepted the $420,000. Case closed on that.
We told them that we didn’t want to go in to put the house pending again because it was pending once when we went in on the one offer and then we took it off, and I have said before that once you start putting things on pending and then taking it off, your houses look that differently. Everybody thinks there’s something wrong with the house, something’s wrong with the inspection, so on and so forth. We canceled just basically because of the attorney. So, we didn’t want to go in that again and then come out, and I was apprehensive because originally, these individuals lowballed us at $400,000 and I think they came back one other time, say, “We’ll give you $410,000,” and we just said no to it, so I was very apprehensive about them; it was a first-time homebuyer, so we always, it’s always more challenging with them just because they’ve never bought a house before, so there is a lot of things that come along with that, a lot of baggage. So, we were very, very concerned about going under full contract with it.
So, what I proposed is for them to do an inspection beforehand and they didn’t want to spend the money if we didn’t go through full attorney review. So, what I said is that we’ll pay for the inspection and if we go through attorney review after that, we’ll continue to, we’ll eat those dollars and we won’t have to pay the $500 at the end for the glass door, and they were happy with that. So, we engaged and we had a full inspection done and also, they wanted a tank sweep. We already provided them with our documentation but they wanted to do another tank sweep, so I was like, okay, that’s fine too. They wanted to do their due diligence. Most of the time, if we provide the documentation, then nobody spends the money to do another tank sweep, that’s just the way it is.
So, I’m going to continue with the story but I’m going to close out with this segment and I’ll be right back. Thank you very much.
Joseph J. Zoppi:
Hello, welcome back to the Templar Real Estate Talk Show. My name is Joseph J. Zoppi, managing partner of Templar Real Estate Enterprises. You could reach us at 973-240-8593, again, that’s 973-240-8593 or templarcashforhouses.com, that’s T-E-M-P-L-A-Rcashforhouses.com, that’s one word.
So, getting back to my negotiation with selling our house, the individual, the couple that wanted to buy the house, they were going to engage in an inspection, and like we said, we were going to pay for it. I had no problems spending the $500. I was confident in the quality of our work and what was done, so it was worth it. Again, I did not want to put it under attorney review, go through that, and then they back out for whatever particular reason that we couldn’t negotiate, and then it would be off pending again for a second time, so that’s something I definitely did not want to do.
The other thing is that as I said last week, we had an oil tank in this property, it was filled in, it was decommissioned but it was on the side of the house underneath the sunroom, a new addition that was put on, so it wasn’t easily accessible and they were very wrapped up in this oil tank being abandoned and decommissioned, so they want to do a soil test and everything associated with that, and the company that originally did this tank, they were very, very reputable, so that was one of the reasons why when we bought the house, we bought the house because they did and they did the work themselves, this one company, and we knew it was quality work. So, with that being said, we had the inspection. Usually, with a tank inspection, there’s a tank inspection, and then there’s the house inspection. The house inspection went through and one of my pet peeves, one of my many pet peeves is the inspection process and what’s put down on the inspection report, and sometimes how ludicrous it is, so I usually get a little crazy when I see some of these reports but that’s just the nature of the beast.
The other thing that I was concerned about is the tank inspection because they wanted to start doing soil samples and it was in a place really where you really couldn’t do a soil sample very easily. It was in a crawlspace underneath the addition and I kept asking, “What happens if we can’t do an inspection, are you going to abandon the deal?” and I never got a straight answer. I kept pushing on it and the agent was saying, “Well, don’t worry about it, they like the house, we just want to go through a regular inspection as well.” So, that was one of the red flags I had, one of the many red flags. They did the inspection, we got the inspection report back. It took over a week and a half to get it back, so right now, I have the house on the market still, but I want to close and I want to consummate the deal, and it’s taking a long time, and so I’m a little frustrated with that to say the least, and they are not moving that quickly. That was a major concern of mine.
So, we got the report back, the attorney sent his remarks and I’m going to go through some of them. There was previous termite damage so they wanted another termite warranty, a one-year warranty on it and we responded that the house is 50-plus years old and prior termite damage is not uncommon, and we haven’t had a problem in the last year since we’ve owned the house, so we’re going to say no to the remediation. They followed suit and they still pushed on it and they wanted a one-year warranty. So, we had settled on that begrudgingly but we did and that’s probably about $800, then there was like a main beam in the basement that they thought might have had some reinforcements to it. We did not see that before we closed everything off in the basement, so they requested what type of work was done with the beam, so on and so forth, and we just said we didn’t do any work on it. It was as is, and they had no issues with that. Then, it was the crawlspace where we just spoke about. We had close that off for the most part, so it wasn’t easily accessible and that was another concern of mine, is how they were going to get in there because it was very, very small to really get into that area, so they wanted the crawlspace opened up and we came back and originally said no to that, and eventually, they said, “We need to do that to do the soil sample,” so on and so forth, so we begrudgingly, again, said okay to that.
Then, they had a couple other things. We have a vent stack, so that’s where plumbing, and you’ll see them on top of the roofs, they are like little chimneys and they are used in the plumbing, and so water flows down, proper pressure isn’t being built up, so on and so forth, so there was a couple areas where they were previously sealed around the vent pipe going into the roof, and what they wanted was the whole vent pipe replaced, and that would’ve been just a big feat between opening up walls and plumbing, and so on and so forth, again, something very ridiculous. We said no to that. We said we had no leaks except for one leak that had to do with some downspouts that were clogged up, and that’s why we had the leak. It was just backed up water, and they okayed that. Then, they had, so there was a waste line for your toilet and there was supposed to be a clean out. When the basement was sealed, there was no access for that clean out and that’s in case the pipe gets clogged, you’re able to have a plumber go in there and clean it all out, and it’s a big connection that you just unscrew, then you could put something in there to remove it, some type of rooter type instrument. So, we said we would open that and that was fair because people have to get to those things, so I think that was very reasonable.
And then, they had some electrical challenges and one of them was a subpanel, so again, with older houses and you start putting additions on, you start putting subpanels, maybe in particular locations, and it’s not a full upgrade of the electric, and that’s happened in the past. It happens to this day and they wanted an upgraded panel. We said no to that. That would’ve been probably about, it could’ve been upwards of $2,000. So, I had my electrician originally look at it and he thought that was fine, so we said no to that.
Then, there was a couple of things with windows, there was some cracks and we knew about this, we were going to replace those and we had no issues. There was a microwave, the vents underneath the microwave weren’t installed and we were going to install and we had them put aside. So again, pretty minor things. Then, on the two bathrooms, they wanted vents installed and we said that we have windows, so according to code, you either have a window for ventilation or a fan. You don’t need to have both. So, we said we have windows and we didn’t need that, and they were okay with that as well.
So, most of it went fine but afterwards, they again pushed on having the electrical upgraded and we said no to that, and also, they still wanted to go into the crawlspace and look around and thought there was maybe some mold which there really wasn’t. So, they were looking for those types of things and it was getting long in the tooth with all this. While that was happening, another individual came and said, “We’re very interested in the house,” and I said, “Well, I have the report here, take a look at the report. I’m going to tell you what we’re going to approve with the other individuals,” and I showed it to them, they had no problems with those things. They did not have to have an electrical inspection, so on and so forth, they were happy with the tank being decommissioned and he said, “I want to go forward with it, and I said, “That sounds fine,” so, we canceled the other contract because this other contract, we wouldn’t have to continue with it because they were going to have to upgrade the electric, I know it because any individual that’s an electrician is going to say, “Well, it’s not optimal to have this and you need to upgrade it,” and that’s the big word, their “optimal.”
The other thing that they wanted was the HVAC which we installed . It was really well done and they wanted some vents put in that weren’t necessary even though the inspection report said it was. So, we weren’t going to move on that as well, but the other individual accepted everything as is, they saw the inspection report which was independent, and he says, “This is great.” Within two days, we were out of attorney review and we are ready to close, hopefully with the next few weeks.
So, that’s the thing, is you gotta balance all this out, and the other individuals were just dragging this along with additional inspections and at some point, you gotta draw the line, especially with the electrical because you have a professional go in there, there’s something that’s functional, and then there’s something that’s optimal, and if you ever sold a car, before way back when, I used to sell a lot of cars when I was younger and when people would say, “Well, I’m going to bring over my mechanic,” every time I heard that, I knew no matter how good the car was, it was going to fail for something, and the mechanic is going to come and say there’s 10 different things wrong with it. Technically, there might be 10 different things wrong with it but it’s still a good working car, and the same thing is with that. So, I didn’t want to give additional $600 or $800 for an electrical subpanel, and who knows what else they would have encountered when they went into the crawlspace and other things like that. So, you gotta balance it out in terms of when you’re buying a house as well as when you’re selling a house, and I was just chewing up a lot of additional expenses with this review. We were close to four weeks into the review and he was going to take another two weeks based on the way they were moving on it and that means we would’ve still had to give in some additional money and accept some additional contingencies which we didn’t want to do.
So again, the discussions around the contract, what you’re going to give in, what you’re not is probably one of the most important things for any discussions. It’s just that simple, and that’s one of the things that we bring to the table, is that, and we are tough negotiators for our clients and as a result of that, we have a lot of happy clients because of that.
So, I’d like to close it out today. Thank you very much for everything. Again, you could reach us at 973-240-8593 or templarcashforhouses.com. Thank you very much, God bless, and take care, everyone.
The preceding program was paid for by Templar Real Estate. The views and opinions expressed are not necessarily those of the staff and management of WMTR. As always, it is advisable to consult a professional before making a major decision.
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