We Buy Kansas City Houses

When we talk about houses we will buy it it’s easy to say we will rehab anything.  But there are some limits, so let’s take a look.

We have basically rebuilt a house before.  We were able to purchase at a price that would allow us to put in support beams to fix foundation issues, rebuild two exterior walls, replace all windows, replace the roof, replace the siding, put in all new gutted to the studs kitchen and baths, and replace all the hardwood floors, plus fresh paint and new fixtures.

Yet when faced with a house with termites that had done hidden damage in the walls, that we had no way of knowing the extent of the damage or the amount of repair the home was going to need, we had to pass on it.

We have purchased a home that needed to have a massive retaining wall replaced and the entire back yard reterraced.  We have bought houses with trees through the roof.

We don’t really like houses that were just built badly to begin with, we can’t really go back and improve a poorly built house or do major changes to a layout.  Well we can, but again the price has to be right.

We have completed renovations that amounted to about $2000 invested in a good cleaning and appliances to one that was well over $90,000 to rebuild or replace everything.

But when it comes to 100 year old houses, we find the cost to repair and replace plus fix the poor construction used such as adding duct work for modern heating and air, installing thermal windows and insulating the house, usually the cost of these repairs will far exceed the value of the home, so we usually pass on those as well.

I hope this gives you some insite as to what kind of houses we buy.

Yesterday we were talking about where we buy houses.  Today we want to take a look at what kind of houses we buy.  Note if you have something that is not quite in our area or not a type of house we actually buy, send it anyway.  We just might know someone who would be looking for that exact type of property.

But for us, we don’t want houses in rental neighborhoods or ward zones.  So if your potential house can see boarded up houses, vacant lots, lots of stuff in people’s yards that should be in the garage or the trash can, then we probably don’t want the house.  We want the boarded up house on the nice pretty block.

We want a house that was built after 1978 preferrably, although we will work with older houses.  One key here is that if there is a stone foundation or knob and tube wiring, then we probably would be referring you out to one of our other investor friends.

The cookie cutter house we are looking to buy is one of the following home styles:

• Ranch
• Raised Ranch
• Split Entry
• Story and 1/2
• Side to Side Split
• California Split
• Atrium Split
• Two Story
• Tri Level

We are really not looking for farm house or bungalow style homes, but again will consider if the numbers could be made to work.

Other things we want in a house:  basement is almos always a must and a garage.  Key here is if every other house has basements in the area, the one we buy will need a basement.  If all the others have a 1 car garage, we will want at least a one car garage, if they have two, then we want two.

We typically need at a minimum of 3 bedrooms and prefer at minimum one and 1/2 bathrooms.

We like nice normal cookie cutter home styles.  Houses that are not layed out well, we will take a look at, but we don’t promise anything.  Again, we can work with anything if the price is right.

So if you have a wholesale house:

Must Sell

We get calls from sellers through out the Kansas City Metro area here at our office and they are Motivated!  They have a house that they want to sell and they want it sold now!

So just how motivated are you.  Let’s look at some examples.

There is the seller who called us about a year ago with her house in Grandview.  In talking with her she thought her home was worth about $124,000 and she wanted to sell it for about $110,000.  When we asked her why she wanted to sell, she told us she wanted to buy a new house.  The numbers did not work for us and so we went on down the road although we stay in touch with her.

Her motivation was she wanted to buy a new house, but she also wanted to get a set price out of the house she already had.  She was not highly motivated.

This same seller called us a few weeks ago.  She hired a Realtor and went out and found the house of her dreams.  She has made an offer on it and I think got the offer accepted contingent upon selling the house she has now, the house she had to have $110,000 out of last year.

She currently has her house on the market for $124,000, yet she called me and said that while it’s listed for $124,000 that she will take less . . . a lot less, because she wants it sold today, like right now, so she will not loose out on the house of her dreams.  Her motivation has changed.  She does not want to buy a new house, she wants to buy a particular house and is in love.  Her Realtor is marketing the house for $124,000, she emailed me and asked if I could offer $85,000.

Another example was a seller who had a house in Waldo (that’s in Kansas City, MO) that he wanted to sell.  He had a new job in Florida and had just moved there and started trying to sell houses.  The house was down the street from our office and he had seen our sign so he thought he would call.  He had not yet listed it with a Realtor, but was thinking about it.  Would we please go look at it and make him an offer.

I don’t really remember the numbers, but I do remember that he did not seem to motivated to sell.  He thought he might rent it or maybe list it, but wanted to get an Investor offer.  If it would not have been a block from my office I would not have gone to look at it, but we did.

He had a lock box on it so we could go let ourselves in.   It was about 4 degrees outside and had been this cold for days.  We walked into a house covered in a world of ice.  The guy had turned off the heat to save money, but had failed to turn off the water and winterize the house.  Every pipe in the house had broken and spewed water everywhere.  The floors were an ice rink, the walls were frosted over, and the finished basement was even worse.  And we knew that once it warmed up and the house thawed out – all that cool ice would melt and cause major water damage everywhere.  We gave him a call back and he became majorly motivated after that.

So when you are calling to sell a house to one of those “I Buy Houses” guys, like us, remember your motivation.  If you have time and don’t have a reason that you need to sell, your best bet is going to always be to talk with a Realtor and list it.  We do have Realtors on Staff who can help you through with this.

But if you have a reason to need to sell quickly or if you have a house like the second guy that is now in need of major repairs that the average buyer is just not going to want to deal with, then working with an “I Buy Houses” kind of guy is the way to go.

To find out how much we might offer for your property, please submit it online at http://www.kcmoHomeBuyer.com or give us a call at 816-200-2198.

Hi – I was wondering what you base your buying prices on.  I assume that we would be getting less if we went this route, but at the same time, with cost/time involved in preparing the house to sell (we have 7 kids), it could take years for us to get it done.  Is there a way to get an estimate w/o cost?

This is a great question from a potential seller.  How does a Real Estate Investor arrive at the price that they will offer on a house?

Well first we are going to take a look at your neighborhood and see what houses are selling for in your area.  We want to look at houses that are the same size and style in terms of square footage, age, basements, bathrooms, bedrooms, garage stalls etc.  We want to see what the perfect house that has been all updated for today’s modern standards has sold for in the recent past and what they are currently priced at if they have not yet sold.

If we can’t find any fixed up houses in the past 6 months we might go back a year or look at average lived in homes that have sold and adjust prices accordingly.

So that is our first number.  After repaired value.

Next we want to see what we are going to need to do to your house to bring it to that perfect fixed up condition.   That means the roof, furnace, air conditioner, and hot water heater probably need to be replaced if yours are older than 10 years old.  Windows probably need to be replaced if they are not double pane thermal windows.  That means if you have not updated a kitchen or bathroom in the past 10 years, more than likely we will need to make updates there and if it is over 20 years old, we may need to completely replace it.

And for the most part every house needs fresh paint inside and out, new carpeting, tile in the entries and bathrooms, and hardwoods refinished if they are present in a house.  Plus all the usual suspects:  new light fixtures, outlet covers, knobs, etc.  We also trim trees, clean up landscaping and fix anything else that might be an issue:  siding, decks, foundations, drain lines, electrical updates, driveways, etc.

We go through and make a list of items to repair and estimate the costs.  This is our second number.  Repairs.

Then we have to consider a third number, holding costs.  This will be what we would spend between the time we buy your house and the time we finally sell it to a new owner, on upkeep, utilities, maintenance and insurance.  We usually figure at least 4 months time and about $200 in utilities per month, $100 in insurance per month, and then snow removal or lawn mows as needed.  One more number in this area is how much we accrue in real estate property taxes per month, so what ever your taxes are, divide that by 12.

Our fourth number we consider is what is it going to cost us to sell your house.  On average we have a 6% commission to a Realtor at a minimum.  If we do not replace the furnace, AC, and hot water heater, we are going to have about $400 in a home warranty for the new buyers.  We will have fees to buy from you and to sell to the new buyer at the title company, we figure about 1% of the total sale price.  And in today’s economy, we often have to pay 3% of the end sales price in the end buyer’s closing costs.

Our last number is our profit.  If we are going to buy your house, then take about a month to renovated it, another month or two to find a buyer, then another month to get the house closed, we need to make some money to pay our bills.  We have a house payment, utilities, cars, kids, and groceries just like you.  So on average we shoot to earn about 20% of the end sales price.  This is usually somewhere around $25,000.

So heres what the formula looks like:

After Repaired Value – Repairs – Holding Costs – Selling Costs – Profit = What We Pay.

So to put some numbers in it for the typcial house we have been buying recently:

We can pay $71,500 on this example.

We have all the same expenses that you do with the added cost of needing to earn something for our efforts.

You will find that most real estate investors who are going to pay you all cash up front are going to pay about the same as us.  You may find a few investors who are not cash buyers who want you to hold the loan, meaning you move out, and they make you payments over time.  They may pay more in price, but you are not going to be getting much cash in your pocket up front.  You get paid out when they finally sell.

So thats it in a nutshell.  If you are selling a house in the Kansas City market and want to know what we will offer, you can pretty much work it out.  As our person in the question points out that the time and effort in getting a house ready to sell around your live and in her case 7 kids can be tough.  We know as we usually have a crew of 4 to 7 people working in the house for 40-60 hours a week for 3-6 weeks.  Working with an investor buyer can be a great option, but it is a trade off in price.

Do you have to get your house as ready to sell as we do?  No, but we have found that the average house not only sells for a lot less than a perfect house, they also take a lot longer to sell unless the price is considerably lower.  And you still have the Realtor commissions in most cases and the selling costs in most cases.  If you are in the Kansas City area and want to see what a Realtor would tell you about getting your house ready to sell and what they would sell it for, give us a call.  We are Realtors and have our own Company.  And while we personally do not want to list your house, we have agents who work for us listing and selling our houses that would love to assist you.