Do you make your offer right away?
Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
I was wondering how you go about making your offers. What I mean is, when you first go out to see a home, do you make an offer on the spot? Or do you go home and think about it and call them back with an offer?
Do you ever make offers on the phone or strictly in person?
Do you mention on the phone or by email when you're setting up your appointment that you're an investor and your offer may be low?
Would love to hear any words of wisdom on this as I'm considering making several offers this weekend. Well, I mean I have several homes I'm considering making offers on. If one is accepted, I will probably finish that deal before making more offers, since I have a very small amount of cash.
Marilyn,
A couple of suggestions. First full disclosure: I don’t and have not ever bought a mobile home but to me RE is RE. I always make an offer on every property I look at or talk to on the phone. They may not like the offer but I always make them. Remember, your job is not to judge or decide what they are willing to take. You job is to find the facts of the deal and make an offer that makes sense to you as an investor and meets their needs. Give them options. Find out what they NEED not what they WANT. You don’t buy if you can’t find a way to make money. Period. You can’t and won’t make their problem your problem. Be honest and fair and you will have little problem. The most important criteria is their motivation level. If they are not motivated, you are 99.9% wasting your time. Why? If they are not motivated for some reason, then why would they sell it for less than it is worth or on good terms or both? Answer: They won’t. Remember that.
Don’t make it more complicated than it is. After motivation, all you need to find out is what they owe, what it is worth, the repairs and what they will take. That is it. Your fear of making offers will go away as you make more of them so don’t worry about it. If they are motivated, they will be looking for reasons to do a deal and not the other way around. It seems counterintuitive but you will see this in time. Negotiating is the best part because you never know what will happen or what they may take. If it looks like a deal, put it under contract because I guarantee that if I find a deal, I will immediately so if you wait you could lose a good one. A simple one-page contract that allows you to gracefully bow out if it doesn’t meet your needs is all you need. After it is under contract, verify all the facts of the deal. This should take no more than a day or two. DO NOT put it under contract and sit on it for weeks. If it takes you more than a few days to week at most to do your due diligence, you shouldn’t be buying anything yet. As you gain experience you will rarely not take a deal because of your mistake. It will more than likely be due to something they did: i.e. additional liens, value not there (again I know squat about mobile homes), too many repairs, or other things they didn’t tell you like not owning it, etc. As long as your contract has an inspection clause or approval of a partner you can get out of any mistakes you made in your initial assumptions if the deal doesn’t make sense for some reason. Learn from it and move on.
When asked about your experience, you have two choices. Option one; say you belong to a real estate investment group that buys up to a home a week (true if you belong to the local real estate association). Option two is come clean and admit that you are just getting started and have just finished some rather intensive training from a mentor or whatever. Which is better depends on the person. Some would rather be dealing with someone with more experience and some like a newbie because they feel they are less likely to get ripped off. Truthfully, it doesn’t matter. If they are motivated, they won’t care if you don’t get every detail correct.
Don’t let the fear of the unknown stop you. Make offers and it gets easier. Find a local mentor if you can to bounce ideas off of or review your paperwork (along with your attorney). I also recommend writing a script for you to follow in the beginning, even if in outline form. You will develop your own style as you gain experience but if you have something to follow you won’t forget something you need and you will be less nervous. If you ever get flustered because you can’t answer a question, put them on hold after saying you have another call and think about it. If you don’t know the answer tell hem you don’t know but will find out. If you totally panic and freeze, just tell them you will find out the answers to their questions, run the deal by your “partners†and call them back. No big deal.
You can also make what if offers as well. Like instead of saying I will give you X for the home you say something like "What if my partners and I were able to offer this amount and these terms, is that something you would consider or not?" Keep probing and soon they will tell you exactly what they need to make the deal. You are not making "real firm offers" just asking what if type probing questions. It may make you more comfortable in the beginning.
Best of luck to you. Make offers and you will be ok. Sooner or later someone will say yes.
Mike C
Depends on the property and how much opportunity is in the home. When I make offers I usually do it sooner than later to eliminate my competitors.
Each deal/seller/situation will be different and depends on a few things. If they are out of town you may have to do it over the phone. If you're approached outside at the park then go look at and make an offer before you leave. I've even made offers through the park manager before.
Usually if it's over the phone I will ask them if their flexible or I will give them a range of prices that I am able to spend (make sure you use the word CASH!). If they are flexible or willing to work within my price range then I'll go take a look. You just want to make sure not wasting a trip + time + gas to look at a home with a ridiculous price and stubborn seller. You should have a pretty good feel of the seller by the end of the phone conversation if you let them talk (and talk).
Personally, I get all the info I can from them. Then I talk to the park manager and see what she can tell me about him, his home, and his situation (it's amazing what these PM's know about everyone!). Then go see the home! After checking central air/floors/roofing/ect you will know what you want to pay before you leave. Make your offer and see what happens!
BTW I would never tell them that my offer will be low because I'm an investor. I tell them that I'm an investor and give them a price range that I have budgeted and let them decide. Always use POSITIVE words like CASH, close quickly, I can be there tomorrow, no more lot rent.
If they do get offended (some will) I tell them 'Please don't be offended. My price isn't based on what your home is worth, but where I need to be taking in to account all my expenses, holding time, and over head. $XXXX is a fine RETAIL price and because that is what I will sell it for, I have to buy BELOW that. This way you're not insulting them or their home. You can paraphrase any way you like I'm just throwing some ideas out there! :D
Be sure to let us know how it goes!
Thank you for the good answers. I need all the help I can get!
Actually making an offer is making me nervous. I've only made one so far and it wasn't so bad.
I think everyone has a different style and way of doing things. I'm more of a people person, just like Lonnie, and go out and take the time to meet with sellers and get to know them. From there, we figure out what the problem is and how I can help them and make it a win/win situation for all. There are some investors who make offers on the phone and refuse to meet with sellers if the asking price is too high. It's all a matter of personality and style. Hope that helps!
p.s. Terry, you're doing great - thanks for keeping us all updated on your progress, keep it up! :D
By the time I go out to the house, I have been watching it for some time, already ran the numbers and knew exactly what I was willing to pay for it.
Many times it's completely trashed and I walk away, sometimes it's minor repairs and adjust my offer according to the amount of rehab, but I never go back out a second time to think about it. It's either buy it now or walk away.
So should I be expecting to make many offers and just a few of them be accepted? Or do you get a lot of acceptances?
Just keep in mind the more money you come out of pocket, the longer it will take to break even and see a profit. It also kills your cash on cash returns! That's why if you want to get the best bang for your buck buy MH's ready to move in for a low price. For a $1000-1500 how wrong can you be??
If it does need some repairs, get it under contract with a 2 or 4 week inspection period (which you should be doing anyways, it gives you 2-4 weeks risk free to sell the home BEFORE you buy it!) Then come back with a handy man and have him do an inspection and give a price on the repairs that need to be done. Take that off the price and go back to the seller with it. You could also have him go with you and do the inspection while your building report with the seller. Make sure he calls your attention and has you look every time he finds something.
Bottom line is if your not going to make a nice profit on it, or it's going to take more then a year to get your money back out of the deal (I like 7-9 months myself) then it's probably not a deal you want anyways. So make offers that work for YOU, and if they don't accept that offer try the next guy. Throw mud on the walls because what sticks will make you smile.
Thanks for the kind words, Rachel :)
yeah, Terry, I agree with Rachel. It's only been a short while ago you were doing your first deal. Now you're practically an expert. It was neat how you were willing to share it all with us. I probably won't tell about my first deal til it's over and sold! I may not tell about it then, might be embarrassing. :D
But seriously, I haven't found anything remotely close to $1000 or $1500. That's looking in all the papers, Craigslist, variouis online sites, and my own ad.
But I'm about to get to work looking in the parks. They're just not very close to me, so I have to drive about 45 minutes to go to them, plus I have my 2 kids with me. But I will muddle through anyway. I sent out 12 letters to parks today. Don't know if letters work or not, but seems like it's worth a try.
I've got pages and pages of more parks to work on. I'm starting with the closest ones.
I have 2 homes to go see in parks tomorrow that were advertised. One is for sale by the park for $3500 and one by individual for $5000.
I got a call today from one of the park owners I sent a letter to yesterday. He asked me if I was trying to do Lonnie Deals and what was my operation like. I was honest with him, but it was embarassing to admit that I'm looking for my first home.
He told me that it was going to be virtually impossible to find something for $2000. And he didn't have anything to sell me.
He did say there was good money in doing Lonnie Deals.
Don't listen to him! I know for a fact that you can get homes for FREE if you want them. Usually if you're going against the average Joe, then you're doing something right!
If you're looking at a 'make me move' kind of seller, forget it. He's right they won't get near 2k. You want motivated sellers! They will sell because they HAVE to. Sellers that have their bags packed already or homes that have been vacant.
I will tell you about a home I looked at today. (He and his wife are moving to NC at the end of April). On the phone told me that he wants 1k for his home but there are holes in the floor that need repaired. I went to take a look. First we BS'ed for about 15minutes building report and getting to know him/his situation. Then as we were talking I walked around checking the walls. When I found a problem I didn't even have to say anything because he was right there (softening up on his asking price in his mind whether he knew it or not)
After we were all done I explained what concerned me and why. I didn't even make an offer and HE asked me if I would buy it for $400 if he paid lot rent through May! They're out there, you just have to find 'em!
Wanna find some sellers? Put an ad in the paper that says "I buy mobile homes!". Those leads are already more motivated than the other seller sitting around in his house not doing anything! Not only that you can cherry pick the deal you want to do. Also any time you talk to a seller over the phone, ask them what park they're in, what do they or don't like about it? It's a great way to get them talking, build report, and most importantly gives you another park to drive around and look for deals!
You DID buy the one for $400, didn't you? That's amazing. I haven't found any like that yet, but I am not going to get discouraged. How did you find this seller?
I will keep placing ads. I like how it makes you feel like you're in the driver's seat when they call YOU.
Negotiating is hard for me. I'm kind of shy, but I think I'll get better if I keep trying.
By the way, what was the $400 home like? What number are you on now? Is it 4? Have you found that you're getting better and better at negotiating and more confident in general as you do more deals? Or maybe you started out confident?
Marilyn,
A couple of suggestions. First full disclosure: I don’t and have not ever bought a mobile home but to me RE is RE. I always make an offer on every property I look at or talk to on the phone. They may not like the offer but I always make them. Remember, your job is not to judge or decide what they are willing to take. You job is to find the facts of the deal and make an offer that makes sense to you as an investor and meets their needs. Give them options. Find out what they NEED not what they WANT. You don’t buy if you can’t find a way to make money. Period. You can’t and won’t make their problem your problem. Be honest and fair and you will have little problem. The most important criteria is their motivation level. If they are not motivated, you are 99.9% wasting your time. Why? If they are not motivated for some reason, then why would they sell it for less than it is worth or on good terms or both? Answer: They won’t. Remember that.
Don’t make it more complicated than it is. After motivation, all you need to find out is what they owe, what it is worth, the repairs and what they will take. That is it. Your fear of making offers will go away as you make more of them so don’t worry about it. If they are motivated, they will be looking for reasons to do a deal and not the other way around. It seems counterintuitive but you will see this in time. Negotiating is the best part because you never know what will happen or what they may take. If it looks like a deal, put it under contract because I guarantee that if I find a deal, I will immediately so if you wait you could lose a good one. A simple one-page contract that allows you to gracefully bow out if it doesn’t meet your needs is all you need. After it is under contract, verify all the facts of the deal. This should take no more than a day or two. DO NOT put it under contract and sit on it for weeks. If it takes you more than a few days to week at most to do your due diligence, you shouldn’t be buying anything yet. As you gain experience you will rarely not take a deal because of your mistake. It will more than likely be due to something they did: i.e. additional liens, value not there (again I know squat about mobile homes), too many repairs, or other things they didn’t tell you like not owning it, etc. As long as your contract has an inspection clause or approval of a partner you can get out of any mistakes you made in your initial assumptions if the deal doesn’t make sense for some reason. Learn from it and move on.
When asked about your experience, you have two choices. Option one; say you belong to a real estate investment group that buys up to a home a week (true if you belong to the local real estate association). Option two is come clean and admit that you are just getting started and have just finished some rather intensive training from a mentor or whatever. Which is better depends on the person. Some would rather be dealing with someone with more experience and some like a newbie because they feel they are less likely to get ripped off. Truthfully, it doesn’t matter. If they are motivated, they won’t care if you don’t get every detail correct.
Don’t let the fear of the unknown stop you. Make offers and it gets easier. Find a local mentor if you can to bounce ideas off of or review your paperwork (along with your attorney). I also recommend writing a script for you to follow in the beginning, even if in outline form. You will develop your own style as you gain experience but if you have something to follow you won’t forget something you need and you will be less nervous. If you ever get flustered because you can’t answer a question, put them on hold after saying you have another call and think about it. If you don’t know the answer tell hem you don’t know but will find out. If you totally panic and freeze, just tell them you will find out the answers to their questions, run the deal by your “partners†and call them back. No big deal.
You can also make what if offers as well. Like instead of saying I will give you X for the home you say something like "What if my partners and I were able to offer this amount and these terms, is that something you would consider or not?" Keep probing and soon they will tell you exactly what they need to make the deal. You are not making "real firm offers" just asking what if type probing questions. It may make you more comfortable in the beginning.
Best of luck to you. Make offers and you will be ok. Sooner or later someone will say yes.
Mike C
No.. I told him that I wanted to put some numbers together for labor and material before I made any offers on it. Honestly, it doesn't look like something I want to mess with right now. (needs a lot of floor work, re-carpet half of teh home, then kitchen need re-vinyled after we patch those holes, and we have to frame out a wall because he turned his 2/1 in to a 1/1!). Although if it was a 3 bedroom I would have bought it in a heart beat! I am looking for homes that need little to no work to sell.
I did tell him that even if I don't buy it, I had another idea how to get rid of it for him. Since he's moving at the end of April and it will be vacant anyways, I told him I could put a lock box on the door if he put it under contract with me and I would market the property/show it to buyers. This way he can move and not worry about it Once sold I would send him his $400 and we would sign the title over. He seemed to really like that idea so that's what I'm going to push for.
I've never been a shy person but first time I was a little nervous on the inside. After you do your first deal you will know where your numbers need to be, then the nervousness is gone because you know your max offer.
I'm assuming you've read Lonnie's books?
Very well said, Mike.
Mike C,
Thank your for the long and thoughtful post. I'm going to print out the whole thread and read it over several times. I really appreciate the help!! Yes, a motivated seller is what I need. I saw three MHs today, but I think only one was motivated. And I don't want to buy that one because it has been gutted and it has to be moved, so that would be too much investment and labor in that one.
One I saw was a 3/2 already in a park and the outside was lovely, but the inside was frightening. It was very clean, but needed lots of floor work, everything was dingy, the ceiling had hideous water stains. Plus it was $5000. I'm not sure how motivated that seller is. He wasn't there, I only talked to him on the phone before I went. I may call him up next week and see if he's getting more motivated.
Then I saw one for sale by a MH park for $2900. I'm having a hard time getting the appalling stench out of my mind. It was a filthy pit. It was only a 2 bedroom and needed lots of work, too.
I would like to find something that isn't SOOOO horrible.
Terry,
I see what you're saying about the $400 home. I saw one today that I wouldn't pay $400 for. It had been gutted and all the electrical and plumbing removed. Your idea of selling it for the guy sounded good, though.
I have read Deals on Wheels, but not Lonnie's other ones. I'm reading it again now. What did you think of the Making Money With Mobile Homes book? I may order that if you think it would be helpful.
Glad you found some things helpful and thank you Terry. We have all been at the beginning so we know what you feel like. Remember this is a contact sport. The more sellers you talk to, the more deals you will do. Never get personally involved. No deal is better than a bad deal. You will hear some very bad circumstances and you will feel bad inside. But don’t let that cloud your judgment. Be empathetic but remember you are there to do a job.
Regarding motivation, the first question I always ask is why are you selling? What they tell you gives you many clues to what their motivation level is. It might be “Well, we are just starting to see what we can do and what we can get.†That is bad. What I want to hear is “I was transferred out of state and I have to move in 3 weeks and I cannot afford two house or trailer payments.†Now they may be motivated (or dreamers thinking something will drop a bag of cash on the doorstep which is surprisingly common) or not. When in doubt about anything, ask. They may or may not spill the real motivations. You may need to probe a bit more. But you need to find out what the motivating factor is because it is important in your structuring the deal. The next question is “when do you need this property taken care of?†You want to find out the time line they are operating on just like the previous question helps you fill in the details. After these two, we go into the stuff I mentioned above.
Sooner or later they are also going to ask why you are asking this (and other things like what they owe) and that it is not any of your business. When this comes up tell them something like this, “I am a real estate investor and I buy properties in many different ways. I can’t make an intelligent offer unless I know all the facts. I am probably the most serious buyer you have talked to so far. But if you don’t want to give me the information I need to make an intelligent offer, then I can’t help you.†So again why are you selling (or whatever you asked)? If they still won’t answer, wish them the best of luck and move on as they aren’t motivated. Maybe follow up in a month or so. The reason what they owe is so important is that is usually the least they can take for the property, with rare exception.
Regarding following up, any potential deal I come across where it looks like I have some potential but they just are not motivated yet or are not sure, I place in a file to be followed up with in 30 days. I call them every 30 days until they sell to me or they die or tell me to piss off. Most investors won’t call them back. But planting a seed, even with just a message every 30 days will get you some of those deals eventually. If they don’t sell in 30 days, put in a folder for follow up in 30 days. A minute phone call is worth my time. There circumstances will change as time passes and the first person they talk to after they decide to really sell will get the deal. Make sure it is you.
As I said I don’t know much about mobiles but my guess is if they are really cheap, there is a reason. They need tons of work or are gutted or are filthy or all of the above. Remember, price is only part of the picture. Terms are also very important and can make or break a deal that at first glance might be worthwhile in spite of a somewhat high price.
The phone is your friend. You can screen a lot of potential sellers and save a trip if they don’t appear motivated. One last thing. Every time you get a question you are stumped with and don’t have a good answer for, write it down and think about it later (or ask here at BP) so you will be prepared for it the next time it inevitable comes up. 80% of the time you get the same basic questions and over time will have a good answer for all them. I have a standard answer for most any question they will conceivably ask me. You will have the same after a few months if you keep track of these questions and formulate an answer.
Regarding terrible smells, the worse something smells the better you should like it. Why? It drives most people away but is usually just cosmetic that can be fixed with less cash than you would imagine with some cleanup and OdorX or something similar. Remember, the worse it smells the better the deal. If you open the door and are knocked back when the smell hits you, you should be excited on the inside. Also gives you some strong negotiating leverage. Remember; don’t look at how things are. Look at how they will be when you do what is necessary to maximize your return.
Remember, every person you talk to who says no is one closer to someone saying yes. In the beginning it may take talking to 20 or 30 or 50 sellers to get the first deal. Even if it takes 100, that is ok (and shouldn’t be more than 4-8 weeks). The first is the hardest and they get easier every one you do.
Again, Best of luck.
Mike C
I think you're doing great, Marilyn. Just by going out there, checking out the parks and talking to people, will teach you a lot. And, yes you'll stumble (I did) but after awhile you'll pick up the lingo and get to know the parks and the market. It's just a matter of persistence, never giving up! :D
p.s. Sounds like things are going great Terry, thanks for your input and for sharing your experiences with the group! :D
It does sound like you are on the right track Marilyn. People are offering some excellent advice. I haven't purchased any mobile homes yet, but have several single family properties that I have purchased over the years.
Besides looking for motivated sellers, I usually only look at the list price or asking price as a starting point. Motivated sellers may be have many reasons for getting out and may be happy to take whatever they can get.
It can be difficult or nearly impossible to find financing for some mobile homes which helps decrease the number of potential buyers.
Happy hunting. I'm sure that you will get a deal under your belt soon. Keep in mind how long it might take to recoup your initial investment and having a prequalified buyer pool.
Thank you all for the help and advice. I do appreciate it.
I am still working hard to buy my 1st. But it seems a lot more are being advertised for sale the past couple of weeks, so that's good.
I've actually seen several ads for free homes and looked at some yesterday. Problem is, they have to be moved. So, I decided not to get one of those, since the cost will be comparable after moving and set up to one already set up.
Have had 2 sellers contact me back. One lowered his price a bunch (but it's still too much for me). I had made an offer with terms, but he wasn't interested. However, he is motivated, and he may still change his mind.
Then had another seller contact me (after 3 weeks) wanting to accept my offer with terms. Now I have to decide if I want it after all.
My plan is to buy SOMETHING this week.
The important thing is your out there making offers and talking to the sellers! Now you see that many of these sellers are more motivated then you think and just because they don't accept your offer at the time, you could very well end up with it later. That's why your offers need to be what work for YOU and not the seller.
I like your attitude about going out there and buying something this week but be careful about buying a bad deal because you bought it in haste. Your first deal won't be your best but you don't want a bad deal/experience to scare you away from this business!
Thank you, Terry. I will be careful.
I'm afraid that if I don't take action soon, I will never do it.
Make an Offer and Make a Friend! I do not go out to see a mobile home unless I know I actually want it before I leave. There are so many homes available that I just do not have the time. Also, if you don't lock the home up, it can be sold from underneath you. I make an offer on the spot for at least 90% of the homes I look at because you can't buy homes unless you make offers!!! I love to make offers to folks over the phone or by e-mail that I have never met. They can get in line or remain on the list of folks I call the following month to see if they have actually been able to sell yet........ This is a true buyers market no matter what area you are in! Don't believe me? Have me over for a week!!!!!!!!