I have my first meeting with a seller this Saturday to get my first property under contract. I have no idea on what to expect or what he expects from me. Is there anything special i should do or say. I don't want my age to scare them off. So any pointers would be much appreciated...
Great on taking action. Without knowing the details of the property and how you are purchasing it it is hard to give sound advice, but here goes.
Before you leave your house you need to know the following about the opportunity:
- what is the value of the house your are buying?
- What does the sellers owe on the house, will he/she take what is owed?
- Are there any repairs needed to house and cost of those repairs
- What is the ARV (after repaired value) of home, if repairs.
- How are you buying the property - land contract (seller financing), subject to, new loan etc.
- And finally what is your exit strategy - long-term rental, flip, wholesale, or fix and sell, or live in.
With these items above the offer writes itself, or at least one comes out front.
Hope that helps, need more help just let me know.
P.S. They are just as scared/nervous as you are!
Thank you so much for your reply, i really appreciate it...
Not to sure of value but house sold for $57,000 back in 2013
Seller owes nothing on house, all taxes are up to date
No repairs needed on the inside but outside needs a couple vinyl siding panels put back up
Zestimate is $81,783
Purchase and Sell Agreement - $0 Earnest Money - 10 days due diligence - 30 days to close
Exit Strategy - I plan on wholesaling/Flipping
Nice house. It looks like it has already been wholesaled to your seller. I mean there is no value add to the house. No repairs that can be used to reduce the price.
To wholesale a opportunity the loan to value (LTV) needs to be below 50%. Right now, with the figures you gave me this house is a 73% LTV. How I got that is take the value of the house ($60K) divided by what it is worth ($81, 783). There is no meat on the bone for a wholesale deal.
Find out why the seller is selling, financial trouble, can't afford etc. I can bet you he/she in another investor just like you and never lived in the home.
When you are looking for opportunities look for the worst one on the block, not the shinny penny, which this one is.
Congrats! Ok, one thing you have to do is reward yourself because you did something right to get them to agree to meet with you! Now getting them under contract with you is the next step and I agree with Pat Gage that the owners are just as "Scared/ Nervous as you are", and I also agree with Pat Gage that you need to have all the details outlined for your eyes only and ready to explain when you meet with them (TELL THEM, LEAD THEM).
You have to let them know that you are well versed in what you are talking about and Jamael you have to be Jamael, fake it until you make it and soon you'll see it's like speaking to any stranger in the grocery store. Remember this, break the ice, don't go in with "I want to put your house under contract" go in with everyday talk, i.e "Thanks for meeting with me today and how's your day going?" and PLEASE, any negative talk that pops in your mind while driving to meet your homeowner, SQUASH it quick and keep it positive.
Another way to relax your mind is to role play with a family member, it's not exactly the same but you want to keep your composure in tack throughout your presentation. Imagine you were speaking to a crowd of Kindergarten Children, You have to keep them engaged, right? So, the same applies here, act as if you've known them forever and let your TRUE SELF close this deal and do it all over again everyday and you'll be just fine.
I would love to hear how it went, so do share with us and I look forward to speaking with you. Feel free to contact me anytime. Keep reviewing the info on BP as I do and you'll find success soon! Have a successful APRIL!
Wow, thanks for the information.
Well the seller said he had the house rented out bu the tenant got fired from job and couldn't afford house so he had to move. Seller stated that he is selling the house because he has no time for it.
He originally wanted $55,000 for the home but i talked him down to $40,000, my original offer was $30,000.
So, if there is no room for a wholesale here, is there any other way i can profit from this or should i walk away from this one... ?/
@Margeret thank you so much for those motivational words. I will be sure to keep in mind everything you said. I am highly motivated on being successful in this business and I am doing my best to get started..
Also i will keep you guys updated on it goes from here on...
Looking at the way Pat was saying he ran the numbers, if I'm following correctly then if you're getting the house at 40,000 and you divide that by the 81,783 then you would be under 50% so it would seem that would be a good wholesale deal. I've never done a deal, just my thoughts after reading what he said and the numbers you then provided :) good luck!!!
Thanks so much for your input, I am still learning allot as i go. I didn't want to get stuck in the analyzing zone to long so i decided to go out in the field. I really do hope this one goes through ok, but if the numbers aren't right then ill walk away happy with the experience.
Best of luck on your journey,
You are correct for a wholesale deal. See the wholesaler will sell typically to 2 end user - a homeowner, somebody that is going to live in the home and fix it up (sweat equity) or to a Flipper, somebody who takes a dirty penny and shines it up and sells it retail (homeowner).
Thanks for posting.
Congrats on taking action and it IS nerve-wracking doing so I applaud you for taking the first steps. I would caution you on using a Zestimate to determine ARV... I'm hoping you have other sources that can help you verify the ARV as this is a paramount part of evaluating a wholesale deal. Are you working with a realtor who can provide sold comps? Even using sites like redfin, trulia, etc -- look at the SOLDS and keep them as close geographically, as close in type of house, and within the tightest date range to see what ARVs are. ARV is after seller subsidies or concessions. If a house sold for 180K but there were 10K closing concessions, the ARV of that house is $170k. There are all the little details you need to be sure of before you make an offer. Good luck!!
Thanks allot for your post. An Agent contacted me and brought to my attention the tax assessors office. So we used that and found that the real value of the property is only $36k..
With that being said, i will have to renegotiate price.. Which I'm sure the seller won't agree with me..
Any advice on what i should say to get seller to understand why i want to renegotiate..?
I offered him $30k for the property on my first offer, i should have stuck with it instead of going up to $40k..
Around my area in MD the tax assessment could mean absolutely nothing in relation to what a seller is willing to pay on the open market. For example by current rehab is assessed around 20K but I only paid 10k... it could be in reverse as well. So just wanted to bring that up as something to consider.
You can only pay what you can afford to pay to do the deal. I can't stand the "money question" because I feel like I'm insulting people but it is a necessary part of wholesaling. We don't pay retail. I will tell you that you will get a HUGE confidence boost when your first deal is done. To get to that, you will hear a lot of nos but you will get there to the yes eventually. So even if you offered more, you let the seller know what you can pay. And you need to go lower than what you can pay because the back and forth on the price.
You can do this, good luck!
Thank you for those kind words before i go into this meeting today. I am very happy but nervous at the same time. Will he have contract or do we use my contract? I have one available, just need to know..
I know this is old. I'll respond anyway to see how this worked out for you, and what have you done since? This information might also help someone else who is facing the same situation.
Hi @Jamael Reed Congrats on getting your feet wet and coming back to BP with questions and guidance. Now you know to do that before you make the offer. Just make sure you have most of the important details to get the best advice.
From $60,000, your offer of $40,000 leaves you at 66% ARV. Still enough to take it to 70% and flip it to a buy and hold investor. Research what rents are (Ask the seller what he was renting it for).
Ask the seller if he is interested in a lease option for a 1 year term. If he agrees in writing, turn around and advertise to those who want LTO. Ask them for money down and leave some equity room to entice your buyers. If he asks for a down payment, ask if he can defer for 2 months and agree on price. Of course, there is risk involved as you have to get that buyer in the house and paying you the down payment. If you have to make a down payment, make sure your buyer's down payment is a little more, to give you some breathing room in case they default or late with monthly payment.
Once you are legally as on the lease, talk to lenders (not banks) to see if you can borrow the money to get the owner out of the situation.
I hope this helps.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.