Meeting with the potential seller

[Jim Kalish]

Hi friends.  I'm getting ready to start reaching out to owners of distressed homes.  One of the questions in the BP calculator is how much profit I want to make.  Then it dawned on me.  When meeting with a potential seller, and explaining why their home isn't worth the same as their neighbors fully rehabed home is, how would I respond to them asking me how much profit I plan on making.  I know I'd ask that question of someone telling me my home is worth less than my neighbors.  Any advice would be greatly appreciated.

Thanks,

Jim

[Adam Schneider]

@Jim Kalish

Hi Jim. Do you think that the seller is concerned about how much money you are making, or concerned about how much money the seller is getting? I think that the seller is not too concerned about your profitability. If the seller is looking at what the neighbor got, and the seller has no motivation for a discounted sale, that one won't work out. If the seller is motivated, that's what you want to spend time on. Is the seller willing to give up equity in exchange for convenience, or not? Most sellers won't ask how much you are making. If the seller does ask the question, you might want to ask why they are asking the question (in a polite way, not a confrontational way). If you do feel like answering the question in some form, I recommend responding at a higher level, not a detailed level. Essentially, your offer is based on the retail value of the property after renovations, less all of the costs and expenses you think you'll incur.