Off Market Property Found...NOW WHAT?!?!?

Question

I recently got in contact with the owner of a duplex that I've had my eye on for a year or so now.

He's interested in hearing my offer, however, to date the few properties I have acquired have been on MLS with an agent. This approach with an agent won't work, the margins would be too thin. However, I intend to have a professional help me complete the transaction.

Now what?!?!

I understand the best approach is to seek to solve his problem, or problem with the property, but the likely first question will be 'what's your offer?'.

What are the talking points to stick to? I'll need to know current rents and deferred maintenance, but I'm not sure how open he's willing to be.

Open to your thoughts!

Travelle

Travelle Mason · Answer

This was very useful. It'll help me walk through a conversation, with building a rapport in mind. Thanks!

Travelle Mason · Answer

This was very helpful. And you're right, we all know not to put a number first, but in the moment it gets a bit different. Thank you. I need to learn the order of progressing through a conversation and knowing what possible options there are.

Jacob St. Martin · Answer

Hello Travelle, it sounds like you have a potentially good deal on your hands! When it comes to an off market deal the terms are more flexible. These are the terms that I can think of:

- Purchase price

- Closing period

- Contingencies

If it is seller financed you have:

- Interest rate

- Amortization period

- Balloon payment

- Interest only period or some sort of no payment introductory period

- Prepayment penalty

- down payment

There are of course other options like subject-to but these would mostly have the same things listed above. Think of each of these as negotiating points. You can't have all of them but you do get some of them. Figure out what is most important to you and most important to the seller. Try to find a scenario where you get your most important terms and the seller does to. Do they want it gone in 20 days? buy it with cash at a low purchase price and either wholesale, flip, or BRRRR. Do they want the highest price for it? Offer them a higher price with a full seller finance and a low rate to keep the monthly payment lower. Do they want a consistent check for the rest of their life? Offer them a long amortization period with prepayment penalties. These are just examples but just try to ask questions to get to the heart of what they want.

Jaron Walling · Answer

@Travelle Mason As an investor that's purchased off market before the best advice anyone can give is to avoid talking about numbers. Until you build a rapport with the seller you have nothing. I'd assume you have since it's been a year of "talking" with them. If they're unwilling to build rapport it's not a good sign. Without finding motivation to sell investors have nothing.

Real estate agents do this for a living. You have do this yourself. Obviously property condition plays a HUGE part in this (which is leverage on your part), but there's nothing stopping a seller from shopping around. Don't let them shop around but don't waste time. You have multiple strings to pull when making an offer. Inspections, no inspections, quick closing, helping them with moving expenses/ cleaning out the property, so be more flexible than a regular buyer. Everything is negotiable. Maybe they're interest in a sub 2 deal. You don't until you ask the questions.

Negotiation 101 - try to get a number from them first. This is basic knowledge but people slip all the time. The sellers expectations could way higher than yours. Maybe yours is way too low. If you can't roughly estimate a rehab, don't know the ARV for the property, or can't run numbers quickly for cash-flow you better do all that before making an offer. If the seller is playing hard ball. you can't claw back $$$ because you offered to high. That was a rant but negotiating and finding good opportunities is exciting. Finding and solving peoples problems is exciting. I hope you find success with the property!

Michael Dumler · Answer

@Travelle Mason, if you're not aware, some agents will offer their time and state-approved contract forms in exchange for a flat transactional fee or even as low as 1% of the purchase price. The agent's commission is always negotiable. That being said, you get what you pay for. If you can successfully negotiate and work a deal with the seller, I'd be more than happy to help out on the transaction side. You did state you intend to have a professional help complete the transaction. Shoot me a message if you're interested.

Off Market Property Found...NOW WHAT?!?!?

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