Sometimes the Irish and Italian temper in me clouds my judgment, so I'm throwing this out to the smart, reasonable people on BP...
During an inquiry into one of the properties we are wholesaling, a rehabber included this sentence in his email pitch to me: "According to public records on June 20, 2014 you purchased this property for (purchase price) and now are wholesaling it to make a (his math) profit."
He then went on to describe a fairly detailed and somewhat creative way to purchase the property, but I had trouble reading it through my ticked-off eyes.
My question is: when I reply to this guy, do I address that statement at all? He is suggesting that we're making a rather huge profit, which we are not - and he should understand this sort of thing if he's a real rehabber. I'm annoyed, but in all honesty, I don't know his intent with that comment - whether it was a jab, a way to slide in to the conversation that he knows (or thinks he knows) what we're into the property for ... or maybe he intended nothing at all other than to set up his pitch, in which he claims we'll make more profit by going along with his proposal. (btw, we can't go with his proposal, which entails us holding most of the note, b/c we need to free up funds for 2 other rehabs. So maybe that's all I respond with.)
Your thoughts? How do you handle it when someone makes an erroneous assumption regarding your profit?
"What I paid is irrelevant. If I had paid $30k more than what you want to buy it for, would you add $30k to your offer?" Yes, this comes up. That's why now, if I simply flip without any/much improvement....let's just say that the price recorded in the Clerk's office is $10-$15k more than I actually paid for it(and yes this costs a whopping $7 per $1,000 in increased transfer tax), for this very reason. "Yeh, you beat up good on that one, I only made $5-10k". :)
I'd bet he's not trying to wind you up, he just wants to get you to consider his offer - and he thinks that proving his "knowledge" will make you see him as thorough and professional, so you'll be more amenable to it. But since the offer doesn't work for you for the reasons you stated, I'd just respond with that.
But what @Wayne Brooks suggested saying is a pretty perfect response if you do want to address that part of it.
Also interesting, from an armchair psychologist point of view... why does this make you angry? I mean, I honestly think that would be my reaction too (!), but I'm really not exactly sure why...
Lol, I am both Irish and Italian but blame my hotheadedness on the Italian side. I had something similar happen on a property I was offering a lease option on for 150k. They obviously saw we bought it for 85 in Zillow and were like "You only paid 85 so 105 is the lease option price." It was an REO that I had to dump 20k and my time into. I didn't feel offended, but I explained that the rehab work done was worth at least 30k...we never got anywhere with them. I think it's just a negotiation tactic, they think if you know that they know what you paid that you'll give in more.
Its all business. I think he wants to make his offer more appealing and showing you will still profit. I would ignore it personally.
It's hard to say what his intention was with that sentence without seeing the whole email for context. I've worked in the IT field for 15 years and I've learned not to read into emails because they rarely mean what you think. And then again, some people are jerks and can't help themselves when behind a keyboard.
I think he was just setting up his pitch for his creative financing. Since his proposal doesn't work for you, i would just respond with that and not address his sentence about your profit.
However, If he had already said he wanted it and I thought he was my buyer I would reply with something like:
"So I'm a bit confused, I thought you wanted the house, are you saying you don't want it for $50k? because i already told a few other interested investors that it was already taken so I'll want to contact them ASAP if you aren't buying it.."
It's either a deal for the rehabber or it's not, but your profit doesn't factor into it in my opinion.
I would not address it and it wouldn't make me mad.
I agree with other posters that I wouldn't even acknowledge his comment about your profit. I would thankfully decline his offer due to that fact that you are a wholesaler not a buy and hold investor nor a lender. Keep professional you never know one day he may very well be a cash buyer.
Thanks, all! In fairness, he didn't make a big deal of it, so I do think it was just part of his overall pitch to try to demonstrate that we could make even more by going for his proposal. I guess it rubbed me the wrong way at first b/c I assumed the conversation was going to head in another direction (it did not). And @Michael Olesky you are SO right about not reading too much into emails, as tone gets lost or distorted way too often.
@Jean Bolger that's a very good question - why did that comment get to me, even briefly - and one I'll have to think on some more. We did have a bit of a run-in a couple of months ago with a completely clueless person who threw around the word "greedy" and commented about the money that could be made "for just pushing paper around." Long story. But this guy isn't that guy.
Thanks again for the input!
If I knew he wasn't getting the house, I'd say something like "I normally have a required profit margin of 20k, but because I thought we would work long term, I was going to make just 10k on this one"
I think he was just using this to bring the price down.
Personally as a flipper I know when deal makes sense and when it doesn't make sense. I would never care if you made $100K just passing the deal to me as long as I got it for the right price for my flip.
Another answer you can give is "we should only discuss the number that makes sense to you and not my profit. What if I got the house for free? would you still want me to sell to you for $10K? either way I have number of buyers that want it for $X so I need to know if you are still moving forward or not"
I would not take it personally. Your post was kinda vague about the details but i'm gathering what he was attempting to do was convince you that an owner financed deal would be better for you.
if you sell it to him cash you make X profit. If you sell it to him on owner finance you make Z profit.
I assume that Z profit was higher?
It wouldn't bother me, sounds like he was using it to pitch his "better deal" for you.
And I'm definitely over it. This one was just a pitch that attempted to demonstrate a better deal. I do appreciate the insight and comments into the overall question, however, as the matter of a wholesale profit is something I've run across from time to time and haven't been sure how, or whether, to address.
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