I'm just starting out as a wholesaler and have made just one offer to a couple different sellers. None have panned out. The sellers would just say they would think about it and never get back to me.
I have read that giving people options (making more than one offer) is the best way to make them agree to a decision and close on a deal. HOW do i do that as a wholesaler? For example.... a couple days ago i was talking to a seller in front of his property after inspecting it, i made my offer
ARV: $115-120k (he wanted $75k)
Repair cost: $15-20k
Nothing was owned on property other than $17k HELOC
My initial offer was $55k, he said $65, i countered with $58. Then we agreed on $61k, but he need to talk to his brother, cause they were both on title. He never called back.
Maybe if i made more than just one offer, gave him an option. He would have been more inclined to make a more confident decision and close. This type of thing has happened with my last two seller's i've talk to.
What am i doing wrong? How can i fix this?
The short answer is that maybe the owners are not motivated.
Long answer. Normally I don't make offer right after inspecting the property, I told them that I would do some research, run the numbers and then call them back. IMO, you want to build their anticipation by not giving them the number right then and there because their number might not be align with what you are willing to pay. It is better to have some sort of break down of the cost ( on paper) to try and persuade the owner to work in your favor and agreeing with your price. Normally, owners have significant others that they have to explain why a low price. If you have it on paper, it's easy for them to sell your numbers when you're not there to defend your case. Also, offer multiple options if it works for you, but be firm with your numbers. If you keep changing your numbers, owner will think that you lowballing them and take them for a sucker. If you constantly allowing your offer to be counter, the owner will take you for someone who doesn't do their due diligent and you're not serious. Be honest, explain to them how the process work and how you can be a solution for them. As a wholesaler, you don't want to be greedy, leave enough meat on the bone for your investor so he can pay you your fees and move on. Homeowners nowadays are very informed, they are not stupid to sell you 100k house for 20k unless it needs tons of work or is justified in another way. This is where you'll make a break a sale. Listen, learn, and practice by doing. Good luck.
Don't ever wait for them to call back. If necessary I would have pinpointed a call-back date on the first contact. Something along the lines of "How about I call you back Tuesday at 9?". Or better yet "Could we maybe conference your brother in now?" Once you let them get out of that discussion without a solid commitment to your offer your chances of closing the deal drop like a rock. Another thing you'll want to consider going forward is to clarify during your pre-screening whether the person you're talking to is the sole decision-maker. "Will there be anyone else involved in the decision to sell this property?" and if so "Can we get a time for us all to meet together or can we get the other/s on the phone while we discuss this?"
Hope that helps.
I do my multiple option offer strategy in the form of a letter of intent. Just states I am seriously interested in purchasing their property under one of the following 3 scenarios. Like @Kevin Tran says, don't make it right after inspecting the property (unless they are extremely motivated and facing deadlines where speed is necessary). Might make you appear anxious. Maybe ask them for something that requires them to do a little homework. You are the expert helping them. Remind them of how painful a normal sale is and 'reluctantly' submit that LOI.
@Steve Vaughan you are the man. great idea. i'm going to try that.
@Steve Vaughan could you give me an example of what your LOI looks like? i'm not exactly sure how one would look in regards to purchasing a property. thanks
@Kevin Tran @Jim Viens @Steve Vaughan lets say, after i have inspected the property. i have an idea of what i want to offer. i tell the seller i'll get back to them in X amount of time. Should i be meeting up with the seller face to face or calling to make the offer?
If they're local I'd meet face-to-face. That way you can show them the numbers...or better yet have a page you can have them calculate the numbers on. But, again...make sure ALL stakeholders are present.
Nobody like to speak on the phone unless they have something to hide. Always face to face because you can read their body language. Are they agititated, are they impatient and want to see the numbers right away, are they motivated, are they lost and looking for an answer? These are some of the things that as a wholesaler you need to be able to pick up on. Also, meeting you face to face will show them that you are serious, the tone of your voice will determine if the sale going to take place or not. Do you come across as someone they want to work with or are you just a vampire out to suck them dry? Here is my advice to you @Mario T.
Face-to-face in a neutral location like a coffee shop is best. Takes the seller out of the emotional attachment to the property a bit. @Mario T. , I wish I knew hot to import one of my letters of intent. This is one I use for multiple exit strategies, not just wholesaling. I always have multiple exit strategies, then fit one to the deal. My LOI has the goal of least amount of cash out of my pocket. Because I don't use partners or lenders, mine is geared differently than yours may be. The LOI essentially states "This letter is being written to convey my (or my wife and I's) sincere interest in purchasing your home/property. We find the location and amenities most satisfactory (or some compliment).
We would be willing to purchase your property under one of the following 3 scenarios:
1) All cash - ($lowest price) with no financing contingencies, but the right to inspect the property and subject to partners approval, closing by (date).
2) 10%or whatever down- with no contingencies, the balance carried with a note from you payable monthly at ($whatever) electronically every month. Closing by (sooner).
3) 39-month lease with option to buy. No contingencies. We pay you ($ ) electronically every month and cover the first $150 of any repair. Purchase price of (higher still).
If any of these terms are acceptable to you, please note with your signature below. As I am looking at other property at this time, this offer will expire on (date/time).
The details of the financing and option fee can be worked out later. I am just providing broad stroke ideas to get their creative juices flowing. Most sellers will pick an option rater than say no. Good luck!
thank you fellas for all the support. you guys are awesome.