So many options here-
1. Contract for deed for 12 months while you rehab
2. Contact your local title co. for the contract.
Use this- my bank won’t give me the money unless this property is repaired. I will fix it up, and refinance it in 12 months.
You’re in the right track, you identified your target homes and sent the letter, good work!
As for next steps, you’ve got many options. Direct mail campaigns are how I bought may last 3 houses. I never use a realtor, mainly because the whole idea of a direct campaign is to identify off market opportunities that you can purchase below retail value.
You can ask your title company for a genetic sales agreement. After they sign it and the deal is under contract, you have title pulled and insurance prepared (Roughly $700.00).
Once the clean title is returned (usually 2 weeks), you are ready to close the deal. It’s all handled at the title office and no additional cost to you...
Keep sending those letters, we just closed on a house last month from a letter I sent back in November! Peoples situations change all the time, you never know when they’ll go looking for your letter.
@Steve Dunford I don't know how it works in Oregon, but in Texas any Title Company could guide you in this matter. We even sometimes fill out the contract with the seller at the Title Company to make them feel more "secure" about the transaction. Once filled out and executed, the title company or attorney will get to work to provide clear title. Then you can close. I highly suggest you find out how it can be done in Oregon. I read from your other post that Oregon is very strict and requires a license for flipping a house and for a real estate transaction. Check with someone local that is already doing it.
As for negotiating them down to $150,000, that involves a lot of variables. What is the ARV of the property, what repairs are needed, how quickly they need to sell, how motivated they are (their situation). And last but not least your negotiating skills. You asked "Is it really possible to purchase a home lower than market value?" The answer is absolutely. We buy properties in need of repairs 50, 40 and even 30 cents on the dollar. We even buy properties in excellent condition at a discount. It has to do with the sellers situation and why they need to sell. It has very little to do with the property itself.
Hope this helps.
The answers above are all good places to seek information. Two callbacks out of 11 mailers is an insanely good return rate. I am usually lucky to see a 3-4.5% call back rate, so 30-45 calls out of 1000. There are many strategies and schools of thought so far as how to make an offer, every single one starts with establishing your "max bid" or what you need to make off of the deal. Say you want to make 30k off of homes 150-200k and make 45k off of homes 200-300k. From there you can work backwards.
Whatever you do... ask the homeowner what the lowest they would take for the property is and MAKE THEM GO FIRST. Never know they may tell you half of what you were prepared to offer. It happens. Make sure they understand that you are a cash buyer and can close quickly. As a rough guideline, you can start off (or anchor) with around fifty cents on the dollar of what the home is worth ARV.
Thank you for all the advice. For a first time post, I really have received a lot of info to crunch and process. I think wholesaling is not going to be my direction. I am how ever going to try and set up “porch time” with off market sellers and be honest with them about my intentions and see where it gets me. I will probably rely on a good realtor to help with first deal as well.
I am also wondering if anyone has a good set of questions that they have set aside when some calls back from direct mail letters. I was a little nervous talking with my last responder about there house and wished I had asked more strategic questions.
@Steve Dunford Here are a few questions you could ask a potential seller when speaking with them over the phone. Make it clear to the seller that they will likely get more for the property if listed on the market. You are there to offer time and convience through a quick close and a cash offer. Explain to the seller what homes are selling for all fixed up, then point out what type of repairs you would need to do, to get that ARV.
Why are you selling? Addressing the sellers motivation is key. If they can convince themselfs of why they need to sell, the ball is in your court. Does the property need repairs? If so what? (i.e roof, hvac, plumbing, electrical, and standard updates like kitchens, bathrooms, paint and carpet) # of Bedrooms? # of Bathrooms? Size of the House (SF)? Basement? Occupancy? This can be very important depending on what your plans with the property are after you purchase it. Listed with a realtor? Be careful with properties that are already listed with a realator. Mortgage amount? If we can pay cash and close on any date you want, what would be the least that you would take and still walk away happy?