Approaching a Distressed home owner

13 Replies

In my area there is a home where the lawn is completely dead and bare. Gutters are falling off. Driveway is cracked. Blinds are damaged or not on in places. Mailbox is fallen over. Car is late 90’s or early 2000s and looks worse for wear. The property looks distressed. I’ve never seen anyone come or go from it. Upon a spear of the tax parcel assessor site the home values are between 200-250k. Owner is a single male in his 60s. I do not think that this has actually caught up to market prices even though it is from ‘19. Homes updated and similar are selling for 315-320. Listing at 350k they’re sold within 30 days so it’s a sellers market. 

In a situation such as this how would you approach someone who I’d like to offer buying the house in distressed condition (subject to major huge things such as foundation issues.) 

is this person a likely candidate for selling? Or aM I way off base? 

How much of a discount on this would you aim for? Go off of tax assessor or neighbor selling prices? 

25-35% off? Or?

How do I find out when this property last sold?

Contact owner non aggressively saying you want to buy. Keep on them, keep on them keep on them. Listen to episode 335 w/ Ryan Dossey-it’s solid advice and approach. Has helped me get some very legitimate leads in my market. If you get an “in” and they open up to discuss their situation you may even get a better discount. Guy may just want out. 

yes I've listened to it. Very valuable info. I'm looking for input on how much people would seek to offer or what number they would have in their head. I understand every one has a different view. I'm looking to hear them :) 

in all the direct marketing approaches no one seems to be laying out how much it is they are offering or their "magic numbers or formulas."

again, I understand there is no one size fits all

@Madison Holbrook the initial stage to approach this homeowner would be to send a postcard every two weeks for 2 months. If you don't hear from him, then the next step would be to skiptrace his contact number and make a call. You need to try these steps before door knocking. 

Thank you. I'm asking when the contact happens how are people approaching the NUMBERS and the offer/deal, what they like to see or how they come to their number. I know my market, I know comps, and I know costs of most repairs/finishing. Obviously these are also factored into this.

Hi Madison,

I’m learning how to come up with these numbers also, and some tips I hear repeatedly are:

1) rather than having a number in mind to approach the owner with right off the bat, it’s often better to talk with them until you get to a point where they’ll give you an idea of what they are willing to let it go for. They might simply want help getting out of the property and the actual number could be quite a bit less than one you might come up with.

2) for flippers especially, a common formula is 75% of ARV, minus cost of repairs. they can usually make a profit if they get it at that discount. Sounds look you might have a good idea of those numbers already, which is a great start. You could probably pay more for a buy and hold rental depending on your cash flow & cash on cash return goals. The bigger pockets BRRR calculator for example would be great for plugging in a variety of numbers that you think might work and seeing what kind of returns you would get.

Good luck!

I agree with @Annchen Knodt . I never tell them my price first. Talk to them about if they are interested in selling, how long they have been thinking of selling, where they plan to go, and get details about the property condition. As you go through this process, ask open ended questions. The more people talk to you, the more comfortable they will be. Then toward the end of the call/meeting, ask "So what are you hoping to get for the property?" and stop talking. Then ask, "Are you flexible on that price?" and again stop talking. Once you get the number, you will be able to figure out if they are motivated and if their price is reasonable.

I hope that helps.

Originally posted by @Ehsan Rishat :

@Madison Holbrook the initial stage to approach this homeowner would be to send a postcard every two weeks for 2 months. If you don't hear from him, then the next step would be to skiptrace his contact number and make a call. You need to try these steps before door knocking. 

I disagree if its just one house your honing in on .. why someone is writing letters  someone else is door knocking and taking your deal.

Go door knock no reason to send letters to just one person that your fixated on..  letter campaign is a shot gun approach not a laser focus.

 

@Madison Holbrook

You should stop right now. You need to research and learn how to use the BP Calculator. Take the time to use the tools of the trade, even a downloadable spreadsheet will help you calculate where your numbers should be. 

Also keep in mind that if the owner is elderly , he may not be in a state cognitively  to make the best decision for himself. If he is impaired in any way I would stop or at least contact a relative.

Originally posted by @Brian Van Pelt :

@Madison Holbrook

You should stop right now. You need to research and learn how to use the BP Calculator. Take the time to use the tools of the trade, even a downloadable spreadsheet will help you calculate where your numbers should be. 

Also keep in mind that if the owner is elderly , he may not be in a state cognitively  to make the best decision for himself. If he is impaired in any way I would stop or at least contact a relative.

when we deal with someone we feel may need assistance we have them retain their own council.. and or at the least they must come to the title company for the closing and the escrow officer has to sign off that they think they know what they are doing..   keep in mind some people are hoarders and will live their lifes like this and they see nothing wrong.. I buy hoarder houses all the time..  well 6 in the last year that I had to demo I really just wanted the dirt..  But it can be amazing the conditions people will live in.. 

 

@Jay Hinrichs We are saying the same thing, you just said it better.

My concern when approaching any potential Seller over 55 is that they are often ripe for being taken advantage of when it comes to their home by realtors, mortgage refinance, HELOC's , reverse mortgages , and home repairs to name a few.

The wholesale industry is another can of worms when it comes to people being taken advantage of. I've even walked away from a settlement when it was clear the Seller did not have the cognitive ability to make decisions for themselves.

People need to be ethical, you sleep better.

Originally posted by @Brian Van Pelt :

@Jay Hinrichs We are saying the same thing, you just said it better.

My concern when approaching any potential Seller over 55 is that they are often ripe for being taken advantage of when it comes to their home by realtors, mortgage refinance, HELOC's , reverse mortgages , and home repairs to name a few.

The wholesale industry is another can of worms when it comes to people being taken advantage of. I've even walked away from a settlement when it was clear the Seller did not have the cognitive ability to make decisions for themselves.

People need to be ethical, you sleep better.

Now 55 is the new 35  LOL  so I would not peg people at 55 as old  LOL.. being that i am bout mid 60s and think I still have some marbles.. 

you can tell when folks need help..  And once they get help U don't have to worry about an unconscionable profit claim. And people can raise those  whether your a realtor or a not licensed..  

I am aware of the calculators. Thank you. As I previously mentioned I have the other numbers of things. 

My question, as previously mentioned, is in a situation where it is a sellers market and the state tax parcel assessor is assessing properties such as this one at 200-250k. Sellers are listing at 350k for updated are being sold/purchased within a 30 day period around 315-320. 

What price would you be figuring your calculations by? and what ballpark do you look at to offer around. 80%? 75%? 60%? 

no, I am not looking to take advantage of someone. Nor do i think someone in his early 60s is automatically super old/out of touch/ripe for the picking. It's the average age of retired men in my area. That's it. 

@Jay Hinrichs
You are def still sharp. We are still on the same page. I think people who are in real estate professionally have ethics drilled into them so much that it's rarely an issue. Most new wholesalers basically don't understand what the assignment clause is and how it allows them to legally wholesale a property. Add to it the age of most of their 'clients' and its a wonder there are not more lawsuits.

@Madison Holbrook
State Tax Assessors rates can be way off - due to last time it was assed , if improvements have been made that assessors are not aware of. Your best bet is to have an agent run comps on the property based on what has closed.

Again BP has calculators where you enter the numbers and it helps you arrive at the recommended offer price.

What you are asking for without numbers is a WAG - Wild *** Guess