My First Offer!!!

12 Replies

Hay everybody,

I found a "For Sale by Owner" yesterday, contacted the seller, and walked the property today. Its a 2b2b, 1300sf, asking price $105k as is, FMV is about $111k, (there is another house two doors down for sale by owner asking $130k exact same cookie cutter house)needs about $9k in repairs. Market rent is about $1,040. The house has been vacant for a few months, the seller lives out of state, and she wants to sell rather than rent to another tenant. I just sent my LOI with three options. First option $53,114 cash (I am pre approved for a loan to cover the whole price at 3.75% interest), second option Owner Finance purchase price $79,824 with a down payment of $7,982 with a balloon payment after 15 years, third option Owner Finance purchase price of $102,104 with a down payment of $10,210 over 30 years.

My strategies are to move into the house if the cash offer is accepted (it's a VA loan so it has to be my primary residence. BRRR if the Owner Finance is accepted.

Any and all opinions are welcome!  Please let me know what you think, like I said this is my first offer to submit so I just a little unsure if I'm on the right track or if I need to adjust my thinking a bit more.  Thank, you guys are great!  I'll post with the seller's response.

Sorry, I'm way too big of a noob to offer any advice, but your post caught my eye. I really like how you submit an LOI with three different offers. I remember hearing that in a podcast and the psychology of it is fascinating. I have a few questions for you if you're willing to field them.

How did you come up with those offer numbers?  Since they're not round numbers it looks like you must have done some calculations.

Your cash offer is nearly 50% of asking.  Is the asking price way too high?  Is that an extremely low-ball offer?  Or is it there to make the other options more appealing?

Thanks! I can't wait to hear the response from the seller.  Keep me updated and good luck!

To be honest I don't fully understand all the math yet I used a couple different mortgage calculators and a little guestimation (like repairs and what not).  I also heard somewhere that exact numbers really help to keep emotion out of the deal because you have to only think numbers, number, numbers.  

The cash offer is based on 65% of asking price - estimated repairs - the profit I would like to see from a wholesale or quick flip= the cash offer.  So if the cash offer is accepted then I would be aggressively marketing to other investors in the area.

The owner financed options were done on a mortgage calculator at 6% interest. 

Like I said this is my first time so I hope I'm on the right track and not making the silly mistakes I've been trying to avoid.    

@Joseph Molander

Your have good action.  Hope you get the cash offer accepted.  

I keep my offers rounded to the nearest $2,500.  

Frank

Frank Romine, Real Estate Agent in CA (#01957844)

    Thanks Frank,

    Any reason you're leaning toward the cash offer?  just curious.

    Originally posted by @Ryan Moran :

    Sorry, I'm way too big of a noob to offer any advice, but your post caught my eye. I really like how you submit an LOI with three different offers. I remember hearing that in a podcast and the psychology of it is fascinating. I have a few questions for you if you're willing to field them.

    How did you come up with those offer numbers?  Since they're not round numbers it looks like you must have done some calculations.

    Your cash offer is nearly 50% of asking.  Is the asking price way too high?  Is that an extremely low-ball offer?  Or is it there to make the other options more appealing?

    Thanks! I can't wait to hear the response from the seller.  Keep me updated and good luck!

     Do you remember what podcast you heard this on?  This is the same type of concept i'm looking to use, glad I saw this thread.  Good job to the OP, worst that can happen is they say no!  I made my first offer a couple weeks ago at about 60% as is value.  Seller said no, I didn't die.  I like putting all the options down on paper like this and presenting it and let them pick one.  I'm working on getting my RE license so the last option will be "I'll list it".

    Just got a reply from the seller. "Thanks, but we'll pass!" Better luck next time.

    Just got a reply from the seller. "Thanks, but we'll pass!" Better luck next time.

    I heard the three option idea on Epic REI podcast.

    When they said "no" did you ask them what it would take to say "yes"?

    One step closer to a yes!

    Bob,  No counter.  They sounded motivated on the phone but when I was there in person they said they aren't very motivated to sell. So I guess I need to tune up my "motivated seller radar" while talking on the phone.  

    I like the idea of giving them options on a letter of intent because it puts all possible scenarios on the table.  From that point it's just a numbers game, make enough offers and a percentage of those will be accepted.

    @Joseph Molander where is this epic REI podcast? Thanks.

    Itunes is where I listen to Epic REI podcast. That guy has a lot of interesting ideas. The is another show "The Best Passive Income Model" and tons of others They are all awesome. I just don't have enough time each day to listen to all and do the research to find out if what they talk about actually works. Let me know what you think.

      

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