My first negotiation with a Motivated Seller
Hi My name is William Laurent.
I just got my first meeting in person with a motivated seller after made my first mail campaign, and I would like to share with the BP community, to get some feedback about it, that can help me to understand better the process and improve my techniques:
The subject property ARV is $207.000,00 after analyze some comparable in the MLS.
when I went to the property, meet with the seller (which is motivated to sell) and make my tour for the property, I noticed that it really needs a lot of updating. The property was built on 1950, and is in good conditions but everything is old, and need too much updating and repairs.
The property is Clear Title, and belong to one old men (94 years old) that is living in a nursing home. I meet with his son which is the decision maker, live 40 miles away from this property, the property is vacant, so they really want to sell the property.
My MAO considering 35% Investor discount, $5K assignment fee (for me as a wholesaler), rehab cost $31K (using the rule of thumb of $20/Sq.Ft) and %1.5 closing cost, the offer was $75K. The seller told me that is too low, because we wants at least $165K for that property.
MAO= (ARV*65%)-(Repairs Cost + Assignment fee + Closing cost)
So after more negotiation, and talking he told me that he will be able to accept $150K (as the lowest amount). But this amount is still to high for me as an investor.
What do you think about this deal? I will consider this lead in a follow up process? i should have to find another investors who are willing to accept less than 35% discount? In my opinion this property is a very good deal for any investor who wants to fix and flip or fix and hold, the area is a mid income location, here in Miami, Florida and with a good rehab work, the property can be amazing.
I would like to hear your opinions, critics, suggestion, from your own experience, so I can get some guidance with this case. I don't want to lose any opportunity to convert this lead into a deal.
Thanks so much for all your comments, support and suggestion I really appreciate it.
Have a great day.
Regards.
Most Popular Reply
You don't have to offer all cash. Ask the son what are they going to do with the cash. If they say they are going to invest it, ask them where and what kind of return are they going to get. Is this is their response, then ask them would like to get a better return with a very safe and stable investment. If they say yes then offer them the $150,000 with say 4% interest, no payments until the rehab is finished. Calculate the monthly payment that is below your anticipated rental income.
What you are fishing for is if this is a good owner financing deal.
If they say they are going to do anything else with the cash then tell them "The price is too high. If you can't sell the house within the next 3 months call me to discuss my offer again."
I hope this helps.