This may be my first deal...Please Help.

Real Estate Deal Analysis & Advice
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This may be my first deal...Please Help.

Shirley Dufrenne
Philadelphia, PA · Member since 2013 · 31 posts · 3 votes

Hi all, I sent off my first set of letters on Sunday which was only about 68 letters. My phone started ringing on Tuesday. I was sooo excited because I'm really following my dream and things are starting to happen. I've gone to the
REIA meetings, networked, met new ppl, and have built my buyers list. My phone is ringing and I'm talking to people. not sure that I'm doing everything right but that's part of learning. So someone calls me today and says that they want to sell their house. Everyone else that has called me just asked me for an offer straight off the back and are only willing to sell if the price is right not because there's real motivation there. So the person who called me today lives in CA and there's no mortgage on the house. She transferred the property to her daughter last month and she says she has a friend of hers who lives in the house. Her friend isn't paying her any rent. It's in a nice area and when I looked on Realist I see the house was purchased for 145k. I looked up the comps on Realist as well which gave me about 10 houses w/in .5 miles of the property that sold w/in the last 6mo. and they range from 110k to 176k. She says that the house is really taken care of and doesn't need much repairs, but I plan on going to see it this wknd. But just based on what I saw on Realist, I was thinking about offering 90k. Is that a fair offer? I also asked her if I made you an offer and could close in 2 weeks what would be the least amount you'd accept and she said she wasn't sure yet and she would have to talk to her best friend first and they would get back to me. Is there anything else I should ask her or I should consider or look into before making her an offer to start the negotiating process?
Thanks in advance for any feed back.

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Bill Horton
Real Estate Broker · Canby, OR · Member since 2012 · 127 posts · 37 votes
13y

... If it has been transferred to her daughter? That part confused me...

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  • Deborah Saddler
    Real Estate Investor · Cleveland, OH · Member since 2013 · 173 posts · 18 votes
    13y

    Shirley Dufrenne, great job Shirley, nice return on letter, especially the first ones you sent out. You should always ask them what are they looking for, let them give you a price first.

    0Reply
  • Adam Weitz
    Real Estate Investor · Folsom, CA · Member since 2013 · 2 posts · 0 votes
    13y

    Just wanted to say congrats! I'm sending out my first letters soon (very nervous). You've inspired me with this one and I'm starting to get even more excited.

    Can't wait to see the advice everybody gives.

    Again, congrats. Be proud of yourself. A lot of people don't even get as far as you before giving up. Way to chase your dream. It will pay off for sure.

    0Reply
  • Carlos Ayuso
    Wholesaler · Phoenix, AZ · Member since 2013 · 36 posts · 7 votes
    13y

    Shirley Dufrenne Good job! What did you say on your letters? And did you mail letters where you from or other states? Keep it up.

    0Reply
  • Lance Snedden
    Herriman, UT · Member since 2013 · 1 post · 0 votes
    13y

    As my mentor and coach Robert Shemin would advise, let them make the first offer. (ABN, always be negotiating). Then ask her if that's the best she can do, multiple times if need be. Excellent work on your letters! I'd love to see what you sent out and if you need a good agent recommendation there please let me know. I have great referrals across the country. Keep is posted on your progress.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    13y

    Good job, but you Must get a better handle on what it's worth, within $5-10,000.

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  • Bill Horton
    Real Estate Broker · Canby, OR · Member since 2012 · 127 posts · 37 votes
    13y

    Great job with your marketing! What is your plan for the property? Do you have exit strategies? Can the lady legally sell the property if it j

    0Reply
  • Bill Horton
    Real Estate Broker · Canby, OR · Member since 2012 · 127 posts · 37 votes
    13y

    ... If it has been transferred to her daughter? That part confused me...

    1Reply
  • Michael D.
    Investor · San Jose, CA · Member since 2011 · 355 posts · 90 votes
    13y

    Shirley Dufrenne, I'm really glad you took the plunge. You've got a wild ride ahead!

    I hope it works out on this building, but please, please prepare your mind for not coming to terms. You have to mentally visualize yourself passing the deal. This will make it much easier for you in two ways:

    1. You're exited and eager to succeed. This might make you more likely to pay a price that you shouldn't. By preparing yourself mentally to pass, it will make the right decision easier.

    2. If you aren't able to get this house, it has to be water off your back. On to the next. It's easy at this stage to get wrapped up in a deal, and if it doesn't work out it might otherwise discourage you. Don't let that happen.

    So in short: Hope it works out. Prepare that it won't. Keep going either way.

    Looking forward to updates on this!

    Michael

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  • Shirley Dufrenne
    OP
    Philadelphia, PA · Member since 2013 · 31 posts · 3 votes
    13y

    Adam Weitz Thanks for the kind words. I was really nervous as well and I just kept on saying to myself "Just do it, just do it, just do it".
    And I'm glad that I did. Congrats on taking action and I can't to hear about your progress.

    0Reply
  • Shirley Dufrenne
    OP
    Philadelphia, PA · Member since 2013 · 31 posts · 3 votes
    13y

    Carlos Ayuso My letters where really simple. It was 2 sentences with spaces in between each line I wrote. And they were all out of state owners. It reads like this:

    Hi ( First Name)

    My name is Shirley. I would like

    to $ BUY $ your house at 123 Main St

    in Philly.

    Pleas give me a call at (my number)

    Thank You!

    -Shirley

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  • Shirley Dufrenne
    OP
    Philadelphia, PA · Member since 2013 · 31 posts · 3 votes
    13y

    Lance Snedden I'm always looking for a good agent to work with. I actually have a meeting with one on Monday to see how we can wok together. I have not had the best luck with the recent ones I've spoken with. They all have claimed to be on top of their game and that was just clearly not the case. The one I'm meeting with also invests and has a couple of investors and he's in the beginning stages of his career. So I'm hoping that translates into a driven and motivated person who is looking to grow in his real estate career.

    Thanks Bill I'm not really sure how that's going to come into play either. Her daughter and her both live in CA so I'm not really sure why she transferred it in the first place. But she did express that she wanted to sell it.

    Michael, thanks for the advice I'll def keep you all posted on the progress.

    0Reply
  • Braden C.
    Real Estate Investor · FL · Member since 2011 · 586 posts · 360 votes
    13y

    Shirley Dufrenne Out of state sellers with tenants not paying rent are always solid leads. How does the $110k sold house compare to the one you're looking at?

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  • Shirley Dufrenne
    OP
    Philadelphia, PA · Member since 2013 · 31 posts · 3 votes
    13y

    Braden C. I'm not sure yet. I plan on at least just driving through the neighborhood to see if there's any exterior work that needs to be factored in prior to getting access to the inside. She said that I would be able to see the inside, I plan on calling her back today. But the only piece of info I don't have that I feel I need that would help me to negotiate better is knowing how long the other properties that have recently sold took to sell. Would you say I necessarily need that info to make this deal happen?

    She did throw out 100k during our conversation; wondering if I would start at that. Also she said that she's not trying to nickel and dime around either. So this to me (just starting out) so like this could be my first deal. She hasn't expressed what her motivation is. There's somewhat a language barrier, she speaks Chinese, but I think we communicated pretty well. I did express the pros of selling to me CASH, FAST closing, no out of pocket expenses. verses the cons of listing with an agent and how long it will take to get paid after putting money in for repairs and paying out commissions etc. And she def doesn't want to list.

    There's another house on the same block that just sold for 125k on 4/2/13 and 2 blocks up that one sold for 145k and it' smaller than the 110k one. The 125k is bigger than my subject property (SP).

    So just based on this info would you say the ARV is appx 120k? If so, what would be the best offer to give her if I plan on wholesaling this deal?

    Sorry this is so long, just wanted to give you all the info I had. :-)

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  • Braden C.
    Real Estate Investor · FL · Member since 2011 · 586 posts · 360 votes
    13y

    Shirley Dufrenne I would need quite a bit more information about the sold properties and your property to be able to determine what the ARV is. If the recently sold houses were listed with a realtor, see if you can find some pictures online to determine the condition. Try and find out what kind of improvements the sold houses might have had like an updated kitchen, bathrooms, newer roof, ect. This will give you some stuff to work with when you're negotiating with the seller.

    She started out asking $100k which usually means she's got some room to negotiate.

    I would try and get as much information as you possibly can about your property and the comps before you make an offer.

    Let me know if you have any other questions.

    0Reply
  • Jeremiah B.
    Investor · Portland, OR · Member since 2012 · 266 posts · 128 votes
    13y

    I would say that her starting at 100k is good news. If you can, show how your offer is equal to 100k.

    eg - 100k is a reasonable value. But, if you listed, there would be a 6% fee, 1k in closing, and 5k in repairs. So, I want to get close to your number, but I want to be sure that we're accounting for all of those fees that you would be saving.

    0Reply
  • Darrick P.
    Real Estate Investor · Philadelphia, PA · Member since 2013 · 28 posts · 2 votes
    13y

    You can't make an offer until you at least see the place. You can only make your offer based on e amount of rehab work that you estimate. Her 100k offer is most likely too high because if it weren't shed list it with an agent (I assume).

    I too am in Philly we should link up.

    0Reply
  • Shirley Dufrenne
    OP
    Philadelphia, PA · Member since 2013 · 31 posts · 3 votes
    13y

    Braden C. other than talking with an agent is there any other way to get that info? Is there some sort of site or software to purchase to get all that info? How do you do you evaluations?

    I went out and saw the property (from the outside). It's on a really nice, quiet tree lined block in a nice area. It is the only single family home on the block. All the other ones are twins. Further down the street is a FSBO. I going to call the FSBO and the other owner to see if I can see the inside either today or tomorrow.

    Jeremiah, those are all points I plan to hit once we get to negotiating part. Thanks for that input, now I'm going to calculate all those figures to have them ready for her.

    Darrick, what part of Philly do you invest in?

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  • Deborah Saddler
    Real Estate Investor · Cleveland, OH · Member since 2013 · 173 posts · 18 votes
    13y

    Good job Shirley, keep at it, get the needed information to negotiate with seller, and go for it.

    0Reply
  • Tom W.
    mia, FL · Member since 2012 · 43 posts · 3 votes
    13y

    Shirley Dufrenne, first congrats. Did you also drive the comps when you drove by the house? If so, How did the exterior compare? When looking at houses for the first time you want to try to get apples to apples as possible if that makes sense. Like you said its the only single family, in that area is that more desirable or less?

    Braden C., gave you great advice in regards to comps and trying to see any pictures or the past sold houses, put those addresses into google and maybe the old mls sheet will be on trulia, etc. This can give you a better idea so when you walk the interior of your potential deal you have a property to compare it by. Hope this helps and good luck

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  • Rob Powell
    Real Estate Investor · Oklahoma City, OK · Member since 2012 · 81 posts · 20 votes
    13y

    Great Job!
    Analyze your comps and get a good solid market value for the property. Then go see it and determine a conservative price on repairs.
    Next just follow the wholesalers formula to get you maximum offer amount market value x 70% - repairs - you profit = Max OFFER
    And remember try to get a number from her first. If she insist you give her a offer first just jokingly suggest $1.00 and ask again what is her price.

    Hope this helps!
    Good Luck

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  • Deborah Saddler
    Real Estate Investor · Cleveland, OH · Member since 2013 · 173 posts · 18 votes
    13y

    Great advice Edward Powell, Shirley Dufrenne, I'm looking forward to you negotiating and getting this one locked under contract. Keep us updated.

    0Reply
  • Reginald Vickers
    Real Estate Investor · Burnsville, NC · Member since 2013 · 27 posts · 2 votes
    13y

    Shirley Dufrenne Just wanted to say congrats and we all are sharing in your excitement. It's like reading a fascinating novel. Can't wait for the next chapter.

    0Reply
  • Shirley Dufrenne
    OP
    Philadelphia, PA · Member since 2013 · 31 posts · 3 votes
    13y

    Hi all, I can't thank you all enough for all of your support and feedback. The BP community is awesome. I was so excited and ready to move on with this deal especially with all of you all's advice and when I called her back she said her daughter didn't want to sell the house. I was so disappointed. So I took a day to myself to accept what had happened then moved on to the next one. It's part of the business.

    As luck would have it. I met with some one who has quite a few properties that were donated to his company and they really need to unload them cause they are costing them money to keep them.

    So this is the deal with this one. I'm going to keep it in the same thread.
    How can I wholesale properties from a company that can't make a profit from the transaction. Do they gift it to me so I can sell them? There has to be a way around this. At least that's what I'm hoping

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  • Deborah Saddler
    Real Estate Investor · Cleveland, OH · Member since 2013 · 173 posts · 18 votes
    13y

    Shirley Dufrenne, did he say he was giving you the properties? If not you need to get a clear understanding from his standpoint first. Then maybe you can speak with a RE attorney.

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  • Shirley Dufrenne
    OP
    Philadelphia, PA · Member since 2013 · 31 posts · 3 votes
    13y

    @Deborah, no he didn't say that he would gift them to me but I'm wondering how would I be able to wholesale these properties if the they can't make a profit from the transaction.

    In a traditional wholesale deal they would be my seller I sell them to my end buyer less my fee. But since they can't make a dime off of them, how can they technically/legally be the "sellers" in this situation. My only assumption would be to have them gift me the properties, I wholesale them and they are no longer costing them money to hold on to them. Every body then wins.

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