Hello to all. I wanted to know how you all specifically pre-screen sellers? How do you decide to make or not make an appointment to meet? What do you need to hear from them to know they are motivated?
I would appreciate specific answers, although I do know that we live in a relative world.
I completely agree with some of my favorite posters here such as Mr. Q. But I would like to share perhaps a different PERSPECTIVE on this:
If all you are doing is wholesaling or cash purchase FLIPS, then everything above is the Gospel for that.
But here's the problem - wholesaling is NOT a viable business opportunity in most major markets because the cost of a lead is too high. It can easily cost $100 per call in a major metro. Wholesaling - using the narrow question set above - will work for about 1 in 20 leads. In a tight market, a wholesaler might only be able to mark up a deal $2,000. 20 calls at $100 = $2,000 - so what has the "wholesaler" made? ZILCH. You're busy, but you are making NO MONEY.
In the market we're in today, you need to have MULTIPLE WAYS to monetize a lead. For example - lease options, which are really as easy if not easier than wholesaling and can be more lucrative. Well, those questions above are 100% WRONG for lease option leads. How about listings? If you can't list the house, partner with an agent until you can, so you can sell those leads to your partner.
Your leads are a rare and valuable raw commodity. The goal of your business should be to MONETIZE EVERY CALL/LEAD if possible.
I like wholesaling but I just don't think it's a business. It's one product on your shelf - if you have different products that fit different needs, then you'd become more of a "solution provider" than a "flipper", more of a consultant than just another guys offering "fast cash as-is!". We have WAAAAAAY to many of those guys in the market right now. The future will not be kind to businesses with only one product on their shelf.
“We cannot become what we need to be by remaining what we are.” ~ Max DePree
Here's another recent one:
Me: Good Morning, this is Derek
Seller: (in an annoyed and aggressive tone) Hey, do you really buy houses or are you just a realtor trying to get listings?
Me: I really buy houses. I do have a real estate license, but I wouldn't take a listing if you tried giving it to me. Do you have a old house you want to trade for my new cash?
Seller: (laughs) Yea, I do. I just didn't know if this was a bait and switch.
Me: Nope. I sent a few letters out because I'm looking to buy a house this month. I haven't seen the one I like yet, so I'm hoping yours fits my criteria.
Seller: I hope so too. It's a pretty nice house, there's nothing wrong with it, but the company I'm working for just transferred me to South Dakota and I have to leave next Tuesday, a week from tomorrow and my company is paying to fly the family there and will take one semi moving truck of my possessions. I don't have the time or money to come back and deal with my stuff.
Me: oh, gotcha. What's your address?
Seller:(gives me address) do you think you can come see it today?
Me: If it fits my criteria and you're realistic on price, I'll be there in an hour. (Then I tell a story and get him talking for a bit, for two reasons. One is I'm stalling while I look up info on his property on the ipad. Two is to build trust.) after 10 minutes or so of listening to his new job and the area he's moving to...
It looks like you bought it in 2008 for $150,000 cash? I'm not seeing a loan on it, is that correct?
Seller: Actually, there is a loan on it, but it's to my dad.
Me: Oh, how much do you owe him and what are your payments?
Seller: I owe him $150,000 and he hasn't asked for a payment yet.
Me: think he'll give me the same terms?
Seller: (laughs) No, I need to pay him back with the sale of the house.
Me: Can I talk to him about me making him payments to pay him back?
Seller: No. We already talked to some a#*hole from the coast that offered us to carry paper. My dad's not interested at all.
Me: Ok. What price do you think is fair to sell it to someone quickly with no inspections, no hassle, no termite, no repairs?
Seller: $170,000
Me: I have a few numbers to some real estate agents you can call. If you want full price you'll need a retail buyer. You can probably do it all over the phone, email, and fed ex without having to come back. Then you can get full price for it. Because I know the area really well, and I think it's worth between $160,000 and $175,000 depending on the level of finishes you have.
Seller: Oh, it's really nice. It has new kitchen with granite, we put a roof on in 2008, and we redid the tile in the hall bath. The master is original to the house, but it's still in good shape.
Me: It sounds like an easy sell for a realtor, then. Do you have a pen?
Seller: I already told you, I don't want to list with a realtor. I want it done and sold this week. I want it all totally taken care of before I leave.
Me: Do you have anything else you need to sell quickly before you leave?
Seller: (nervous chuckle) yea, my wifes car and my truck and our fifth wheeler. We're flying out and the new company has a truck for me.
Me: Do you owe anything on the cars?
Seller: My wife has a 2009 Toyota Camry we own out right. The trailer is a 2006 Wildcat with one slide out and it has no payments. My truck is a 2012 Ford f-250. I still owe $20-25,000 somewhere in that range.
Me: I'll see you at noon, ok?
When I got to the house, I was pleasantly surprised. The house WAS in really nice condition. I figured I'd replace the carpets and paint the interior so it's fresh and new, otherwise it didn't need much. I knew I could get $178-180,000 after $5,000 in repairs. I offered the $150,000 he needed to pay off dad subject to him paying off the truck and including the three vehicles in the sale. 4 day escrow, or as soon as title could close. He agreed to the terms except the truck. He didn't have the funds to pay it off and already had an interested buyer. I agreed and we closed in 5 days. I wholesaled the car and trailer to a friend who has a used car lot. The house just closed for $183,000 with 3% back ($5,490) to buyer for closing costs.
$183,000-$5,490-$6,200 (total actual rehab costs)=$171,310. Then $4,575 in agent commissions to buyers agent.
$4,000 for 2 point pm loan. $1,500 for my side of escrow and title with binder policy. $250 for utilities. Equals $160,985. Net profit of $10,958 for house and $6,00 for Camry and $9,000 for trailer. So total profit of $25,958. It wasn't worth the risk without the vehicles. That was the catalyst that made the deal work for me. And he was able to move and not miss the job with the BIG pay check for him.
I fired my boss in 2003 and have been working self employed as an investor since then. As you can see from my profile, I've been a bigger pockets member since 2008. I've learned so much from the experienced people on this site. There is some amazing information here!
I fired my boss in 2003 and have been working self employed as an investor since then. As you can see from my profile, I've been a bigger pockets member since 2008. I've learned so much from the experienced people on this site. There is some amazing information here!
That's great. I've got lots to learn. The good thing is that everyone started somewhere.
What a great post! Thanks for all the great info./roll playing script!
Awesome thread! For Pre-Qualification, or FSBO, or Expired, type of "scripting" work, I have some complimentary scripts in a script book for free download in the marketplace.
To answer your question specifically about what does a motivated seller SOUND like? LOL... You can LISTEN to this free podcast with actual recordings. The Premium Podcast has even more, but the free version will give you lots of ideas!
Listen here for actual recordings. in my podcast ironically all about "What a Motivated Seller Sounds Like!
Great subject!