Making offers without inspecting properties

18 Replies

I've recently started marketing for properties and received a good response. However the sellers aren't interested in setting up a time for me to inspect the property. They just want an offer. I did do a drive by on a few but this says more about neighborhoods than specific houses and their rehab needs. I have sent some LOI's to sellers based on the drive by and a worst case scenario estimate for rehab. This obviously resulted in very low offers that were not well received.

So my questions are. What am I missing? Should offers be based on best case and then adjusted down? Are these leads not the type of leads needed for the buyers I currently have? 

Thanks, Joe

I never look at the property until a get an accepted offer.  Big waste of time looking at deals in person that I never offer on.  It's all about the numbers anyway.  I can make 10 offers in the same time as I can inspect one property in person.

That's what the 7-10 day inspection period is for.  Get the offer accepted, inspect it, either accept it or turn it down then.  If the numbers down't work, you're not buying.  Make sure the seller accepts the numbers that work first.

I'm in a different camp on this.  I would NEVER EVER make an offer on a property I have not walked thru physically.  And I do NOT make blind offers on the phone.  That's "shotgunning".  Last point, in my market and many other major markets we work in, if you are asking for an inspection period on your contract, you're DEAD because the competition here (specifically HVA) is warning sellers that that's the way guys (with no real money) bail out of contracts. 

If you guys have figured out how to make a living at this by buying properties sight unseen, more power to you.   When I make an offer, it's a serious offer with no contingencies - I have no idea how you do that without SEEING the property.

@Dev Horn That is exactly how I thought I was going to go about it. Reach out to sellers. Inspect the property. Make a solid offer based on what I saw. I can't say that approach doesn't work. It could be that the calls I'm getting aren't serious calls. That will always be the variable no matter which strategy I use. Thanks for the input 

Those calls are not truly motivated sellers.  They are the "I wonder what they can offer on my house" crowd that's just curious what you can do.

When people are really motivated - due to financial or health issue, job loss, inability to make payments, inheritance, etc., they will gladly invite you in.

This is real estate.  We have to SEE IT.  And these are PEOPLE, we have to MEET them.  Some guys play it like it's an assembly line and you just crank people thru a process - I just don't do this business that way.  I have a process, and I'm good at it, but it involves MEETING PEOPLE and SEEING HOUSES.  =)

A lot of the sellers that want an offer from you over the phone are not very serious about selling. They just want to see what you are offering and are hoping it is a real high number.

If they took the time to call you though, you have a great opportunity to build a relationship with them and see if you can help them out of a possible difficult situation. If they insist on a number, you may want to try to give them a price range. Then you can give them a more accurate number after seeing the inside of the property.

Good luck!

Originally posted by @Joe Melvin :

Some sellers do encounter some very flaky buyers. You could always try to get the seller to give you some sort of verbal 'guestimate'of what it would take to get the property into a livable/rentable condition -- they should have some sort of idea.

With the repair 'guestimate' and ARV of the property, you should be able to make an offer that is contingent on the actual repair numbers being at or below what the seller estimated.

If during inspection you discover the repair numbers actually exceed what was estimated and that the deal wouldn't make $en$e, then you can either back out or adjust the offer accordingly.

I'm in the middle of Dev and Joe. I make tons of offers sight unseen working the MLS, you pretty much have to lock them up on day one if they are priced right in my market. Plus, sometimes I make a bunch of offers for what they are really worth when they are over priced to see if anyone will bite. I simply do not go look at houses unless I've got them under contract or have told the seller my general number and am pretty certain I'm going to buy it.

I don't do a lot of direct to seller marketing anymore, but when I do I'm more trying to weed out the non motivated people than sell someone on me when I talk to them.  Like Dev said, anyone that says "make me an offer, but you cant see the house" is a time waster.  

I make an offer on every house I go look at, btw.  I know what I can sell it for fixed up when I get there, then its just doing the math on what it takes to get it there and its just doing the math when I get there.  I used to do a lot of creative stuff, so there was more salesmanship doing sub2 and such, but now I'm like "I'm a buyer at this amount".    I buy plenty from wholesalers and plenty of them will waste your time, sellers are the same way.  When you're getting started you've got plenty of time to go visit people and its a pretty good exercise.  Once you get going, you wont have time to take joy rides.  I'd go broke if I went and looked at every house that came my way, I wouldn't have time to do anything else...  

Keep in mind when I was working foreclosures I'd talk to 100 people to look at 10 houses to buy 1.  Make sure your expectations are in line.  @Dev Horn I'm curious, what are your numbers like on calls vs. purchases?

I have made offers and purchased property without seeing it, how? By relying on an appraiser I knew, trusted his work and talked to. Otherwise, it's going to be inspected. 

Might tell those wanting a price "hey, BTW, I have a 2013 F-150 for sale, how much would you give me for it, it's blue with low miles" if they don't get it, move on. 

I agree, they aren't motivated sellers and hoping you put a smile on their face. :)  

joe, you need to get less specific in your letters. making offers and setting rehab costs usually result in giving people low ball offers and declines. tell people who you are, and what similar houses in their area are going for, in a large price spread. if they are thinking $50,000 and you tell them their house could be worth anywhere from $30-$75,000 depending upon inspection, dollar signs start ringing in their ears. you will get more offers that way

@Joe Melvin This is how I would handle it.

A preliminary screening process is what you need to quickly determine an immediate offer or MAO, based on what you currently know. Sure, that number can be negotiated based on further investigation into the property (contingencies). That's ok. If they are willing to accept those contingencies and offer in a contract, get that seller to sign that contract by that first call or meeting. Don't wait. If they aren't ready to sign, move onto the next deal.

It is a numbers game. Don't waste time on unmotivated sellers. You can tell right away with one call. Don't use email or text. Meeting is ok, but should be at the house and ready to negotiate a deal. Time is too valuable to go see a place without making an offer. Seeing a place does reduce the risks, but you still need to make an offer, based on this new information in a contract.

To start the call lead the conversation, but have them indulge information. What would they pay for their neighbors' house, or the best house on the block, for example? What repairs are needed? How old is the house and what type of repairs have been done? What is the neighborhood like? What are the schools and shopping like? How is the job market? Renters vs. Owners. Some, if not most, sellers will know some of this information, but not all. Most of it you will have to use other resources to find out. Due diligence can be performed in all cases (pre offer to post inspection). You should know this info BEFORE you speak to or meet the owner.

Of course, there are those deals that just don't work or they won't accept your number. Move on to the next deal and waste no more time.