Negotiations with seller.

7 Replies

First off, I would like to say that i have successfully launched my first marketing campaign, and I am feeling very excited.

~first call from a seller~

A day ago, I received call from a seller I sent a letter to. He said he had a offer for 60k from another buyer. He also stated he had the property apprised and the appraisal was for 120k. The property is set for foreclosure the beginning on Feb. What I didn't find out was what was needed to be done to the property. How should I handle those situations if an offer is on the table? How can I be better prepared to negotiate those type of deals, in such a short notice? 

The offer may or may not exist, may or may not be serious, the buyer may or may not be able to close, the offer may or may not be subject to anything or everything.... since you are new, and do not have the experience to evaluate the "other offer', my advice is to ignore it.  You need to visit the property, inspect it and conclude what repairs may be necessary, the cost of those repairs, the value of the property as is, the value of the property after repair.  You then need to calculate your costs.  Assuming you are interested in purchasing the property to fix and either resell or lease, you will need to have cash or a financing plan line up.

From your questions it sounds as if you are not quite prepared to move forward with an actual purchase.  So let me suggest an alternative.  Find an experienced investor to partner with.  If you have capital, provide the capital in exchange for his expertise.  If you have no capital find an experience wholesaler to learn from.  I have seen many new potential investors, flippers, and wholesalers get to your stage and realize they don't now how to proceed.  It just takes the time acquire some more knowledge. The best way is as an apprentice to someone experienced.

Good luck!

Don,

Thanks for your advice. New in the business, I'm trying to figure out what is next. As a new wholesaler, I have a list buyers (which was easy to generate) and I still can't put two and two together. Even as I find deals from other wholesalers, I know there is a way I can connect the two pieces. Might not make the most I could, but it's the knowledge of knowing how to put everything I've learned, and everybody I've meet together. 

It all depends on your exit strategy. You will be better prepared by knowing the after repair value and repair estimates of property. You just have to be prepared to put property under contract at a price that works for your business and if you're wholesaling, be prepared to assign contract to buyer. Most but not all foreclosure properties do not have equity for wholesaling and are typically short sale type deals.  You need to also focus on building rapport with sellers. Lot of sellers will sell their property for less to someone they view as a cool person they can conversate with.

If the seller was content with the deal, then he would have taken it. Instead, he contacted you. That is a sign that something is lacking. It could be trust, and it could be dozens of other things other than money. When you determine what that missing piece is, you can put together a game plan.

It would sound something like this:

"I appreciate you thinking of me and giving me a call. I have to ask, you already have an offer on the table, why not just take it?"

The answer to that question will tell you where to focus.

Then you can ask, "What were you hoping I could do for you?"

There is no need to try to make assumptions or guess how you can win the deal. You have to ask these questions in a sincere and nurturing tone. The seller will tell you exactly how to sell him. Find his pain. What does he really want? It's not always money. He may not have another place to go, need help moving, be unable to move, have poor credit so finding another place and turning on utilities could be hard, if there are renters in the property that could be his pain, etc. Your goal needs to be to solve that pain. Simply ask him. It sounds simplistic, but in sales today we try too often to have a slick answer or trick close. Those traditional sales tactics no longer work. Be sincere and the seller will guide you.

John Martinez

Terrence, 

Thanks for your input. If it is a foreclosure with no equity, it becomes a short sale. How is a short sale different from a normal wholesale deal? What are the down sides of doing a short as a wholesaler?

Hey John,

In your reply, you stated that asking the right questions will open up the seller. Simple talking to the seller. But if the seller is another investor, how does this conversation go? At that point is it really worth me pursuing the deal?

Originally posted by @Malcolm Brown :

Terrence, 

Thanks for your input. If it is a foreclosure with no equity, it becomes a short sale. How is a short sale different from a normal wholesale deal? What are the down sides of doing a short as a wholesaler?

 It's different in that you have to wait for the bank to agree with the sale of the house. The approval process typically takes 3 - 6 months to complete. Downsides are that it takes longer than a regular deal. It's also not guaranteed you'll get the price you want.