Lake Mary, FL · Member since 2016 · 27 posts · 7 votes
Hello & Good morning all!
I spent my Sat morning & afternoon yesterday driving around and looking for opportunities. I ran into a couple who are distressed sellers and they need to sell their home asap. I looked at their home and its a beautiful 3/2 in a great area and has great potential to buy & flip or buy & rent.
I'm not sure how to find a buyer and what to do next....I feel I can help this couple but just dont know what to do next. Some guidance is much appreciated.
Hello thanks @Charles Smith so my next question is ...when I make an offer ...is there a rule about how low I should go on offer? I've heard to offer as low as possible but I just dont know if I'm too low or not. This couple is asking for $210,000 and I have no idea what to offer - any suggestions?
If you need to ask, it means you are nowhere near ready yet. Seller asking price means NOTHING!
Once you realize that, you can start at the beginning:- What have similar homes sold for?
After you know that, there are a LOTS of other questions too. (Number one tip: no emotion)!
Start, now. (And please let us know your conclusions along the way, for assistance). Cheers...
Real Estate Consultant · Wilmington, NC · Member since 2016 · 41 posts · 6 votes
10y
well first I would get them under contract. Then start your marketing through different sites and word of mouth. It will sell as long as you market it.
Lake Mary, FL · Member since 2016 · 27 posts · 7 votes
10y
Hello thanks @Charles Smith so my next question is ...when I make an offer ...is there a rule about how low I should go on offer? I've heard to offer as low as possible but I just dont know if I'm too low or not. This couple is asking for $210,000 and I have no idea what to offer - any suggestions?
Real Estate Consultant · Wilmington, NC · Member since 2016 · 41 posts · 6 votes
10y
look the address up at the tax office and on a few sites to get a feel of an estimate. Then act quickly to make a conservative offer, remember if you start low you can always go up. If they are asking 210 I may offer 194 just to see how flexible they are but you need to know the market also. I hope this helps you.
Hello thanks @Charles Smith so my next question is ...when I make an offer ...is there a rule about how low I should go on offer? I've heard to offer as low as possible but I just dont know if I'm too low or not. This couple is asking for $210,000 and I have no idea what to offer - any suggestions?
If you need to ask, it means you are nowhere near ready yet. Seller asking price means NOTHING!
Once you realize that, you can start at the beginning:- What have similar homes sold for?
After you know that, there are a LOTS of other questions too. (Number one tip: no emotion)!
Start, now. (And please let us know your conclusions along the way, for assistance). Cheers...
Brooklyn, NY · Member since 2016 · 68 posts · 14 votes
10y
I have a similar situation but I know the person and my question is what is the best solution to having the contract drawn up by a lawyer or should it be a standard contract with the right to assign it clause? PLEASE HELP! She needs to act fast and I don't want to miss the opportunity.
Lake Mary, FL · Member since 2016 · 27 posts · 7 votes
10y
Hi @Brent Coombs - Happy Sunday Thanks so much for your advice. I checked the surrounding area with similar houses and the range is 200k-239k - the sellers are second owners - what are your thoughts??
Real Estate Consultant · Wilmington, NC · Member since 2016 · 41 posts · 6 votes
10y
I would think start around 180k see if they will come down and meet you around 193k depending on how much the renovations cost you could get a nice check. A simple formula price you hope to sell it for times 70% minus yor fee gives you the moa max allowable offer
Lake Mary, FL · Member since 2016 · 27 posts · 7 votes
10y
@Account Closed Hi and thanks for your tips and I agree with you ...I definitely don't want to screw the seller...not my style and I want to have everything in place to make this transaction smooth. I didnt make an offer yet ..the seller said they would call me today or tomorrow. The seller had a realtor but said the realtor backed out - they said realtor was purchasing home for herself but got stuck and didnt go through with it because she couldn't sell her own home.
But anyways, I have someone who wants to buy and I'm trying to figure out the contract part. This is my first ever deal and I'm just trying to wing it the best can.
Investor · Orange County, CA · Member since 2015 · 136 posts · 57 votes
10y
I suggest connecting with an experienced investor in your market to advise you on your first potential deal. There are many moving parts that haven't been mentioned here and you don't know what you don't know. Good luck!
The property actually looks great - probably will need to put in 2-3k to remove the ugly wallpaper but the house is in great condition...there's really no other issues. I think I'll offer 180-185k and see what happens.
Sorry for all the dumb questions you guys but my next one is: what is the difference between listed price, off market price, and estimated value? Do they mean the same?
Like for example, the property I mentioned it shows an off market price on Realtor.com and I looked at a similar property which is two houses down and also for sale - but this one is by a realtor and they have a listed price....I get so confused with the different price terms they use.
Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
10y
Getting a lawyer to review your first contact wouldn't be a bad idea. Comparables would be your starting point to get feel of the value.As to selling, you could also consider co-wholesaling with somebody who has an established buyers list
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
10y
@Mary Bodrato, as far as I can tell, the couple haven't really shown signs of being "distressed Sellers". It's seems obvious to me that they know what their home is worth, and, that's what they want. And who can blame them?
Can you find them a retail Buyer quicker than a Realtor?
Or, as @Account Closed asked, can YOU close on the deal?
Please remember my number one tip: no emotion. I sense you may need to be reminded of that.
I suggest also that real estate is not the hobby/job to "wing it". All the best...
Lake Mary, FL · Member since 2016 · 27 posts · 7 votes
10y
@ Brent Coombs - I did realize that the sellers may not be in a distressed situation. But I think they want to close pretty quickly because they were screwed by the realtor backing out and I think if this goes on for another week they may come down on pricing. I still have to do my homework though...I haven't had a chance to run the comps ...still learning how to do that. Once I run the comps I should have a better idea what to offer. I may find someone locally to co-wholesale with as one colleague mentioned so I could learn the process properly.
But if I don't find anyone I may just leave that deal alone. I hate to give up on it though.
Hello thanks @Charles Smith so my next question is ...when I make an offer ...is there a rule about how low I should go on offer? I've heard to offer as low as possible but I just dont know if I'm too low or not. This couple is asking for $210,000 and I have no idea what to offer - any suggestions?
Mary, do your best to use the wholesale calculator provided by Bigger Pockets section (found in the tools section). It will help you decide what you maximum offer will be. Hope this helps!!
Investor · Boca Raton, FL · Member since 2014 · 103 posts · 39 votes
10y
A few things:
1. When dealing with individual sellers, the most important thing is their motivation.
Comps, price, repairs… all of that stuff is secondary.
At first, remember that almost every seller is way too high when setting an asking price or estimating the worth of their property… no need to worry there. Only by understanding why they need to sell, will you know if there’s a deal or not.
Here’s an example that might make sense to you (or might not make any sense at all, lol, but worth a shot). I grew up a total video game nerd. I don’t get to play often, but when I do, I love it (Right now… Destiny and Mortal Kombat X)
As a kid, games cost about $50… a lot of money back then (at least to teenage-me). If I paid $50 for a game and beat it in two days and took it back to the store, they would purchase it back for around $3 to $5… then resell it for $45!
Who in their right mind would sell back at that price!? Especially knowing what the store would make. I knew it wasn’t a great deal… I expected at least $40 back for my barely used game... but it was convenient… also, maybe I wanted some money towards the next best game, maybe I just knew I would’t play that game anymore… maybe there was something else I really wanted to buy asap and needed any additional money I could get....
Perhaps that’s a terrible analogy… but my point is, you’d be surprised how low people will go, regardless of what their initial asking price may be. Look at the Pawn shop industry… same thing. People go in asking for and expecting $100 for an item, but if they're are desperate, they leave with $10 or $20... And the business model thrives.
Talk to the seller… maybe you can help them, maybe not. Remember, it HAS TO BE WIN/ WIN. If money is their primary motivation, it's not a deal
Which leads me to my second point, that a lot of people get wrong.
2. A lot of people tend to try and make the seller take a low offer. If the seller isn’t motivated, they wont take a very low offer… and you have to be ok with that. Never get too attached to any one deal. The idea is NOT to MAKE a deal into a wholesale deal… it’s to understand that deals already exist, but they're hiding and you have to find them. Subtle difference there but important to survive in this business. You have to make a lot of inquiries and offers to determine which ones are deals, and let the others fall away. The analogy is akin to digging for gold. You don’t try to turn the rock and soil into gold. Rather, the gold is already there, but you need to dig in a lot of spots and sift through a lot of stuff that isn't gold. You find more of what you don’t want than what you do want and it can be frustrating…. but you keep sifting (searching, probing, asking, making offers, etc). When you do find that gold nugget, it makes all the dirt you had to go through well worth the effort. Hopefully that makes sense.
3. Send me an email or direct message, I can help you out with some buyers in the area
Good luck. Worse case, enjoy the learning experience and move to the next one as fast as you can.
Phoenix, AZ · Member since 2015 · 345 posts · 138 votes
10y
All this is great experience at the very least because right now you are starting to see what to look for, the importance of knowing what you're buying and how much one can expect to profit, and how to go about getting a property under contract. I think if you knew exactly what that home would sell for in the area after you got your hands on it would help navigate you to an offer price. Repairs, holding costs, marketing, having buyers lined up, and the like are things to consider. Check out the search bar at the top to really drill down question topics in regards to your situation too. Good luck!
Investor · St. Thomas, Ontario · Member since 2015 · 692 posts · 312 votes
10y
Mary, I'm confused, what are you gaining here? With the wholesaler's rule of thumb being ARV*0.70-repairs-fee lets run through:
Comparables $200k-$235k, so we're going to use $200k as a sure sell price.
$200k*0.70 is $140
You think it needs 2-3k for repair so we'll use 3k.
So your asking price is $137 minus whatever you think you deserve for locking this up. At least, this is the common conventional wisdom here on BP.
Now, on the other hand, if you take the $194 offer that has been suggested, you're going to end up with a buyer that is only will to pay 200k minus the 3k repairs and they're going to have an agent that wants 2% commission - for a grand total of 193k and your fee is negative $1000. The sellers win because they got out fast, the buyer got a house they want at retail value, and you got to inject $1000 plus legal fees into the deal. Oh right, but they're having trouble selling so you're also going to have to pay holding costs on this thing and likely having to double close because retail pricing is not fast selling.