How much do you tell the seller?

Question

When you make an offer on a off market deal, how much do you explain to the seller? What I mean is let's say you offer 110K On a house....well below market value and the current owner will assume you are low balling them. The house needs repairs so your offer is based off this.

Do you explain WHY you are offering well below market value? That the house needs a new roof, new A/C, walls need to be removed, paint etc.. etc.. ? Or do you just hand them the offer and tell them to look it over and walk away?

I own a landscaping business so I am no stranger to sales interactions with people, but with my business the more talking I do to explain to people what we are doing the better. I am not sure if less is more when it comes to buying off market homes? Or should I spend 30 minutes explaining why we offered 110K for your home when market value is 250K

Account Closed · Answer

I am always up front with people. I have them tell me what they would fix and ask them how much it will take. I ask them when the kitchen and bath were last updated. If they miss something like a roof I simply mention lenders require that a roof has to have "x" amount of roof life and that one looks like it may not pass. I explain that there is no way to know what we will find behind the walls in the bathroom but typically there is mold and that needs to be mitigated. If you are uncomfortable doing a complete inspection, pay to have one done and then sit down with the seller and go over the details. The inspector may run across something that you missed that matters but always will be more work than the average homeowner thinks about or cares to fix. Explain that the list is what they would need to deal with if they listed on the MLS and then on top of that, the real estate agent will want 6% ($12,000 on a $200,000 house) for their fees.On top of that if the buyer is an FHA loan there are about 3% ($6,000) in concessions. Plus, there would be no guarantee when the property would sell, realtors would want to show on 15 minutes notice,  and there would be open houses with people going through their drawers and medicine cabinet. This is all factual information.

Bob Okenwa · Answer

There should be justification as to how you arrived at that number. It helps to paint a picture of the work that needs to be done and your offer is a reflection of that work and of course your needing to make a profit to run your business.