All Forum Posts by: E. Jacobs

Great reply Scot, but how would you recommend he allocates his money in order to bring in those great properties?

I know you should always be honest about your business, but if you are trying to negotiate a very low price with a motivated seller and they ask you how long you've been doing this, do you think it could hurt your chances of getting the deal done if you tell them it is your first time? They may think you don't know what you're doing and either didn't accurately estimate the value of the house or repairs or that they will be able to get a better offer from someone who has experience and may think the property is worth more. What do you guys think?

Thanks a lot for that post Bryan. As a newbie myself, I think it's very important that I watch my back and don't get taken advantage of. This industry has a lot of ins and outs and somebody who hasn't been exposed to doing these kinds of deals can definitely be caught with their pants down. If you're doing business with someone who has mastered the game and they know you're still only trying to learn the rules, it can be very easy for them to try and manipulate you and increase their profits at your expense (as mentioned in the example about the electrician). That is a major reason why I have become a part of BP. You can receive honest help here on anything that you might be questioning. It's also important to always do your homework. Find a mentor, read books, and do due diligence. Get multiple quotes on any job and personally I wouldn't trust anybody until they've actually earned my trust. Once you know who's a friend and who's a foe, you will know who to seek help from and who you should be cautious about.

Originally posted by Chris Trook:

My contract says:

Buyer may cancel this contract at any time, and for any reason.

Chris, just curious if and how much earnest money you are putting down for a contract like that? If I were a seller and you told me you can back out at any time for any reason, I would be thinking there is a much higher chance of you backing out and wasting my time. Of course from the wholesaler's perspective this is a great clause, so I'm wondering what kind of reaction you've gotten from sellers about that.

Chris, you are right that it isn't too unrealistic that the contract could get the job. However, it is more than likely that an investor going into a rehab deal is going to have a team of workers or contractors that they commonly use. But you are right, a good investor should always be comparing quotes, and if the contractor who gave you the initial estimate beats that of the investor's contractors, you may have found that contractor some new business. The only risky part is that I'm assuming only a small percentage of houses you look at are going to close with a successful deal, so you may be paying for a lot of estimates and not cashing in on any of them. Personally, I can't afford to be burning hundreds of dollars getting estimates on each lead so that I know what I can offer. There is no way to guarantee the seller will accept my offer or that I will be able to find an end buyer, so there is a lot of risk involved in putting money up front and paying a contractor to do an inspection. That is why I think that so far the best options are of course to either learn it yourself, partner up with a contractor who will inspect for other forms of compensation or profit sharing (no flat fees), or as Ruby just mentioned, using some form of software to estimate the costs for you. Maybe when you get big and are more efficient about your leads, you will be able to afford paying those flat fees because you will know what leads have a high chance of closing and you will know when or when not to bother paying for an estimate. But by then, you should just know how to do it yourself!

Originally posted by Dan Krause:

:pup: Doug Smith and E. Jacobs: The "Warning" that E. Jacobs points out-is this actually shown on some of the listings? I havent had time yet to scan through everything. Thanks

If you are logged in, all you do is hit view details on a property and you will see that warning in the bottom right under the map. If you don't know what the warning means, you probably don't need to worry about it. It is saying that if you do come across a property that was listed by a wholesaler, not the homeowner, then it is not allowed (and highly unethical, on this website or anywhere else) to contact that homeowner directly to try and undercut the wholesaler they have already made an arrangement with. For example, someone wants to sell their house. The ARV is 100K. They sign a contract giving a wholesaler 30 days to buy it at 60K. That wholesaler then lists the property for 65K. What the warning is saying is that it is NOT okay to call up that homeowner and say hey, I'll offer you 63K and we will go around the wholesaler (so the owner makes an extra 3K and the buyer saves 2K). The seller would receive more and the buyer would pay less. However, the wholesaler would be screwed because they did all the work and were compensated nothing for it.

Not to speak on Doug's behalf, but I would imagine it depends who the seller is. If the property was listed by a wholesaler, you probably won't be able to work out a wholesale deal because a wholesaler will only be looking for end-buyers. If the property was listed by the actual owner, then I would imagine yes, you could negotiate a wholesale deal if you will be able to provide that seller an end-buyer. It's also important to notice where it says:

Warning: The seller of this property may have this property under contract and plan to re-sell the property to you. If this is the case, any investor who attempts to go around the seller and buy directly from the owner will be permanently banned from MyHouseDeals.com.

Why not make your purchase contract contingent on your ability to find a cash or hard money end-buyer within xx days and nothing else?

I'm looking for any investors in or near Bloomington, IN who do wholesale or short sale deals. I will be at IU until mid May and I would LOVE if somebody could let me come along with them on some deals and see how the whole process works so that when I go home to Chicago after school I will already have some practical experience. I have plenty of free time (class 2 days a week, completely free 5 days a week) and I'm willing to do dirty work in return for teaching me how to find leads, talk to distressed sellers, make an offer, and close a deal. I'm easily trainable, never complain, and love to learn. Anyone? :mrgreen:

Eric Jacobson

Thanks Jon, so if I get a call from a motivated seller but the numbers don't work out so that I can get the property for what I want because there isn't enough equity, then my options are either to negotiate the short sale or try earning a bird dogging fee. If I can't pull off the short sale, I would rather bird dog the deal than tell the sellers that I can't help them. Some money is better than none!

And Mitch, have you heard of deals where the seller will actually pay money to get out of their house? At first this sounded like a stretch but if you think about it, their options are either 1) turn down my offer and incur further holding, selling, or repair costs to try and fetch a higher price, possibly risking foreclosure in the process, 2) let me negotiate a short sale, which even if successful, will nail their credit, or 3) put up their own money to satisfy the difference between my offer and the loan balance and avoid all of the above problems. I suppose 4) would be to try and find a buyer who will overpay for their property. But really, this doesn't sound too unreasonable to me if there is at least a decent amount of equity in the property. Of course, this would be beneficial to me because I would then be able to earn an assignment fee. Correct me if I'm wrong about any of this- I'm just thinking out loud :)