All Forum Posts by: Burt L.

I've had two deals in a row where sellers have played me to get a higher price from another buyer, and I've been losing out. On the first one, I didn't know of the other party and it closed at only 1K above my offer. More recently, I knew of the other party as I saw them at the property but the seller was so enthusiastic with me and was more concerned with the closing date that I didn't go to highest and best, though it was certainly lurking mind during the conversation.

In each case, I was the first one contacted to make an offer, and the seller then goes to the other party as they are embarrassed to come back to me for a higher offer, which I may have done. Perhaps in the future I should say I don't want to make a first offer, but to come back to me later?

After my offer, each party has then "gone silent" and not responded to contact until "informing me" of their choice. On the other hand, I don't want to get into bidding wars either.

How does a person walk this fine line? Maybe I should be asking if they are speaking to another party on the deal first or to ask "where are you in the sales process" as Sean Terry suggests. It takes alot of marketing dollars to get the phone to ring and these are most frustrating as more time gets lost on top of it. What approach might you take in such situations?

Looked at a property today and I was the first investor to arrive. I viewed it with a relative of the owner, and in the meantime another investor had arrived and was speaking to the owner outside the property. When that investor went inside to view the property, I had to make a decision on whether to get in a bidding contest there, and chose to reiterate to the owner that I could provide a Wells Fargo bank statement with funds necessary to purchase the property (not fictitious) and that I would give a call back in the morning.

I didn't see how having both parties try to outbid each other face to face would be helpful, and that it would kill the deal for anyone, most likely. I will know tomorrow if the seller accepted another offer on the spot, on the Sunday or wanted to hear from me.

One of the phrases I have had heard is "what amount you need to have to forget about other offers and move forward with me" or something to that effect. It was apparent the other investor thought he would be the only investor there as well.

How do you handle these situations, or how could I handle this better in real time - or in my conversation tomorrow?

I get this response from owners from time to time and wonder how others deal with it? If its been a rental, there is depreciation recapture and cap gains tax. Some people don't want to be landlords anymore but don't want to pay the tax either, so are stuck.

I haven't tried suggesting an installment sale or done an owner carry (other than one pre-foreclosure) and have just done cash wholesaling so far. How do you proceed when an out-of-state owner says they want to sell, but that capital gains would eat up their gains?

Like many, I have expanded the area I send my marketing to. I now have a max of 2-3 hour roundtrip drive-time to see a property which makes it even more important that sellers and their situations be better qualified before giving up a major part of a business day. Some people like to have a property under contract before ever visiting a property but I find that excludes too many possibilities.

In my immediate cities' market, if a seller expresses some financial, renter, or property-condition distress, I am more than willing to make the trip.

What might some of your best "Qualifying Questions" be of sellers, before you are willing to commit to visiting a property. As a marketing radius gets bigger, this becomes more and more important in potentially wasting lots of driving time that could be better applied in one's business.

I much appreciate the input given. Waiting to hear back from the Dept of Environmental health on the situation and not sure if I should just ask anonymously at first. I spoke with the owner of another remediation company who had given a bid on the remediation (just by walking around and measuring sq. footage). He said that the Dept of Enviro Health will post "Do not occupy" signs on the property once they show up.

On the suggestions above, I have given cash for keys many times and do let them sit with the situation for a day after the property is posted before approaching them. If the Dept of Health posts it and only gives them an hour, I am concerned about retribution taken out on the property at night, etc afterwards, as the tenants/bikers will assume the landlord had knowledge of what was coming and didn't give any more notice of what was soon approaching for their mother - the one hour timeframe to get out. Although small, its a surprisingly valuable house.

If instead, the usual 3-day notice is given for a "substantial lease violation" and then I approach with a cash for keys scenario, I suspect it will be easier on everyone than the one-hour eviction scenario. I have seen inside the house, and there is an immense amount of junk. If the tenants remove it, it probably will cost less to have it remediated as the contaminated belongings will be removed, with the incentive of the cash for keys scenario. Of course, the health department could show up at any time before or during the 3 day period. The Industrial Hygenist that tested the house and determined the meth levels was supposed to report the results to the Dept of Health by now, but government moves at its own pace.

I should ask the property owner if he wants to serve the 3 day notice with cash for keys (probably paid by me) or wait on the Health Dept to post it for the 1 hour notice - if in fact they really do post the meth properties, that I am waiting to hear on.

Really good suggestions provided above - thanks.

I contacted both an attorney today, and made a call to the police department on it. The attorney said an eviction can be done as there was a "substantial violation" of the lease and the usual 3 day notice, and then filing an eviction action can be undertaken. She also said she would take a look at the state statute on Methamphetamine - I haven't been able to find it online myself. The attorney said I may want to consider whether or not to bring in a governmental agency, in the form of the Dept of Environmental Health or not as it may become more complicated. The remediation companies deal with the Dept of Environmental Health, giving them notice of contamination, and being being cleared of contamination. Also asked an employee of one of the remediation companies who said that the Dept of Enviro health condemning the house doesn't make his job more difficult. and that the police would remove the tenant quickly. I get different info wherever I go.

I called the non-emergency line at the police department and they did say the usual eviction process was required. I can roll the dice and see what happens with the Dept of Environmental Health, but plan to call and ask what would happen anonymously, first. Conversely, I read a news clip of a meth contamination at a house in Boulder County, CO, where the tenant was given only one hour to vacate after notice by the Health Dept, but Boulder County government can be unique in many ways. That tenant had moved into a house the prior tenant had contaminated and still got one hour to vacate.

Another idea is to serve the 3 day notice, and have the attorney send a letter at the same time stating that the tenant will be sued for property damage if they don't vacate in short order. It would still be easy to find them for service, obviously.

I am working with the seller as a wholesaler - he just wants this all in the rearview mirror as soon as possible and there is equity to work with. Also a 30K difference in some of the remediation bids so far - definitely an inefficient market. Again, everywhere I go, I get a different answer so far.

I am working with the owner of a property that has two houses on it. The tenants in the first house had to be evicted due to non-payment and it was a long, ugly process. There were arrests for meth possession at that house and so it had to be tested  after the eviction and showed as positive. Once a single house on a property has tested positive, all other structures have to be tested. The second house had methamphetamine levels even higher than the first house.

That tenant is still in the property and hasn't paid rent since the house was tested and so is also behind on rent. I wonder if a second eviction process can be avoided as the house is contaminated. The owner is still reeling from the first house hasn't provided notice of contamination to the second house yet and knows there is another large fight ahead.

Is a formal eviction process required? All any of the remediation companies have said is to 'consult with an attorney" and I would like to know more before more legal bills are undertaken. Maybe there is an abbreviated way to remove the tenant in this situation? The tenant is the mother of some rough, biker gang relatives that visit frequently and just seemed like a "nice little old lady" at first take.  Its sure to be an adventure with criminal damage as it works its way to conclusion, especially as it will be removing some rough people's close relative and they are sure to take it quite personally.

Wanted to provide an update - the owner agreed to a two-month extension for getting costs to remediate the second property, and will bring cash for the cost of the second remediation at closing, as the price was already reduced to the loan payoff after the first house was tested as meth contaminated.

An interesting point in the post above - the remediation company will be doing the demo for the rehabber, so no demo cost to them. I plan to price the property with the cost of the remediation included.....at X price, which includes the cost of remediation. Buyer will then have to replace the sheetrock.

It looks like I need to take some remedial business writing courses, as I've failed to communicate that I will be wholesaling this property, and not selling to end users - but to a rehabber and will disclose to them, especially as they will receive the estimates for the remediations. I couldn't wholesale a suspected meth property without having it tested and did the right thing on it, out of pocket, and then again, and again. I'm in 3k on testing so far.

As mentioned, the owner came down to the amount of his loan pay-off on the first house very quickly- the contract amendment came back within the hour - and I need to communicate the second set of positive meth results from late last week, soon. There is no more equity to work with on the cost of the second remediation though (much less sheetrocking it again, etc. )It has been mentioned that a bank would likely be cooperative on a short sale, but I hear nothing but bad things about short sales and that its not for wholesalers. I could pursue a sub-2, but wholesaling a sub-2 isn't a good idea and have only done that once, in a foreclosure situation where the buyer put a lot down and I was confident they wouldn't walk away. I can ask the owner if he has the funds to bring to closing for the second remediation, and  when he says no - would he then be willing to do a Sub-2 instead, which sounds like a pretty easy conversation though. I would still be in the deal to some extent afterwards, even with a loan servicing company, and it could get messy afterwards anyway.

The first bid on the remediation of the first house of 1200 ft was 28K for both meth and asbestos remediation, but the bid on the second house (cottage) of only 400 ft was 22k for meth and asbestos remediation. Seems out of control, as the second house is a third the size of the first, but the bid by the same company is 78% of the first house, an inconsistency @Bill S. mentioned in the post above. I will call that company for an explanation, though am sure there will be a justification. There are about ten companies that offer remediation and I can get bids from all of them, and mention that one company wants to bid about three quarters of the cost on the second house for a third of the size, and maybe they can "do better". I was amazed at how fast the first company offered to come over and offer a price on the work after reading the reports - this does seem like an inefficient market area currently. I wholesaled another meth property that had already been remediated, but the sheetrock not replaced yet, and that buyer jumped at the deal and never even asked for a copy of the Decontamination Certificate, so I'm confident it  can be done.

My immediate issue is getting another extension and whether to pursue the seller bring cash to the closing table or to pursue a Sub-2 with the problems with that mentioned. The rehabber would certainly like that as a wholesaling point to them though. I always double close and being tied to the deal later would be problematic as buyers like the deal until they see  your fee afterwards and I would still be involved in helping them through the parcel split process so the houses could be sold separately, etc. I might have to insist on the owner bringing cash (he has ten rentals out of state but of course will plead poverty) or having a much thinner deal. If writing a check at closing, the seller will likely take a much harder look at things though.  I remain open to suggestions on a complex deal.....

I have under contract a property with two houses on one lot. There was an indication of methamphetamine contamination due to police activity there, and I had the problem house tested before wholesaling it. It came back positive and has to be stripped to the studs, due to the levels of meth.

As part of a remediation, all structures on the property must be tested, and it turns out the "nice little old lady" in the second house whose been there for six years is either a meth user also, or has family that stays there who is - lots of pot paraphanalia seen during meth testing. That house also came back with very high levels. After the first test showing positive, the owner reduced the price to the amount of his debt, just to get out of the property. Now there is a second house that must be stripped to the studs.

There isn't any more equity to work with and its always hard to get a seller to bring cash to closing, though I have for much smaller amounts. There isn't much else but Sub-2 left to negotiate for that I see and I don't see a viable use for that in this situation.  I plan to wholesale them in our local strong market, and help the buyer do a parcel split so they can be sold separately (I have done three parcels splits for other buyers of houses with two on a lot).

If I don't negotiate for more, it also makes a seller wonder why he came down so much on the first house that tested positive, though I could still make the deal work with no price/terms adjustment but it becomes a lot thinner and I've spent a lot on meth and asbestos testing - something wholesalers don't usually do, but it was previously a much stronger deal.

How might I proceed in negotiating further with the seller now that there isn't any equity left - and there is a second house to be stripped to the studs and rebuilt? Its been another college education along the way...