OfflineFor those of us who live in “Hot Zones” like California and are having difficulty getting that first offer accepted: there is hope! I’ve tried the 25:1, 50% off listing price method and returned a big ZERO! I know the method works, but I think in some areas of our great Nation the 25:1 strategy needs to be tweaked to fit our unique market. Through grueling hours of research (okay, it was rereading some information from a local wholesaler and it took approximately 20 minutes) I learned why he and his wife are successful wholesalers. They approach are market completely different. They have a method and it works. They make approximately 12 offers a week and close on 4 houses a month. Below is a quick outline of what I learned.
1. Target Your Offers; this means no willy nilly offers with no rhyme nor reason.
2. Your offer should be within 10-15% of a deal ALREADY before you make an offer.
For example:
FMV $200k
For it be a deal it needs to be 50%-70% of FMV, depending on condition and area.
So: $200k X 60% = $120k for a deal.
Therefore, you need to find a listing no higher than $140k to offer $120k.
3. Prime times to make offers on REOs;
1) Day 1 On Market
2) Massive Price Reductions
3) Fall Out of Escrow/Closing
4) Board Ups (houses that are boarded up)
5) Trouble with the City (code violations, illegal additions, etc.)
If you come upon a hidden “gem” that has been on the market for over 90 days, and the listing agent tells you the bank is desperate then by all means shoot for the 50% of the listed price. I will be trying this method starting 8AM tomorrow morning! I will let all of you know how it goes. If you have success please share it with us. I would also like to thank Kurtis and Cindy (my local wholesaler) for their great information.
KimmyJ
“Ability is what you’re capable of doing. Motivation determines what you do. Attitude determines how well you do it.” Lou Holtz, Norte Dame Football Coach
1. Target Your Offers; this means no willy nilly offers with no rhyme nor reason.
2. Your offer should be within 10-15% of a deal ALREADY before you make an offer.
For example:
FMV $200k
For it be a deal it needs to be 50%-70% of FMV, depending on condition and area.
So: $200k X 60% = $120k for a deal.
Therefore, you need to find a listing no higher than $140k to offer $120k.
3. Prime times to make offers on REOs;
1) Day 1 On Market
2) Massive Price Reductions
3) Fall Out of Escrow/Closing
4) Board Ups (houses that are boarded up)
5) Trouble with the City (code violations, illegal additions, etc.)
If you come upon a hidden “gem” that has been on the market for over 90 days, and the listing agent tells you the bank is desperate then by all means shoot for the 50% of the listed price. I will be trying this method starting 8AM tomorrow morning! I will let all of you know how it goes. If you have success please share it with us. I would also like to thank Kurtis and Cindy (my local wholesaler) for their great information.
KimmyJ
“Ability is what you’re capable of doing. Motivation determines what you do. Attitude determines how well you do it.” Lou Holtz, Norte Dame Football Coach
Hi
Just joined this group about a month ago I do have deans first book which I'm reading through a second time. I havn't made any offers or deals yet currently in the process of trying to get a list built first since I plan to work mostly on the assign method.
but thanks for posting this since I live in ca in the palmdale area. I may have to try this.
If you don't mind me asking, you said in your area houses
are being snached, what area, state are you at ?
Thank you, very interesting info.
Though, I have heard from a seasoned investor (regarding the list price/FMV}
that if a property is listed for a certain amount that is the Fair Market Value
of the property, unless he was talking about REOs ONLY.
Anyone has any input on this ?
Thank you again,
Orit
I live in Southern California. Fair Market Value is based on what homes have sold for in the last 90 days not what they're listed price is.
Thank you, I'm so far away in FL LOL
Yes that is how we determine FMV, I don't know why this mentor/investor
said when I had an REO under contract that the price it was listed for told
him the MV of the prop. I had the bank accepted it for around 65% of the listing price
I guess (I actually know) it wasn't good enough deal,the agent which put the offer in
or me didn't think I should go lower, that's why I don't work with her anymore.
Hey, you learn from mistakes.
Orit
I am discouraged and hoping someone can give me some insight here. I have an agent sending me info. on homes as soon as they go on the market, all foreclosure properties. He sent me one 2 days ago 1st day on market I was really interested in. It was only 3 years old, in pretty good condition, and listed for 88,900, FMV of about 131,000. So it was listed at about 67% of FMV. I had an appt to go see the house today. Realtor called today and said the Bank had stopped showings, already had a dozen offers they were reviewing, AND some of the offers were above the list price. what am I doing wrong here? Is 2 days too long to wait to make an offer? Am I targeting the wrong properties? Do I need to go after older properties needing alot more work? Also, realtor who is helping me just told me that he doesn't see any money in flipping properties; but only in being a landlord for 20 years. I would like to assign some deals and build up some cash before even thinking about being a landlord. Maybe I need to keep looking for a better realtor. Do I need to focus more on pre-forclosures and attract sellers to me before foreclosure? Any comments or help would be appreciated. I'm trying to get started, but feeling discouraged. I think one of the hurdles I face is that my neighborhood is a relatively strong market compared to most. Thanks in advance for any advice.
What you are describing is starting to happen more and more in Florida. I have an experienced wholesaler friend (who has been quite successful) in Tampa who cannot get a deal right now as the REO's have become very competitive with the moratorium that was in place, (Plus the loan modifications).
It is happening in SW Florida as well. I am newly licensed in Florida and my broker just told me she sold a house listed at 53K for 70K..had 20 offers over list. That does not mean you cannot get a good deal but you may have to be willing to pay a little more, do more work, or be REALLY patient.
In my city in Ohio, there are a some deals where the rent will cash flow nicely. I have a friend who just finished rehabbing a fairly standard 1200sq ft 3/1..be real interesting to see if he can turn it...and if so, the bottom line..it took him just about a month.
Kate
"Whether you think you can or can't, you are probably right" Henry Ford
Thanks for the feedback. I am in Houston, Texas and live in and want to start investing in my neighborhood in North Houston. I live in a very large subdivision (Kingwood) that has always had a very strong housing market. Do you think REOs are too competitive? I'm starting to think this is where the "typical" investor (not a DG investor) lives, and they will pay more than we will for property. I'm thinking I need to seek out motivated Sellers BEFORE foreclosure occurs. I have not so far taken the time and effort to get this going... but it looks like this may be necessary to eliminate some competition for properties.
Thankyou so much! This was all that I needed to go out there and make a ton of money. I already know how to buy and sell. I do ebay and sale stuff. Doing real estate is really no different. My biggest obstacle was getting the funds. My credit is poor right now on account of being in and out of a job. I've tried investing before but gave up because of money.
This has really given me confidence in myself. I am currently out of a job and this will be my full time job. I have already sent my requirements to a couple of realtors in what I am looking for and I have scouted out houses in my area. I am on a ball and having fun too. Thank the lord!!
"Work hard Play Harder"
Do anybody know if there is anything involving any laws with the land trusts and double closing.
"Work hard Play Harder"