OfflineSo this is my husband and I's third deal that we just closed on yesterday. Check is in the bank for a profit of $3500. The other 2 deals we did were found from Craig's list and bandit signs. This was our first deal we did through a Realtor and it took us several times to find a realtor that was up for this strategy, so I thought I'd write about our experience.
Basically, if you submit 25 offers from the MLS (50-60% asking price), you will get one to accept. These offers must be on homes that are listed as vacant, price reduced, and "as is". All three of those must be in play. The first time we had a real estate agent say they would do this for us, the agent was kind of negative about it, and he made us go and look at every property we were making an offer on. We submitted all 25 offers through him, we did get one counter offer for only $3,000 over what our offer was. Hindsight tells me we should've done that deal, but we were chicken as we had never done a deal before, so we counter offered at our first price and the deal didn't go through. Our agent got frustrated with us and we ended up parting ways.
The mistakes we made on the first round were that
1. we allowed the agent to make us do extra work which also caused extra work for him.
2. we only put down $1 deposits on these contracts and that made a lot of people mad about our offers. Now, when we submit an MLS offer, we do a minimum of $1500 deposit which is not a big deal since we have our contingencies in our contract. (you only pay this deposit if you get your offer accepted)
3. On the houses we made the offers, not all of them had the 3 requirements of "as is", vacant, and price reduced.
Regardless of our rookie mistakes, the first round of 25 to 1 still worked! We just didn't go through with it. Also, our real estate agent was not up for all the paperwork. He's a retail agent and likes showing houses and is not much of a paper pusher. That's OK, it's not a good fit.
Fast forward to what DID work. We found an agent who is a hockey Mom and does real estate on the side and doesn't like showing houses, having a schedule, or doing all the things that retail agents do. We told her our strategy and asked her if she would be willing to submit 5-7 offers a week (goal to get 1 MLS deal a month). We told her the offers would be low and she may get some people who make snide comments about the offers. She said she was up for it.
So, seven offers in, the house was on the market for 9 months. Listed at $55,000, move in ready and newly remodeled (not a great remodel). We offered $33,000 with a $1500 deposit and our offer was accepted! No counter offer! We marketing the house for a week, found a buyer and closed 4 days later. Our agent was out of town for the closing, but will get a check for $1000 on Monday when she gets back.
The end buyer gets a house for $36,500 and will rent it for $800/month! That's a great return!
We texted her to let her know that the deal closed and there is a check for her at the title office. She texted back, "Let's do that again"! Yes Ma'am, we will do it again!
Couple pointers for working with agents. Tell them your whole strategy. If they try to make you do something different, move to the next agent. It's OK if your strategy doesn't work with them. Heavy retail agents will probably not be up for this. Don't let the agent take the lead, you're the one in control. Anyway, good luck to everyone out there. I just wanted everyone to know that the 25 to 1 strategy is alive and well in my area. Onward to the next deal!
Peace! -Susan and Steve
Susan and Steve,
Thanks for the post. I am working on my first deal now, but it is not with a realtor. I have been a little nervous about working the MLS listings, but I love the way you have laid out the process.
I talked with an agent yesterday and I believe she is going to be the one to take the chance with. Now, I will know how to handle it. Thanks again for sharing your experience!
Congrats again !!!!
Lori
www.cthillproperties.com
Great Job! Thank you for sharing and excellent job on providing details!
Best Wishes!
Dan
www.danbuyshomesfast.weebly.com
congrats...so are any of the mls props you offer on reo's or short sales?
Don't Wish the Past, Create the Future! - DH
hello Susan and Steve,
I love your post. Thats what my partner and I did with our 3rd deal. I can not tell you how many agents we went through. But its worth it to keep going and to move forward until you did find the right one. I love your story and can relate very well. I am looking forward to seeing your next deal. WOOOO HOOO Congratz again Lets hear more:)
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www.virtue-investments.com
nice deal! thanks for sharing the details for others to learn from! just awesome!
wishing you many more deals,
Valerie
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We do put offers on REO's and short sales. They take a lot longer to get a response from, but still worth pursuing. This property was not a short sale or REO. We did buy and REO and flip it for $15K profit without doing any rehab. I think if you do wholesale an REO or short sale, you just have to double close instead of assign the contract. This one we just assigned the contract. Also, this one, we believe was a private funded short sale. Meaning that someone used someone else's money to buy and rehab the property, but didn't do a very good job, and the investor got tired of waiting and just took the next offer for a loss. At the closing the paperwork showed that the seller received $0, so all the money went to somebody else. We are not sure on the story there.
-Susan
Congratulations! Thank you for sharing this with others. The tips and stories like yours are very helpful priseless. I'm working om my buyers list right now, failed with one REA, not sure about another one but I'm not going to give up like I did before. Yhank you and other people on DG site. And of course to Dean. It's amazing what he did and continies doing for people.
Congrats, guys!
What do you use for contingencies, and what would you do if you didn't have $1500 deposit or you didn't have it by the time the offer was accepted? Could you state on the contract that it's due at closing?
Susan and Steve, CONGRATULATIONS on your success!! and THANK YOU so very much for sharing what did not work and what did work when working with a realtor. This is VERY helpful! We wish you continued success!! Deb & Mike
Living proof that MLS deals do still exist :0 How did you find your buyer, was it someone you already had?
Lenee
www.allstarhouses.com
~Act successful! And you'll draw it to you.~
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Good job! Keep doing it and doing it, and masterize your system! It really feels good sharing your success in real estate. Tom and Jeri
Tom and Jeri
www.TuCasaInvestors.com
www.TuCasaRealtyllc.com
I have been watching your posts and am so impressed with your action and so proud for you for changing your lives with real estate !
And great job "handling" those realtors.
Keep it up !
I'm gonna be boarding soon.
Best wishes to you both.
Peace,Love and $$$
XO
Angie
Where did you meet the "hockey Mom" agent? I picture me just phoning through the yellow pages to find someone for me.
"A man who has never lost himself in a cause bigger than himself has missed one of life's mountaintop experiences." Richard Nixon
It sound like you guy have it together. Once you get going there will be no stop sign in your way just bumps along the way.
Averyday is a Friday so weak up each morning and get excited.
Our inspection contingency was for 10 days. We also had a contingency for partner approval that didn't have a deadline. As for our buyer, he was not on our buyers list before we found this deal, but he is now and is buying a lot in the area. We have about 10 solid buyers on our list that own 5 or more props in the area. We advertised the property on Craig's List and Postlets and that is how our buyer found it.
As for the deposit question, I doubt you would be able to negotiate to pay the deposit at closing, that kind of defeats the purpose of the deposit. The deposit shows you are a serious buyer. If you have a solid enough buyers list (and we are getting there), you don't have to worry about the deposit because you will have specific orders from your buyers and you can just contact your buyer and tell them the deal and get the deposit from them. We do not have this in line yet, but are getting closer. You can probably also get away with $500 on the deposit if you need to. We have found that the larger the deposit sometimes makes the seller more willing to take the deal. That makes them feel more secure with the buyer they are dealing with. They don't get that money until closing, but it is just more reassuring when the deposit is higher.
At our last REI meeting, we spoke with the guy over the club and he said that he had submitted numerous offers on a house for $30K and it kept getting rejected. The rejected offers he kept putting up a $3K deposit offer. Then, he was frustrated and saw the prop still not moving, so he offered $25K (a lower offer) with a $25K deposit and it got accepted. This was an REO prop he was buying. Seems silly, but we have heard this strategy working quite a lot.
Thanks for the inspiration and the great information. I will bookmark this one.Good luck.
And thank you for sharing that story. I am also still working with my first agent. She came back to me offering information I was looking for earlier. She said the market is just dead here. I went out and drove the neighborhood today and got quite a bit of numbers as well as putting out signs.
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As for the deposit question, I doubt you would be able to negotiate to pay the deposit at closing, that kind of defeats the purpose of the deposit. The deposit shows you are a serious buyer. If you have a solid enough buyers list (and we are getting there), you don't have to worry about the deposit because you will have specific orders from your buyers and you can just contact your buyer and tell them the deal and get the deposit from them. We do not have this in line yet, but are getting closer. You can probably also get away with $500 on the deposit if you need to. We have found that the larger the deposit sometimes makes the seller more willing to take the deal. That makes them feel more secure with the buyer they are dealing with. They don't get that money until closing, but it is just more reassuring when the deposit is higher.
At our last REI meeting, we spoke with the guy over the club and he said that he had submitted numerous offers on a house for $30K and it kept getting rejected. The rejected offers he kept putting up a $3K deposit offer. Then, he was frustrated and saw the prop still not moving, so he offered $25K (a lower offer) with a $25K deposit and it got accepted. This was an REO prop he was buying. Seems silly, but we have heard this strategy working quite a lot.
I am confused when you say deposit your talking about earnest money right?
You also said they don't get that money until closing?
What money are you talking about?
I am super glad you are sharing this it is very useful information. I have a pretty good agent I just met with a week ago that wants to do a buyers representation agreement with me. We haven't closed any deals or anything yet because he just had to put his father in hospice and is dealing with that. I told him to take his time so I will be contacting him on Monday being a full week since we last spoke. Anyways I am told the realtors that request the buyers rep agreement are normally are some of the better ones...we will see. He understands the numbers thing, but I am not sure how he would feel about something like this. I might give it a try after a few of his normal deals he brings me. I told him I want to view properties 150k or less as that is the limits of my buyers and that I am only paying 70% of after repair value less the repair costs, so that might work doing what you are if those numbers match up or close then negotiate as needed. I know in Texas I have 24-48 hours to get in with earnest money. However I have a nice handful of buyers and am always looking for more. I figure I tell them the numbers and let them know the first one to get in with the earnest money check can have the deal and just put up say $10 for my option period so the property is legally locked anyways as money has changed hands and can't be taken out from under me.
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Great success story there. One question,...are you using the RPA for the association of Realtors in you area, or using a standard Purchase Offer contract.?
Gil
Congrats on the deal!! It is not easy to have success wholesaling properties on the MLS or working with realtors in general.
I was just curious if are you using the standard State Realtor Contract and if you are, did you write and/or assigns after your name as the buyer? The Pennsylvania (my state) contract says you can't assign the contract without the seller's consent, so I was just curious if you used your own contract or the realtor's contract and how you went about it. This is key for anyone trying to do deals on the MLS.
Larry F
FlipKid.com
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Larry F.
The Flip Kid
Congratulations on your first deal !! Keep that money coming in .
One more question "Basically, if you submit 25 offers from the MLS (50-60% asking price), you will get one to accept. These offers must be on homes that are listed as vacant, price reduced, and "as is". All three of those must be in play" This is what you said.
Is this 50-60% off original listing price or the current listing price?
When you say all three of those must be in play are you saying it must be vacant, and they have a price reduction already?
Does it have to have the key word some where saying as is. I figure most properties are "as-is" someone please correct me on that part if I am wrong. Thank you.
"I have my mountain in sight. I am climbing to the top and I will kick anyone off that stands in my way or tries to hold me back!" --quot by me.
--quot by me.
"My glass isn't half empty, its overflowing!" --quot by unknown modified by me.
"The sky isn't my limit I can keep going!" --quot by unknown modified by me.
"There are too many square people and I think a little differently if that makes me round hey its better than being flat"
Follow me on my Journal:
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answer to your question: Most properties are not sold "as-is". After you do an inspection, you typically would send your list of repairs you are requesting in order to complete the sale. That is normal for retail sales. Most investors buy "as-is" and they just deduct repairs from the purchase price. The 50-60% offer can be from either the original list or current list price. Per Matt Larson, you just take the current list price and offer 50% and I believe that would work, but we usually do a bit more work with the numbers. We don't go look at any of the properties until we have an offer countered or accepted.
Price reduced will always be listed in the listing. "as-is" is in the description of the property usually, but vacant is typically not listed in the property, but by looking at pictures, you can tell. (or driving by).
I hope this helps.
Congrats and thanks for sharing. Really optimistic for us wanting to do the same
When you trust in yourself, you are trusting in the wisdom that created you.
Ah... I see. I am not used to the idea that a seller would be willing to do that. The "as-is" it what I am used to doing because I find the sellers don't normally have the finances to make the repairs or I don't trust them to do it properly. I've just seen to many houses where owners try to DYI it and that is part of the repair cost lol.
You said you usually do a bit more work with the numbers do you mean by checking sold comps with a CMA first before you make your offer to make sure it is fair as well?
Or do you do something else?
"I have my mountain in sight. I am climbing to the top and I will kick anyone off that stands in my way or tries to hold me back!" --quot by me.
--quot by me.
"My glass isn't half empty, its overflowing!" --quot by unknown modified by me.
"The sky isn't my limit I can keep going!" --quot by unknown modified by me.
"There are too many square people and I think a little differently if that makes me round hey its better than being flat"
Follow me on my Journal:
http://www.deangraziosi.com/blogs/jcommons
Way to get that third deal under your belt!
RENinja
"Remember, success is a journey, not a destination.
Have faith in your ability."
Bruce Lee
Way to go Susan and Steve! Thanks so much for showing how you are working your business. The MLS is alive and well folks, don't listen to the negative remarks about it, there are alot of strategies out here, so pick one or two to go with and make it happen.
SEMPER FI
GET SOME!
Way to go. It is so obvious that you guys have owned and operated businesses before!! When you read something you understand and take action!! You guys are entrepreneurs for sure. You are a great example of how to be successful in this business. MAKE OFFERS, get to doing REAL business. Not over analyzing and hi tech yourself before you even know the answer to the most basic questions!! Isn't it great how you learn with every REAL deal and offer you make!!
Once again, congratulations you two!! The sky is the limit in 2012!
Michael Mangham
Mentoring/Partnering Nationwide
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
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I'm going to try to answer this one, but my hubby really could answer this better, he handles the paperwork. We do put our contracts in as "Lobdock Properties and/or Assignee". We don't use the standard Oklahoma contract, but it's very close. We just add our contingencies in and the three contingencies are the inspection period which we had 10 days on this one (might ask for longer next time, but our buyers list is big enough, we can typically move the prop in 10 days anyway). The next contingency is per partner approval. I don't know where in the contract we have this listed, but it is in there. There is one more contingency, but I don't recall it at this moment.
The important thing to understand is that we do not try to fool anyone about what we are doing. We are up front. As far as having an agent put in 25 offers, that is a lot of paperwork. I think you need to be honest with your agent and the agent that is best to work this strategy is probably not the same kind of agent you would want selling your own house. The agent we are using is really busy running her children to all their activities and such and is busy with her family. She loves this strategy because it's just pushing paper and it brings in extra income for her. I would say that a normal retail real estate agent is probably not going to love doing this for you. That doesn't make them a bad agent, they just aren't right for this strategy. Be up front and honest and you will go further.
The point of the 25 to 1 strategy is that you are looking for the one seller who is ready to sell at any price. They are out there, but you don't know who they are until you throw the bait out there. That said, I don't think you are going to gain much by over analyzing the numbers, just make offers.
-Susan
Thanks,....good points there,....
Congratulations again,
G