OfflineQuestion: How do you handle a seller who asks you for an offer after asking them; "What's the least amount of money you are willing to take if I offered you cash and closing in 30 days?"
Here's the story on this property:
Dove into bird dogging for the first time yesterday. Found an ugly house in a great location. Seems vacant. Neighboring houses looked good. Lawn's mowed but house looks empty.
Property Stats:
3Bd/2Ba. 1150 sqft. .69 acres. Built 1964. Last sold in 1995 for $90K. Low-end ARV and comps are $160K. Large driveway with two carports. Close to Shopping centers, bus routes, restaurants, highways. urban/suburban area in Manchester, CT.
Took down the address. Called the town tax assessors office. Asked the clerk for property owner information. Clerk actually gave me the name and phone number of the owner. Phone number she provided from the water record she looked up. I was shocked she gave me this information. Seems like an invasion of privacy that this information is publically available. I'm happy about it though : ). Owner seems to be another investor based on the tax record name. Property is owned by "Robert Henry, LLC". Called the owner. Was nervous before and during call. Spoke kindly to the owner called "Henry". Explained my reason for calling:
"Hi, my name is Pedro T, I'm a local real estate investor. I drove by the property on X street. Would you be interested in selling it?" Henry just replies, "Depends on the offer. The property needs work." I said, "I understand. That's okay. How much work does it need?" Henry responds, "Well, some folks might just paint it. Other folks might replace the carpets, It depends on folks." I then asked, "What would be the least amount of money you would take if I offered you cash and closing in 30 days?" To which he responds, "What is your offer?" At this point I'm feeling a bit frustrated because I can't get the guy to open up. He doesn't give me a number he'd be willing to sell at. His answers are brief - doesn't seem to be a talker but there is a hint of interest in his tone. I can't get a number out of this guy. So I kindly explain, "Well, it's hard to make an offer without looking at the inside to get an idea for how much work needs doing." Henry says, "I'll be at the property tomorrow. You want to take a look?"
Speeding the story up from here: I made an appointment to see the inside of the place today at 1PM EST time. I asked if he'd be okay with me taking pictures to show contractors. He said fine. I walked the property this morning. He doesn't live there. He's a local out-of-towner. There is a new furnace in there, but it's not hooked up according to him. It doesn't seem to be livable at this time. From the outside the house needs new siding and I'd put new windows in. I'm not a handy man nor do I know repair costs, but I wonder if $30k would be enough to repaint the inside walls, carpet, furnace installtion and siding?
I've got one guy on my buyers list, but I know how to get more fast and easy. I'm not worried about that.
Not sure this place is a deal. Regardlness, however; I'll say this for sure: So far I've had a blast. I can see myself doing this for life whereas I cannot see myself working corporate america for life. Deal or no deal this is fun, challenging, and an entertaingly learning experience.
The main question I'm looking for an answer to is this. (As stated in the openning of this post):
How do I handle a seller who wants an offer after asking them; "What's the least amount of money you are willing to take if I offered you cash and closing in 30 days?"
Thanks for your help, DG fam!
Pedro,
Just tell them that you need to do some homework on the house itself and the neighborhood. I think you gave him a good answer. Especially since he seems to be an investor himself, he can appreciate you needing to get more information and run some numbers.
Vincent
"He who is mighty has done great things for me...He has...exalted those of humble estate; he has filled the hungry with good things..." Matt. 1:49-53
You made the classic rookie mistake. Don't do it again.
Think about it from his perspective; he knows you're going to lowball him. But why would he aid you in lowballing him???
Just from reactions it seems he's not a distressed owner so you may want to be calm and don't show your hand that you're new to this.
1. Bring a camera and notpad
2. Write down things you think needs work
3. Take lots of pics
4. Ask about age and type of heating system(whether its oil, propane or forced air). Then ask to see in basement
5. Age of roof and last time it was replaced and if they still have receipt
6. When electrical system was updated
7. Is there a history of asbestos or lead
DO NOT!!!! make an offer. Let him know you want to go over your notes and pics before you make an offer that you both can agree on. That statement should let his guard down with you and he may then open up to and actually help you speed up the process.
Hope it helps
Thx for your suggestions.
What rookie mistake did I make? I asked him the questions just as DG recommended. His response was to ask me for an offer. I agree with you - this does not appear to be a distressed owner. If anything, this is a secondary investment property, which has been sitting for a while.
I plan on making no offers today. I will get an estimate of repairs from my first-in-line buyer based on the pictures to be forwarded him.
Thx for the list of questions. I will be sure to ask those. Additionally, I will prod him to see if I can find out when he last bought the house, how long its been sitting, and what his plans are for the property.
One thing I know is this: Questions are the answers. The more the better.
We need more of these kinds of posts, with the details on what you said and did. Sounds like you followed Dean's advice to the letter. Keep us posted, ok? I think I'm going to print this one.
Angie and David
"Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of educated derelicts. Persistence and determination alone are omnipitent." --Calvin Coolidge
My Journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/45893/...
What rookie mistake did I make? I asked him the questions just as DG recommended. His response was to ask me for an offer. I agree with you - this does not appear to be a distressed owner. If anything, this is a secondary investment property, which has been sitting for a while.
I plan on making no offers today. I will get an estimate of repairs from my first-in-line buyer based on the pictures to be forwarded him.
Thx for the list of questions. I will be sure to ask those. Additionally, I will prod him to see if I can find out when he last bought the house, how long its been sitting, and what his plans are for the property.
One thing I know is this: Questions are the answers. The more the better.
I know its recommended that you ask how low of an offer they wuld accept but, sometimes adjust your pitch to what you think is best, not always to the letter. Think of his slow, short meticulous answers; he knew eventually you would either
1. Ask how low an offer he would accept
2. Offer a lowball offer on the spot
3. Tell him you'll call him back.....and don't
The ice has been broken so do your research and have three offers onhand
1. Low-end offer
2. Middle of the road offer(present this)
3. The most you will offer offer(in the case of a counteroffer)
Tell him something like this
"Mr &^%$ I really like the house and would like to offer $$$$. If you don't mind me asking how long have you had the house and how long has it been vacant???"
IMMEDIATELY!!!! before he can asnwer that ask him "I have a contractor but just in case I may need someone else, can you recommend someone???"
Let him answer, and then he'll go back to the original questions re your offers. He may be more at ease with his answer and counteroffer and will/should answer you with alot more calm. If he gives you a counteroffer thats above your highest, just say "can I get back to you??? Thats a little above my max budget but maybe I can swing it. Let me do the numbers"
Make some more small talk, ask if he has any other properties or knows anyone else looking to sell, etc. Then politely say "Mr %$# i'm gonna run and try and see what I can do to buy this place."
The next day....call him back and say "Mr ^%$ I worked the #'s and the most I can offer is $$$$. Is there any way we can work this out???"
I'm willing to bet a cigar he'll accept your offer
Now I get it, Elix. Thanks.
The artistic element of negotiation.
I'm going to print yours too!
"Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of educated derelicts. Persistence and determination alone are omnipitent." --Calvin Coolidge
My Journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/45893/...
Pedro:
The way you handled the deal immediately put both you and the seller into the negotiation phase. His reply to you was exactly what it should have been.
The first rule of negotiation is that you never throw out a number. The first one who does loses.
If you said for example, I will give you $100,000.00 for your $160,000.00 house, which would have been a decent purchase price, not great, but decent, he may have said, yes, you gotta deal and you would have been excited to get your first deal, but how excited would you have been to be at a closing table and once it was all said and done, he, the seller said to you, nice dealing with you, but I would have taken $70,000 or even $50,000.00.
You must always see the inside of the property and do a thorough walk through before making an offer. Don't rely on a drive by to get excited. You may be married to a property for 90 to 180 days, before selling it, so you better know the property and the only way to know is by looking at it thoroughly.
You make money when you buy, not when you sell. Remember this. The better you know a property, the better you can buy it for, and thus make more money when you sell.
1 PM sharp. I arrive at property. Owner's absent. 3 minutes pass. Owner still absent. He's late or blowing me off. Knowing full well he's at least late, I decide to make a strategic phone call. , "Hi Henry, Pedro here. I'm at the property. Are you inside the building? Should I ring the doorbell?" Henry replies, "Sorry, I'm in front of BJ's store around the corner I'll be there soon."
Soon after, Henry arrives. The greeting begins. My first time meeting an owner of a distressed-looking home considering sale. Was I nervous? Believe it. You bet I was! Did I know what I was doing? By the book, yes. By experience, heck no! Here's how the meeting went:
Henry steps out of his car. We walk towards each other meeting halfway. The best way to meet someone and make a good impression is to offer something before they do. I offer my welcome first: "Hi Henry, nice to meet you. I'm Pedro T. Thanks for coming. How are you?" Henry's reply, "Fine". Right away I can tell he's a contractor-investor. Stock-build. Utility belt. Strong arms. Rough speech. This guy works in the trades. He's got enough experience to pull the wool over my eyes and I wouldn't know he was doing it. I had suspicions over the phone he was an investor. But I had to walk the process out for the experience. Who knows. Maybe he will sell. I'm not discounting anything. One mans trash is another mans treasure.
We began walking up the stairs from the backyard. Most of you may have a laugh at this part. Of all the questions in the world to come up with; I ask him this first question about the property: "The siding on this house - is it made of asbestos or lead?" Turning around, Henry looks at me right away. Smiling, he says, "That is wood siding. You are new to this." I smile back and answer, "I am". At this point I mentally face-palm. Who on the planet asks if house siding is made of LEAD??? That's me. I'm the one guy on planet to ask that question. To seem like I know what I'm doing I then say, "I'm an investment broker. I find properties for a list of cash buyers that are looking to invest in rehabilitation-needy properties. They give me a list of items they want in an investment property. I go out and find them. I'm not a contractor, so I wouldn't know". I still should have known siding is not made of lead...or is it? lol. I don't know, but I attempted a recovery and kept going.
We reach the back door. There's no door handle. He pushes it open and immediately his phone rings. He puts HIS phone to MY ear. A woman speaks, "There is an unauthorized entry at your property". Sounds serious. Henry explains, "That's the installed security system on this place. It calls me Whenever the wind blows the door open". His phone rang several times while we were there. lol. He is a strange and interesting character. I'm having fun. I begin to relax. My confidence grows. This is nothing like I imagined. I feel like a main character on film. Only been with this guy for 10 minutes. Wonder what the next 50 minutes entails. We enter the kitchen. Small. Needs updating. Looks like someone kicked a hole in the lower wall. Out of anger maybe? Damage is minimal.
In summary, the place looks a minor dump. Needs to be cleaned out. Structurally appears sound. Walls in most rooms are clean. Bathrooms look clean considering nobody lives there. I ask him, "Henry, what's your plan on this property?" That simple, short question opened the floodgates. He answered with the following information:
Purchased the property through auction three years ago. He is a cash buyer/investor. Only buys from auctions. He gambles on them. Told me he's had to shovel dog feces and maggots from prior properties he bought at auction. His strategy is buy, hold, and sell. It's not working for him in this market. His money is all tied up. He wants cash. That's why he wants to sell the place for the right price. I'm still not feeling he's a distressed seller.
Was sometimes hard to see in the house, so HE hands ME a flashlight. Henry's a nice guy. Rookie mistake by me. Next time I bring a flashlight just in case.
Everyone here will get a kick from this next discovery. Out the corner of my eye I see familiar signs. Bandit signs! I point to the signs and ask Henry, "Are those your signs?". He replies - again smiling, "No. I see those signs all the time. I take them down. I don't think it's right that people post those signs. I don't like it so whenever I see one I just take it with me. Those ended up here." My response, "I see". He continues, "You know what those folks are doing now? They are putting those signs up high on the utility poles. I can't reach them! Can you believe it?" At this point I'm thinking, "Thanks for the tip, Henry. I'll remember to post my bandit signs high-up utility poles instead of on lawns." lol! My response to him, "Imagine that. That's pretty crafty, eh?"
I told him buying pre-foreclosures is the way to go if he can find them. At any rate I took 48 pictures. Uploaded them to flickr at http://www.flickr.com/photos/50013635@N06/
for my buyers to look at.
Before ending our meeting I ask him again, "Isn't there some figure you have in mind that you'd like to sell this place for?". He says, "You're a business guy. I know what will happen. I give you a figure then you offer me less and I counter with more. I want to see your first offer". So off I am. Thanking him for showing me around. I tell him I'll be in touch. He asks me again for an offer and I tell him that depends on variables I don't have access to at this time. He says, "okay". We part ways.
I later called the Town Clerk's office to find out what he paid on the place. They pointed me to two online databases I could access from home: Land Records and Re-evaluation database. Both databases showed zero for purchase price. Clerk agreed that is strange, so now I gotta go to see the copy of the deed at the town hall.
I call one of my buyers. He says the property already sounds like a stretch/no deal, but he will look at the pictures and run the After Repair Value (ARV) numbers and comparable sales to see what kind of offer he'd make. Based on my talks with him he says the house sounds like a $35k rehab job. We'll see. He will get back to me on Saturday. I'll keep you posted.
You are doing a great job I can't wait to read the next paper of your meet the owner
Angie
May each day get better
I just went through a burnout. The seller calls me up and he tells me that he already have it on contract for 225K how much will you give me for the property. I tell him I don't know I have to see the property. Before that I tell him that he can't be in contract with someone else and then sign another contract with someone else for a higher offer. I told him" that the person you got in contract with probly register the contract at city register and if he did and me and you try to close on our agreement that we would not be able to close because his contract would cloud the title. I go over there he tells me that he had a contractor go over there and give a estimation on the cost and repairs, which amounted to 140K" plus 225K = 365K. I futher told him that if he offer you 225K for this property here he gave you a good price for it, he said that it might not go to closing. Conclusion I don't belive that he had the property under contract for 225K. But being that he threw that out there I'm gonna make belive that he have it under contract and just follow up in 4 to 5 weeks.
It sounds like one of three things. Either he is another individual such as yourself, he inherited the property and is looking to sell or he purchased it under a land contract where he will get title once certain things occur.
If he is not on the deed, I would not pursue this any longer because he will not legally be able to sell to you or anyone.
Jimmy
You wrote: The main question I'm looking for an answer to is this. (As stated in the openning of this post):
How do I handle a seller who wants an offer after asking them; "What's the least amount of money you are willing to take if I offered you cash and closing in 30 days?"
You say, IE: I'm gonna be somewhere between 50-80k, Is it worth me to come over & take a look at the property.
Jason S.
San Diego, CA.
**All CASH House Buyer!**
Refer Us To Neighbors, Friends & Family, Earn $1,000
LIKE my FB page http://www.facebook.com/JandBHouseSolutions
Asiebert - Thx for the comments : )
Jayda - That reads like a confusing situation. I'da been outta there soon as things felt shady, as they read in your post.
Jimmy - I hunted down the lawyer that auctioned off the property to the current owner, so it's been confirmed in multiple places that he does in fact own the property.
Jason - Nice reply! I like the range strategy. I will use next time this situation comes up. I'm sure it will save some time.
Vee here, Great job, I'm looking for your following cases. I am also scared but I'm going for the kill.
This is the type of information I like to read about providing an almost visual picture, as I am a visual kind of guy. The funny part of going through the back door versus the front door and just picking up visual clues, such as the person you're with: stocky build, voice inflection, speech, soft or rough hands in who does the work. Part of our job is similar to being a Sherlock Holmes of homes and people. Keep up the great detail, Thanks!
Bill G.
Never Give Up, Never Surrender!
Do your research and give him your first offer
Remember what I said about having the three offers in hand
When you tell him the price, give a small explanation behind the reasoing of that price
"I went to the tax accessors office, as well as did comps on recent sales in the area with last sale two months ago @ $$$$$" GIVE HIM THE SPEECH I GAVE YOU WHEN PRESENTING YOUR OFFER
He might not agree, but he'll be alot less defensive in his rebuttal
I see you asked again the price LOL.
90% chance you've got the house
This is one of those things I just cannot wait to see how it all comes out at the end. Elix has some great ideas and knows about people like this so play along with it and see what it comes out to as I just as anxious to see how it goes along with the others here and wish you the best in getting this one done as this is experience every one no doubt can use in the future if they come across something like this one too.
shawn
Good info here. But how about saying in a sort of joking manner,so your saying if I can pay you at least a dollar we have a deal, because I can pay a dollar cash, even 2 dollars, I can swing. He'll say whatever he says which will be hell no or something like that, then you say so what do you have in mind and wait for a response.
I got my mind made up.....
www.Kingjussinvestors.com
www.jussinvestors.com (buyers site)
My buyer calls me and says, not interested, but I might have some folks who would like the deal at $84K.
I feel at this point the seller bought too high three years ago. Just not enough equity built up in the home for a cash investor. Then I think - Lets try for a tenant buyer! Talk to Henry (seller) and he doesn't have the money to fix the place up now. So has been sounded like he's waiting for an unrealistic offer for him to take. Well lets see what happens:
I call the seller, Henry. Ask him what he bought the property for and that I will check town hall to see what he paid for it. He says, "You're not going to find out what I paid for it. It's not written." I'm not sure how he pulled that off, but he's right. Sale price is not listed in the town records. I tell him, "Offer $75K." to which he responds, "That's half what I paid for it! Not gonna work.... Hangs up on me. At that point I felt sick. The rejection set in and I felt horrible. I gave myself 2 minutes to wallow in the hurt. Then bring myself up from that disappointed feeling. Rose my head and said, "onto the next one. Got to keep going. Can't stop. Just like that 'Matrix' movie moment when Neo sits in car with Trinity. He wants out of the car, yet Trinity stops him. Looks him in the eyes. She says, "you've been down that road neo, you know exactly where it ends." Likewise, I know exactly where the road back home ends: Same stuff different day. Same house. Same wage. We want more so onward we go. Move.
Today I post my beginning journal. The first entries leading to a successful close. Here is that journal link (to be posted when up-I'll update this thread):
Hello Caz that is how one learns, get out there find a possible deal and give it a shot and see what comes out because if you did not take any action at all then you would not of know what would come out of the deal at all. The key point to this is that you went out there, found a place you thought would be a deal and worked on it. That is what you call taking the action and getting that knowledge, do not worry or feel down stand up and go for the next one. I have lost a couple myself but not due only to the offers I have made being low but also that the financing did not go the way I needed it for me to make a profit as well but instead only the seller was making money on the deal but I keep looking and keep trying so just hang in there and keep going.
shawn