Properties Selling at listing price or a little above

I plan to use Matt's 25 to 1 strategy. I don't know how well it will work when properties are selling at listing price or more, with multiple offers. Need help, any ideas?

I Would say that This maybe a good thing for you. If you find these buyers and they are paying top price Then you need to put these buyers on your list. Now all you need to do is find negotiate or create deals that are way below fair market value.....YOU BECOME...what these buyers r looking for because YOU know how to find. These deals......these deals R out there......YO just need to find them ........lock them up......then assign to these top price paying cash buyers u have in your hand.
Go getum ray........good luck buddy!!!!!
Jay

Have you tried looking for or at houses that have been on the market for more then 90 days or more? There are alot of these properties around all areas these you usually can negociate a lower price for because the sellers are more motivated to sell. If you get a contract for one of these you buyers will love you and keep coming back.

What can you say about Florida.It does seem like people are paying full price cuz they are mutiple offers.I put 3 offers in on properties that have been on the market forever.Now it seem just cuz I put my offer in they started getting all kinds of offers.So yes it is a little harder here.Im in central Florida.I just lost my agent cuz she was getting yelled at by the seller agent cuz of my offer.

over bids in Alabama (Montgomery) areas as well. YES, Jay is right ADD them to your buyers list lol.

Why I had to focus on drawing non-listeds, FSBO, probates, etc. in order to wholesale them.

I have captured the property on MLS by submitting offers with earnest money equal to my offer price. (but you have to have solid buyers or means to come with the full amount in 24-48 hrs) so may be a 'little down the road' technique if you've not closed deals yet.

Blessings,
Jen

Jen if 100% correct on where you are going to have to go to find real deals. The problem in a market like yours is never the buyer. That is the easy part. I never market for my home/owner buyer. I list my properties on the MLS when its time to bring them to retail. That is one of the areas I DO use my agents for!

If the market is as you say it is than finding cash investor/buyers will also be VERY easy. That is not your problem here. It is finding the DEAL not the buyer.

Market and search for unlisted pre foreclosures, probates, tired landlords, expired listings, absentee owners, ETC ETC. In a market like the one you describe, making 25 offers at 50% of list price to an agent on MLS listed properties is a TOTAL waste of time. It just shows that different strategies work in different markets! You must adjust to your market!

One last thing. Agents are always calling for "highest and best" we have multiple offers! Yet the properties are still listed 3 weeks later. I see this ALL the time. They are just trying to get you to raise your offer in a lot of cases. So make an offer based on the numbers and FOLLOW UP in two or three weeks to see if the property ACTUALLY is under contract. If not, harass your agent and resubmit your offer. Follow up is key and so is an intelligent offer based on the numbers.

It sounds to me like MLS listed properties really are selling above list in your area. 25 or more offers is a great idea, you have to make multiple offers in this business, most will be declined. Making multiple offers directly to homeowners on unlisted properties IS your strategy. Like I said before making 25 offers at 50% of list in your market on MLS listed properties through an agent is a waste of every ones time.

Good luck, sounds like the opportunity there is HUGE!

Michael Mangham
MD Home Acquisitions LLC

I really appreciate everyones comments and help. I'm really glad DG put together a site like this. It makes things easier when you can talk to other people that can give you their insight and that have been there before.

Thanks

Ray

When I got my cash buyers list, I noticed they were buying pretty much at listing price also, and I was wondering the same thing you were. So I checked just a couple of the properties (I still need to do more to verify) and found that altho the properties sold at list, the list price was below comps. This made sense as the cash buyers are likely the investors who are buying good deals. I figure this gives us two things:
1 - cash buyers
2 - how to find the areas that are selling once we can move from wholesaling to buying and flipping.

If you do check the comps on the cash sales, let me know what you find.

Aniko

You hit the nail on the head!!! Comps!! Not list price. List price is truly meaningless. If you make a 50% off list offer in a market that is getting list or better how many offers will be accepted? DUH! NONE! However, you will go through a lot of agents that way. Know your market and know the numbers (not list price)

Aniko, on your number 2 above. If you are going to be a successful wholesaler you must know and present all the information to your buyer as if you were doing the fix/ flip yourself. So, you have to be able to completely evaluate the deal NOW, not when you move into flipping your self. Make sense?

Good luck,
Michael Mangham
MD Home Acquisitions LLC

Michael Mangham
MD Home Acquisitions LLC

You've got the list of buyers you need. Now go find the properties they want and make some serious money and they won't need/want a realtor again!!!

I just did the comps on a property listed at 104k that I am considering making an offer on. This property is pretty much ready to go, only needs minor rehab. About $2500 mostly because of pool clean up and lanai. I figure it should have a retail value of 115k. For it to make sense to a buyer I think it would have to be bought for 95K which would give him equity of about 17k after repairs. If they did a refi to pull cash out, they would have positive cahflow of $330 per month, after paymnet,taxes,ins,management,. The property would rent for $1100 per month. I would have to get a contract for 85k to 90K to make 5 to 10K. Maybe? I don't know if I can get it that cheap. Anyone looking at this deal do you think the numbers make sense for a wholesale deal? Is this a good enough deal for a fast sale to your buyers list?

Thanks

Ray

No is the answer for a wholesale deal.
You say ARV is $115,000 Lets say repairs are $3000
I would offer around $77,500 max. on a wholesale deal.

A lease with option to purchase or taking it subject to would work with those numbers. But you would be selling to the tenant/buyer not an investor. You could assign the lease/option or subject to contract to a buy/hold investor.

Michael Mangham
MD Home Acquisitions LLc

Would'nt a investor/buyer like a deal that has equity of 17K and cash flow of $330 a month enough to pay 95K? What will most of your cash buyers be looking for in a deal? At what number do you think a investor/buyer will be most motivated to buy? After rehab how much equity and cash flow will a cash investor be looking for to be motivated to buy fast. I know what a subject to is but what do you mean? Subject to what?

Thanks

Ray

Subject to existing mortgage.
There is not enough room in this deal for an investor to pay $97,000. That is not a wholesale deal. How ever, it could work using creative financing. Most investors will consider a deal a wholesale deal if they can realize a 15% ROI or better.
Look at it this way. You say the seller will haves $17,000 equity right. Well he does not get that until he sells, right.

He sells at $115,000 IF it will truly SELL at this price.
His commissions, closing costs. insurance, utilities etc = about $10,000
So his equity is really only $7,000 IF that much. He will have $97,000 into the deal. Buy price plus repairs. This is a 7.2% ROI IF it is a CASH deal. If he has any money expenses you can deduct those from his "equity". I don't see a lot of appreciation in the Florida market so he would have to be a long term buy and hold guy. Are you sure of your fix up costs, ARV and what you can rent the place for? For real? How did you come up with your numbers? Property in a strong rental area? If so, get it under contract and give it a shot! You never know.

Now if creative financing is involved it could work just fine. Do a sandwich lease with option to purchase it yourself. Remember the deal is price or terms. I think terms is how you make this one work. Cash offer would be $77,500, then on to the next one!

Michael Mangham
MD Home Acquisitions LLC

this way the investor is not laying out any out of pocket money.
We have the same problem here in Citrus County, Fl. & it's even harder to do a lease option because the tenant buyers don't have enough cash for a deposit.
Your example of 330/month cash flow isn't great because of the ROI(return on investment). If you laid out 95K cash & made 330/month that's only
about 4% ROI; if you were able to finance & do a 70% loan to value or 66,500,
that would give you about 13.9% ROI per year.(With no vacancy)
I would rather buy,fix & flip; using Michael's example for buying at
77,500 & selling for 115,000 ... gives you a 37,500 profit or about 48.4% ROI.
That's how you can accumulate more cash quicker.

I talked to a few RE agents and they say a lot of the investors are using the buy hold strategy. Their getting as much equity and cash flow as possible while waiting for appreciation. That could explain why the houses are selling at list or better. The research I've done on the houses that investors are trying to flip after rehab, indicates that they are not working on much of a spread, usually around 20K to 25K. This doen't leave much profit margin after exspenses. Most of these houses selling now for 60k to 100k were selling a few years ago for 300K. I'm sure they think when the economy does improve and the RE market gets better, Florida and other sunshine destinations will appreciate quicker then other areas. There probably not coming back to 300k, but upper 100's is probablly realistic. which could mean that each one of these properties could have 80 to 100K of equity over time plus the cash flow over 5 years. So if a lot of the investors are of the buy and hold mindset, would'nt they be willing to pay more if they had some equity and good cash flow while their waiting for the market to turn? Mike I want to wholesale, and if my buyers list is made up of the buy and hold investors, what should my wholesale deal look like to them so they will close fast. If they are buy and hold, should I calculate what there ROI will be over 5 years, and is that how they will look at the deal?

Really Appreciate your Help!

Thanks

Ray

From what I've been following here sounds like the realtor is running the market to you, this is a buyer market, realtors make a living on commission the higher the price the more money they make period, I dont care if a house was worth 300k a couple of years ago, it was over priced thats why we have the market we have today. Some of the people buying these house's at current list prices are not all investors. If you want to whole sale in that market you should be no offering no more then > cent on the dollar or .70 after ARV, so your numbers at 115k repairs 3k your offer will be 61,085. would be a great offer and your'll make money, the investor you sell to at 78k will make money. thats how you flip and make some money, dont let the realtor tell you your bussiness, its a buyer market, realtors are a dime a dozen look for another one who thinks outside the box.......i hope this helps....

I agree if I was buying the property to flip myself there isn't enough spread at 95K for me to make enough profit. But I was calculating numbers to sell to a buy and hold investor who would probably hold the property for several years. If they could do a refi and get a 70% loan and could realize a 12 to 14% cash on cash return plus appreciation (thats why their buying and holding they think the market will rebound),would that get them motivated to buy fast at 95K, or what would the number have to be? I thought if they would pay 95K and if I could buy at 85 to 90K i could make 5 to 10k. What makes a buy hold guy pull the trigger? Isn't instant equity and good cah flow?

Thanks

Ray

Are you saying 70% of 115K? How did you get 16,085?

I mean 61,085?

hello subtact 3% closing cost, 2500 lawyer cost, 3k for rehab cost theb .70 well end at 61085k bid, the 3% and 2500 are cover your but cost. if your in this bus to make money, remember 25 to 1 deal...I hope this helps....

Just a thought Ray. When my RE agent initially sent me a list of cash buyers in my area, I also found a lot of them were paying close to full asking price. I found out that the agent didn't give me the initial MLS listing price just the reduced price. So I had him go back and refigure the list of cash buyers and give me this time both the current asking price and the initial starting asking price. The reduced price was now discounted and made more sense. Quite possibly you already knew this but it helped me and I thought it may help you too.

I am in Florida as well and I got my cash buyers list two weeks ago. I have well over 200 cash buyers in my area from all over the United States and the World.

I have bought 5 properties at 50-60% of ARV this year off the MLS. It might be more like 35 to 1, but look for the houses that are really trashed. There are not as many buyers going after these properties. There are also some buyers going after Chinese drywall houses. These houses are selling for less than $30 a sq ft. The Chinese drywall houses were built in 2006-2008 and can be found through out Florida. Find the buyers first! Then the sellers:<)

Hang in there Ray and don't give up!

Thanks for the Info and help!

Jeff... great job!

What methods did you use to obtain 200 cash buyers in 2 weeks?! Would you mind sharing your strategies and numbers on some of the deals you have completed? It's awesome to see this working for you...

Thanks so much,
Aniko