An offer that went bad - Posted by Glen Singleton

Real Estate Investing
1

Posted by Ed Copp (OH) on May 05, 2000 at 13:45:59:

Glen,
Your seller is not motivated, that is to say he is not a seller. This is pretty common. It seems more prevalant in older people. The attitude is. What will you give me?, and then my property is worth a lot more than that. " I was offered a gizzilion dollars in '93" is a common comment. The problem is no motivation.

Keep the channel open, with a card or a note or an occaisonal call. Remember that the next person who mentions numbers looses. The next person may be the next generation too.

Often people ride this “mine is worth more” expectation until after the value peaks and starts down again. Be patient, that might work (later)…ED

2

An offer that went bad - Posted by Glen Singleton

Posted by Glen Singleton on May 05, 2000 at 11:57:09:

I recently contacted an out of state owner about a vacant property he owns in my city. He was extremely difficult to find, but I eventually tracked him down. He inherited the property many years ago, and as best I can tell it has been vacant and neglected for 10 - 15 years. We are experiencing a lot of development in the area now, and this has become a hot location.

When I contacted him initially, he was very non committal and would not name a sellin price. He did indicate interest in selling, and asked me to fax him my offer. Since I didn’t have access to the interior of the property (its boarded up) I made some assumptions based on the general condition and after getting some comps I made my offer contingent upon an inspection.

Here are the particulars: Duplex with a garage apartment, near downtown Houston. After reparired value $195,000. Land value alone $100,000. Estimated rehab costs $60,000. The are numerous liens filed by the city for mowing grass, clearing trash, etc. over the years, and there are delinquent taxes.

I offered him $67,500 cash. I thought this was a pretty fair offer. I can get the financing. I could either renovate the property as a duplex, or tear down and build a new townhouse which is the rage in this area now, or flip to a developer as they are very active in the area now with new development. Lots of posibilities.

The problem: After working up my offer, I faxed it to the owner using the standard real estate contract form used in Texas by all realtors. This is a Texas Real Estate Commission form, and its a good contract, fair to buyer and seller, and contains all the provisions of my offer, i.e. the inspection contingncy, etc.

After I faxed this, I called the gentleman back to discuss. His reaction was very perplexing. He told me he was insulted that I would send hime a “contract” when he just wanted a number. (He never gave any indication my offer was too low, or that he didn’t like the terms.) He said, I don’t think you even know what your doing and I don’t want to sell to YOU. I tried to explain my reasons for sending the contract forms rather than a one page fax with a number, but he would not listen. I aksed him if there were particular terms in the contract he objected to or if he didn’t like the price, etc. but he would not answer the questions, saying “I don’t have to talk to you.” All in all a very unpleasant phone call.

I later faxed a letter to him apologizing for any miscomunication on my part, and I tried to explain my reasons for sending the contract. I also explained that all of the terms were negotiable, and I still wanted to buy his property, etc.

I haven’t heard from him, and doubt I will.

My questions for all of you are:

(1) Did I screw this up (I guess so!) or is the gentlemen being irratinal ?

(2) What, if anything, should I do now to try and salvage the deal ? I think this is a good opportunity, and I’d like to get it.

(3) Have any of you had similiar experiences, and how did you handle them ?

I would appreciate any advice or insights you might have. I have done a couple of deals so far, and I love this business but I realize I have a lot to learn. Thanks !!

3

Re: An offer that went bad - Posted by Laure

Posted by Laure on May 06, 2000 at 18:05:41:

Maybe he’s unstable. I don’t think you’ve done anything wrong.

Laure :slight_smile:

4

Re: An offer that went bad - Posted by JoeKaiser

Posted by JoeKaiser on May 05, 2000 at 17:46:37:

Properties that sit vacant for years and years are free and clear, but they often have back taxes and liens that get paid just before legal actions are taken.

If they weren’t free and clear, the mortgage company would have foreclosed on them a long time ago.

I’ve found that there is often a “story” that goes along with each of these properties, and I make it my goal to hear the story. That sometimes takes a lot of effort to locate the owner and then figure out just what is going on. Often, the owner perceives an “unfixable” problem with the property so isn’t really inclined to do much of anything with it. Other times there’s an emotional attachment that makes it tough to part with it.

Still, if you make the effort to meet the owner and hear the story, you can often make things happen. Just the fact that you were there to listen is often all the owner needs to feel comfortable with you as a buyer.

Remember, they’ve likely received dozens of letters inquiring about their run down property. Me, I’d rather sit down and talk about it whenever possible.

Joe

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Re: An offer that went bad - Posted by Eduardo (OR)

Posted by Eduardo (OR) on May 05, 2000 at 13:48:01:

Glen–

I used to do a lot of work with out-of-state owners. Every once in a while you run across a property like you describe–run down, numerous liens, unpaid back taxes, been this way for years. Realize that the owner is most likely an irrational person. We tend to think that a rundown property means a motivated seller. This is not always true. Some people are literally crazy and others just don’t give a darn about money–they get their jollies by being belligerent. Every so often you meet a seller who acts irrationally, but this is cover for driving a hard bargain–it’s his technique. Here’s what I would do: Try to determine if he is sane or not. If he lets the taxes go delinquent, but eventually pays them off just in time to avoid the sale of his property by the local taxing district, he may be sane. Talk to the tax collector. If he eventually works with the city on the liens, he may be sane. Ask the city. Does he own other property nearby? Check it’s condition. Does he live in a place where you know someone? Ask them to check up on him. And here is one I’ve successfully used in the past: Does he have an unusual last name? Call other people with that last name, see if they are relatives. Ask them low-key questions. Sometimes people will open up and go “blah blah blah” and tell you everything you ever wanted to know if you just let them talk. If you conclude he is sane, but acts like a nut, keep talking to him, but let him know you don’t take his act seriously. Laugh and joke with him (I get the impression from what you say that you’re pushing him to hard). Become his buddy. I’ve had great success with this approach over the years: Play dumb! If he says you did this wrong, you did that wrong, say, “Tell me how to do it right,” “Help me,” “Show me how it should be done,” and so on. Compliment them on their ideas. Sometimes this really works and they’ll help you buy the property. Remember, there is a great psychological component to this game. Anyway, good luck. --Eduardo