Posted by Joe Kaiser on March 12, 1999 at 13:47:07:
What happens when someone slips in and buys the thing while you’re sitting at home playing games?
Joe
Duplex $52,500 - OFFER and DEAL Questions. - Posted by Scott
Posted by Scott on March 11, 1999 at 09:37:17:
Hi:
I found a 2BD/1 Bath duplex on a corner lot. It has separate entrances on two different streets. Carport for both sides. It’s on the market for %52,500. It’s rented out to family members of the owner for $200 per side ($400 Gross a month).
Good buy? Neighbor is low-middle and great location. WHat should I offer? Rent could be raised to $300 with new tenants…just some general advice would be great.
Scott
Re: Duplex $52,500 - OFFER and DEAL Questions. - Posted by Karl Grube
Posted by Karl Grube on March 15, 1999 at 20:41:44:
A Solution: Offer cash at or below the assessors valuation. This will be the upper end of the wholesale price. Make your offer subject to a bank appraisal satisfactory to the buyer. If he accepts, find a banker who will finance at 80%-95% of appraised value.
If the appraised value comes in at $52,000, buy the units, adjust the rents, even if you have to move into one of the units. Anytime you can buy a residential living unit at $25,000 it is a good deal … You can’t build one for that amount! (kwg)
Don’t make an offer . . . - Posted by Joe Kaiser
Posted by Joe Kaiser on March 11, 1999 at 11:09:19:
. . . instead, make an appointment.
Sit down with seller. Discuss the property and his intentions to sell. Get inside his head and figure out what he needs. Listen listen listen.
Ask him if he’s got some “wiggle room” on the price.
Propose “what if” type questions, “what if I could get you close to your asking price, could you carry the contract for 10 years or so?”
Talk about HIS situation, goals, problems, etc. (I once introduced a realtor/buyer to some hot to go sellers. I’d already put the deal togther and he was there to pay them and me. The first thing he says once we finally sit down is, “let me tell you a little bit about myself.” We all looked at him like “why?”). Focus on the seller and his needs.
In twenty minutes, if he’s got any inclination to sell, you’ll know the whole story and you’ll know precisely what it takes to make the deal fly. There won’t be any question as to “what should I offer?” Instead, you’ll know exactly what it’ll take since you’ve been writing it all down as you go.
If it’s a number that “works,” you do the deal. Otherwise, you leave him with a handshake and your phone number in case he gets a little more eager down the road.
Stop making offers and start making money.
Joe
Re: Duplex $52,500 - OFFER and DEAL Questions. - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on March 11, 1999 at 10:33:59:
You need to get more information before you make an offer. First, get the comparable sales for the area. Then you will need to find out what expenses were paid on the property. Get this from the sellers Schedule E on their tax return. Do NOT take their word for it. Also when you bid, do not bid based on the $300 per month you think you can get, but on the $200 per month that the property is currently getting. If the expenses are not too high, I might open with an offer of $25,000.
Just my .02
Re: Don’t make an offer . . . - Posted by Joe(IN)
Posted by Joe(IN) on March 11, 1999 at 13:01:50:
Joe, Question,
How do you decide who to make an appointment with. It seems like you could spend an awful amount of time doing this with sellers who just will not sell low enough.
Thanks
Joe
The prudent thing . . . - Posted by Joe Kaiser
Posted by Joe Kaiser on March 11, 1999 at 11:29:55:
and the way it works in real life are often not entirely compatable.
I never look at comparable sales or expense figures prior to making a deal. Absolutely no need at this point for two reasons.
If I spent lots of time and energy figuring it all out, what happens if it gets sold in the meantime? I’ll tell you what, I’ve wasted a lot of time and energy. Someone could easily just beat me to it, especially if it’s a real deal. I’d like to avoid that whenever possible.
A little bit more subtle . . . if I don’t have an agreement in hand prior to checking things out, I have no way of knowing that he’ll sell it to me should I decide to buy at a later date. He might just change his mind and not sell at all. Happens all the time, especially for people who call on my “I buy houses” ad and want me to do some initial checking on my own. I don’t.
Frankly, I won’t even drive out to look at the place unless I know we can write up an agreement right then and there on my first visit. I want to see the inside of that place one time at most, and I’m not interested in anything other than getting them signed off. Anything else is wasting my time.
Plus, if they don’t have their numbers at hand (happens all the time), then I’ve put a needless monkey wrench in the offering process that’ll get in the way of our doing business.
Before spending two seconds “checking things out,” get an agreement signed off. Do your “due diligence” only after you’ve obtained an interest.
If the numbers are later determined to be NOT what the seller had indicated, you are now in a position to negotiate an even better deal or simple walk away.
Frankly, I make the best possible deal up front before anyone else has a change to jump on it, and then I hope to find problems in my due diligence that allow me to rightfully continue negotiations.
Joe
Re: Don’t make an offer . . . - Posted by Joe Kaiser
Posted by Joe Kaiser on March 11, 1999 at 13:41:27:
I determined long ago that I make the vast majority of my income sitting at some fellow’s kitchen table.
Period.
My sole objective is to get my butt firmly planted in his chair. Do that often enough and virtually everything you ever wanted in life will be yours.
Of course, I want lots of things so I’ve still got plenty of butt planting left to do.
A funny thing happens about 20 minutes into the process. More often than not, they begin to like and trust you, they have a face that goes with a name and not just someone’s signature on the bottom of your lowball offer your agent faxed to their agent. All that stuff matters.
It doesn’t happen all the time and every once in awhile you meet people who are downright hostile, but more often than not your presence, with a friendly smile and a firm handshake goes a long way to getting a deal put together.
In other words, it’s a key element in making things happen if they’re anywhere within driving distance.
I used to do it “other” ways, including having them show up at my office with their paperwork (so I’d never even look at the house). Dumb. You may have also learned in your negotiation tapes about the power of getting people onto your own “turf” and how much more power you have when they’re seated in an environment you control. Again, dumb.
Any of that “get them onto your own turf” stuff is merely “perceived” power and frankly, I’d much rather let them feel the comfort and “control” of being there in the friendly and familiar confines of their dining room, surrender that perceived power to them and allow them to feel as though they’re in the driver’s seat. In that environment, they’re likely to be more confident and be more inclined to actually get down to business.
Thats an environment I can easily work within.
Again, the vast majority of the making of the dough happens right there at the table. Get there and you’ll understand. And, should things not work out, it was likely good practice for the next one . . . which is why I’m eager to make appointments with anyone who expresses the slightest bit of motivation on the telephone. If, at some point in that call, they’ll confirm for me that they’re able to give me a firm “yes” or “no” in that initial meeting, I’m there.
Joe
Re: The prudent thing . . . - Posted by Duane
Posted by Duane on March 11, 1999 at 18:13:03:
So I am assuming that this only works if you now your area very well and you can guesstimate repair costs just by looking at them, therefore you negotiate to a fairly accurate, below FMV. Then, after the contract is signed, contigent upon several things, you have an actual appraisal and inspection done to find the hidden things. Then you renegotiate accordingly?
Re: Don’t make an offer . . . - Posted by Reif
Posted by Reif on March 11, 1999 at 23:08:28:
Joe,
I’d like to ask how you a) know from your phone call that he might say yes at the first meeting, and b) how do you ensure getting husband and wife (need both on the contract, probably) at the first meeting without getting pushy?
Or do you just figure if the wife won’t be there also the guy isn’t ready yet - next deal?
Reif
Re: Don’t make an offer . . . - Posted by Jim IL
Posted by Jim IL on March 11, 1999 at 18:59:44:
Joe,
Wise words like that are what keep me searching for your posts on a regular basis.
I just wanted to say, “Thanks Joe”.
Jim IL
Just one more question, please? - Posted by John Katitus
Posted by John Katitus on March 12, 1999 at 24:56:58:
I have read that you shouldn’t make an offer at the first meeting, but wait and let them cook for a day. How do you know whether to make an offer at the first meeting?