Posted by Tim on March 03, 2004 at 08:57:38:
Thanks. I appreciate your input
Posted by Tim on March 03, 2004 at 08:57:38:
Thanks. I appreciate your input
flushing out motivated sellers w/many 50% offers - Posted by Tim (FL)
Posted by Tim (FL) on March 01, 2004 at 22:35:35:
I read an article on another website where an investor would send out hundreds of offers at 50% (and sometimes less) of the list or asking price. He actually had an algorithm that automated the whole process and offers were faxed to mls listings as soon as they appeared on mls. He never even saw the properties. This was done in order to “flush out” the really motivated sellers. He said he really annoyed some realtors, never heard back on some, got some counter offers for full asking price, and got about 2% success rate. Is this a legitimate practice to get to the sellers that are truly motivated, or will your name become mud in the REI community? And will realtors then avoid you like the plague?
Re: flushing out motivated sellers - Posted by Jon Morgan
Posted by Jon Morgan on March 02, 2004 at 21:45:05:
There are better ways to find motivated sellers. First of all, there are different levels of motivated and that is how we find deals.
Motivated seller- Wants Retail, has time to wait and will find a house when they sell.
Motivated Seller- Building a new home or needs to move for job transfer or some other reason, needs to sell home in 3-6 months, but has time to wait for a retail offer until then
Motivated Seller- Selling in the paper FSBO, may be hard to find if you cant tell him form the other FSBOs that have all the time in the world to sell. This FSBO needs to sell quickly, perhaps the payments are killing him or he is overleveraged on his mortgage. He may have been recently turned down for a refinance (great resource is a mortgage broker for these leads)
4.Motivated Seller- Keeping up two mortgage(or a rental payment) payments, has moved or is getting to move and cant keep up with both. Must sell immediately for relief.
6.Motivated Seller- behind one or two payments, lost job or has a job that pays less or sudden illnes or injury. Must move into something more affordable immediatley. Motivated to sell quickly…A true preforeclosure deal
There are so many ways to find these sellers without making blind offers. This business is about relationships, not computers and fax blasts. If you want to get leads, you need to build relationships…
Re: - Posted by Sam Watson
Posted by Sam Watson on March 02, 2004 at 17:47:21:
Being a Real Estate Broker for the past ten years, I can tell you. If I, or one of my agents received a 50% offer on a home newly listed on the MLS I would personally put it into my circular file.
My office did over 50M in business in 2003, why would the seller even be interested in a low ball offer when they will get retail? Remember, in California and many of areas of the country this is still a sellers market.
Re: flushing out motivated sellers - Posted by Tim
Posted by Tim on March 02, 2004 at 17:44:53:
I get the feeling here that realtors don’t like it too much, most investors think it can work, but would not use a realtor anyway.
Re: flushing out motivateds w/ 50% offers - Posted by jasonrei
Posted by jasonrei on March 02, 2004 at 15:43:08:
I used to list on MLS, and I’d get some guy sending me lowball offers all the time. I wouldn’t even respond to them.
The guy would just send a 1 or 2 pg fax, so that was good. If he had been sending in 8 pg offers I would have put a stop to it and been pretty p/o’d. As it was, I just took him to be some nut wannabe investor.
I imagine it’s a waste of time.
Go directly to the homeowner - Posted by Buckley
Posted by Buckley on March 02, 2004 at 11:30:54:
This is a good approach if you market directly to the homeowner. Never send anything to the agent, as you read, the agents will just start ignoring you and blacklisting you.
Part of your mailing strategy should involve convincing the seller of the advantages of dealing with an investor, such as eliminating the commission fees for realtors, the reduction of holding costs while the property is listed, etc. etc.
Generally, the realtors will do their best to shoot down any deals that are good for you (eg. - 70% FMV), unless you find a way to word the deal where the realtor can get full commission. But, in that case, you’re cutting into the profit of the homeowner and making it a tougher sell. Indirectly, let the homeowner know that it may be useful to let the realtor’s rep contract expire (usually 180 days after signing it)and deal with you immediately thereafter.
Even with a 1% success rate for each 100 letters, you’re talking about spending under $40 in marketing costs per deal, which is really next to nothing. If you sit around worrying about what the realtors think, you’ll go broke pretty quickly!
Spaghetti against the wall… - Posted by Sean
Posted by Sean on March 02, 2004 at 09:45:41:
Yes this is legitimate, he is doing the spaghetti against the wall approach… just fling enough of it, and something is bound to stick. (also referred to as the shotgun approach)
There is nothing inately wrong with this method, it will work.
As to your reputation, well that’s a whole other story. Its certainly not going to win over many realtors if they have to deal with presenting your low ball offers right after every listing goes up… because they know 99% of the time its a total waste of time, and its their time you are wasting.
However, there is something to be said for a 1% success rate, if you win 1% of the time, it just means you have to write up 100 offers to get a winner… I think however there are much more efficient ways of finding motivated sellers than this approach.
Simple we buy houses ad will bring sellers to you, many may be expecting full price, but you will get more than 1 in 100 that are ready, willing and able to deal.
Re: flushing out - Posted by eric-fl
Posted by eric-fl on March 02, 2004 at 09:31:26:
I posted a response to a very similar question not very recently…
Re: flushing out … - Posted by MM
Posted by MM on March 02, 2004 at 02:21:02:
i don’t go for the shot gun method myself never tried it but i would think it would be harder to establish working relationships doing it that way
Re: With that in mind - Posted by Wayne-NC
Posted by Wayne-NC on May 24, 2006 at 19:01:22:
I see you post from where your current location is ie -FL, - Atl. You are getting tough to follow. IRS problems? LOL. I was in N. St Augustine last Dec in a home that my borther bought and it has appreciated very well. He works in S. Jacksonville at a car dealership off of US 1. I was impressed with the whole area and not that that means anything to you but I will go back next winter for another visit. I don’t do that to just anywhere, especially with all the traveling that I have done in the past. I like being a beach bum too and that’s why I spent my beginning years on the Jersey Shore, 15 years in S. Florida and now the Outer Banks of NC. My next move is Hawaii! I am currently looking for another sure thing. Well, I’ve done it before and as I said before, time will tell. Better luck for you in this location.
Re: Go directly to the homeowner - Posted by Darkside
Posted by Darkside on March 02, 2004 at 15:56:49:
What good will it do to convince the seller not to list once they’ve already listed? Remember, you’re getting this list from the MLS. If they’re in there, they’ve already decided to list.
Re: flushing out - Posted by Tim (FL)
Posted by Tim (FL) on March 02, 2004 at 10:21:48:
Thank you. Very informative post. I appreciate your viewpoint on this subject, esp. since you are a licensed agent.
Re: flushing out … - Posted by Tim (FL)
Posted by Tim (FL) on March 02, 2004 at 07:55:31:
Thanks for your reply. I agree; it seems interesting in that it probably does find the truly motivated sellers, but I feel like you would develop a bad reputation in the REI community and people would be less likely to work deals with you.
Re: With that in mind - Posted by michaela-FL
Posted by michaela-FL on May 25, 2006 at 07:44:47:
pssst, don’t give away my secret ;-)!
I liked what I saw in the area and it felt good.
Hawaii would certainly be an area I’d love to move to, but since they have 6 months quarantine for dogs, I couldn’t do that to my ‘baby’.
As ot ‘better luck in this location’ - I didn’t leave because I had bad luck in Atlanta. In fact, I could have made a lot more money with the little niche that AI developed, but to me it was about ‘quality of life’. I wanted to be closer to the ocean - no snow. What good is making money, if you can’t enjoy it?
Wrong assumption - Posted by IB (NJ)
Posted by IB (NJ) on March 02, 2004 at 16:31:41:
You’re assuming that realtors are dominant players in the real estate INVESTING field. Nothing could be further from the truth. While realtors have a lot to do with real estate many have very little to do with real estate investing. If you deal directly with sellers for your deals, you don’t worry about low ball offers pi$$ing off realtors. In fact, develop a reputation for buying properties at 50% fmv and you’ll be sought out by the REI (emphasis on the ‘I’) community as someone to work deals with.
Here, Here! - Posted by Wayne-NC
Posted by Wayne-NC on May 25, 2006 at 09:24:25:
To: Michaela-FL or Michaela-ATL or wherever makes you happiest, Quality of live is EARNED and therefore should be enjoyed! Maybe no snow but it will get cold in the winter, however, not like Atlanta. Anyway, I was refering to your luck Pensacola, not Atlanta. You were consistantly lucky in Atlanta and that equals good. BTW, your secret is safe with me. Also, I didn’t know about the Hawaii quarantine law. I don’t have any pets anyway and I am sure that applys to cats too. My protections are fed with 9MM bones and it doubles as an investment as well. They rivaled REI over the past couple of years with a doubling of value! Gotta love it. I’ll have something besides real estate to pass on when I pass on. Wayne
Re: Wrong assumption - Posted by Tim
Posted by Tim on March 02, 2004 at 17:38:03:
So, if that is the case, then it doesn’t really matter if realtors blacklist you, as long as the majority of your deals don’t involve them, right.
Re: Wrong assumption - Posted by Tony Fletcher
Posted by Tony Fletcher on March 07, 2004 at 02:42:05:
I’m a Realtor, have been for 18 years… Who cares if they blacklist you? Most of them are looking for the easiest way around and many more will join the ranks each and every day.
Re: Wrong assumption - Posted by IB (NJ)
Posted by IB (NJ) on March 03, 2004 at 08:21:34:
Realtors can only ‘Blacklist’ you with other realtors (if they can Blacklist you at all). 99.9% of my deals have NOTHING AT ALL to do with realtors. They don’t know me and I don’t know them. As long as the REI community (Investors, lawyers, title companies, etc.) doesn’t think there’s anything wrong with submitting 50% fmv offers (and I’m sure they don’t), you should be fine.