Re: How am I getting this wrong? Or am I? - Posted by RichardWA
Posted by RichardWA on March 10, 2001 at 15:11:17:
This is an excellent question. You do have to be careful that the seller’s problem with the property doesn’t become YOUR problem with the property. There are many reasons why a seller would sell for significantly below market value–many having nothing to do with the property itself, but simply due to personal factors–lost a job, transfer, divorce, the financing on the property was poorly structured (can’t handle payments), poor marketing skills, bad memories associated with the property, etc… None of those need become YOUR headache.
There’s many reasons why we might be able to do what the seller we bought from can’t. Three major ones; 1) we always buy right. We might even have bought for less than the seller paid for it. We buy for enough below market value that we can sell it for below the appraised value and still make a profit on it. You have to buy right, to sell right. People are always eager for a bargain, and if you can make it clear in your marketing that this property would be a bargain for them, you’ll have little problem selling.
A second major reason is, being presumably professionals, we have far greater marketing skills than the seller does. We have more knowledge of how to sell quickly, and more time and energy to do it. Most sellers know almost nothing about marketing techniques, and make little effort to sell. No salesmanship either.
A third reason is financing. We can do things with financing that the average seller either can’t, or won’t–either because they’re not willing to go through the effort, or take the risk, or simply from lack of knowledge. That gives us a major advantage right there.
Yet another is management. Often, tired landlords get that way because they don’t really know how to manage a property correctly–that’s what causes a lot of the headaches that made them tired landlord in the first place; things like not screening tenants adequetely, being too lenient with late payments, not enforcing rules, poorly written rental agreements, etc… And again it’s often lack of knowledge that causes these kinds of problems. And we can cure those problems, and make the properties more valuable in the bargain, because we have access to knowledge on how to manage tenants and property portfolios and we apply that knowledge.
Yet another reason is we have contacts (or we should); investors all lined up ready to buy from us, lenders ready to lend to us, realtors, attorneys, mentors, established business relationships with people who are all proven go-getters and can move quickly, to help us succeed in our business. That’s a TREMENDOUS help. And most folks don’t have that network.
For the most part, when a property doesn’t sell quickly, it’s for one of two reasons; one, it wasn’t marketed properly. Just putting a “FSBO” sign with your phone number in the window ain’t gonna cut it. You have to do more. And the other one is, the property is simply priced too high. A lot of folks are looking to get top dollar first, get no offers, then some deadline approaches and they get desperate and suddenly will accept almost any ridiculous offer just to stave off disaster. We won’t make that mistake, will we?
Hopefully this helps some.