FORGET CASH (LONG)! - Posted by Jim IL
Posted by Jim IL on March 17, 2000 at 21:28:23:
Many people here advocate the use of the word CASH in ads to get calls.
I did that in the beginning.
I found though that most sellers who called zero’ed in on the word CASH and that was all they could think about.
Plus, in reality, unless I could buy the home at a SEVERE discount, the cash option for me was not reality.
So, I removed the word CASH from my ads, flyers and signs. (I was just not comfortable offering something that I would in all probabilty not be able to, or willing to do.)
I now simply way, “I buy homes”.
When sellers call and say, "I have a house I NEED to sell, how do you work this?"
I steer them away from that topic and ask them about the house and there situation. When they balk at this, I tell them that I need to gather info in order to figure out the BESt offer for us both. If that is not good enough, then the answer is classic…“Some will, some won’t, so what?, someones waiting” (R. Legrand)
After I have talked about that, if they ask again “how” I will buy the home, I tell them this;
"Mr./Mrs. Seller, I buy homes basically two ways:
- All cash, which means at a SEVERE discount. This is after all my business and you surely understand that I cannot run a business without allowing some profit in the deal for me, otherwise, it simply makes no sense.(the word SEVERE weeds out many FAST!)
- On terms".
The sellers always ask what “Terms” means, and I go into a little bit about that.
Basically my approach is to tell the seller, “This is your problem, and this will make that problem go away, will that work for you Mr. Seller?”
If they say “Yes”, (they usually do because I have solved the problem), then we sign it up and they are happy.
So, the answer for me has been to steer away from the CASH issue, and toward the problem solving aspect.
Now that is not to say that some problems can be solved without CASH. Some problems sellers have do require cash. That is when you get real creative, and rather bold in my opinion. If you remain detached from the outcome of the deal, you can be creative, and who cares if you offend the seller with your offer.
I once had a seller tell me he “Needed to get $20k down” from the sale if his duplex to pay off some bills.
The place needed repairs, so even IF I had $20k, it would not have been wise to put it into the deal.
Instead, I proposed to the seller that he refi and pull the $20k he needed out. I gave him the advantages of doing this. (ie: using the $20k tax deferred, and keeping some cash flow.)
He said he could not get a refi, and was adamant.
I put him in touch with a mortgage broker I know, and he got his refi.
I then bought the place for his mortgage balance, using a Land contract.
I used a partners money for the repairs, and now have the duplex.
I got it about $20k under value when all numbers were done, plus $500/month in cash flow.
The seller got his problem solved, I got a property NO MONEY DOWN, with CASH FLOW, and a great price.
Not too mention the Land Contract has a nice long term allowing me to keep the place without refi-ing for several years. (I’ll probably sell it before then anyway.)
So, be creative, forget about CASH, especially since you do not have it to offer.
Even if I had the CASH to use, I would not. It simply makes no sense to do so now.
And, to date, the MOST CASH I have EVER put into a deal was $2k, and I got $5k in option money just a couple days later, more than doubling my initial investment in less than a week. (what kind of yield is $3k profit upfront, $200/month cash flow, and $15k backend, for ZERO into the deal?..right! Good 'nuff!)
Hope I did not ramble too long, and hope this helps,
P.S. Happy St. Patricks Day! I’m off to drink some beer now…Õ¿Õ
P.P.S. For those of you who think CASH is KING, you may be right, but do not jump on me for NOT using it. (I don’t have it anyway.) I bet my yields not using any are as good as, or better than those who use it. Besides, this is fun.