JPiper and any seasoned investors - Please read - Posted by Jim-WI

Real Estate Investing
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Posted by Bud Branstetter on May 28, 1999 at 10:19:58:

The typical question is “if I could close quickly and pay all cash, what is the least you can take?” From the age of the house or how long they have been there you can estimate what the loan likely is. How many people put more than 5 or 10% down. You could also ask a question like, “If I had to lease it for several months until I got a new loan could you do it for $1600/mo.”

On subject to - I just write in the phrase “subject to” where the contract says assumption. You also need to pin down value more. On the same block the size of houses can vary dramaticly or be no more than a few hundred square feet apart. You also have to determine motivation. Debt relief of the monthly payment in their situation is probably number one. Taking subject to and getting them cash in the future may be the most likely.

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JPiper and any seasoned investors - Please read - Posted by Jim-WI

Posted by Jim-WI on May 28, 1999 at 08:19:54:

Thanks for reading my post. I’d like your opinion on the following situation.

4BR, 2.5 BA, 2300 sf home. 4.5 yrs old, 2.5 car garage. Asking price = Make us an offer! FSBO. Was on market at $199,900 and recently down to $189,900.

The owner sounds very motivated. Husband already x-ferred to new job site.

I’m thinking of obtaining a 60 day option to purchase and assigning the option. My offer would be no more than $140,000.

Other homes in area are selling for $289,000; $227,500; $350,000; and $309,000.

Is the option the way to go? Or should I put a lowball offer in first? This house is a pretty house as Legrand would say. Any thoughts would be great! Thanks!

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Re: JPiper and any seasoned investors - Please read - Posted by Ed Garcia

Posted by Ed Garcia on May 28, 1999 at 10:51:44:

Jim:

Low ball is the way to go.
No matter what ever you do with this deal, you start off with a low ball.

A lot of investors feel that if you start off with a low ball, you insult the
buyer, no such thing. My concern about the buyer, is the same as theirs
is about me, Were both out to make our best deal.

A low ball can blow their mind. It can make them mad, up set, but one
thing is for sure. It will giggle their thinking. It will make them start to
adjust their thinking to get closer to where your coming from.

Justification to your Realtor ? Your an investor.

You tell them that because your an investor you can?t pay top dollar
because you need room to get out of it yourself, but that your good for
a fast close. Remember the stage is set, you have already told us that you
have a motivated seller.

Chances are, Piper is right about the loan. But a low ball offer will shake
the monkey out of the tree. It will make the Realtor come back and tell
you what the loan amount is, to demonstrate how ridiculous your offer is,
and why the seller can?t except your offer.

That?s exactly what I wanted to do.

Normally Realtors don?t like to disclose loan information. They know
that you?ll target the loan amount when making your offer.

Jim, like the next guy, I work each deal differently, depending on the
circumstances. But one thing is for sure. When I?m not quite sure where
to start, I always start off with a low ball. Usually I?ll get more of a
reaction from the Realtors involved.

Most Realtor are order takers, and when they come up against a
professional buyer, they fall apart. They?ll make remarks like, I think
this offer is a waste of time. There is no way the seller would accept
this offer.

You see Jim, a Realtors mentality is geared towards retail sales.
Their job is to sell full price, and that?s how they see the market.

My answer when they make this statement, is, I don?t want to waste your
time. I have another broker in mind that will have no problem making
the offer for me. I?ve done a lot of business with that broker.

Jim, at that point you can watch them cringe, they?ll cave in a little, and
then back up and regroup with a new attitude. If not, I blow them out of
the deal.

So you can see how much fun you can have when your in control.

A low ball offer also sets the stage for a seller carry back, and a lease-option.
The seller sees that you are willing to pay more with terms.

Now go make your offer??.

Ed Garcia

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More Info - Posted by JPiper

Posted by JPiper on May 28, 1999 at 08:37:42:

I guess you know the definition of a “seasoned investor”. That’s a guy/gal who’s been clubbed over the head and otherwise turned every way but loose sufficient times that he/she now squints and questions everything.

First, I don’t like options. I hear they work?.but I have never used them. What the typical seller is looking for is an offer?not an option. The typical seller has enough trouble understanding offers, let alone options. Options don’t look real to them. I use a purchase offer with a contingency if I feel I need one. Usually my contingency is an inspection contingency. Seller’s accept this?.it looks “normal” to them. And what do you have? A purchase offer with a contingency is nothing more than an option?.you have the option to walk away if you don’t approve the inspection.

Second, I would probably not make an offer on this property unless I understood something about the loan. My guess is that when you check the loan out you will discover that the loan balance is higher than $140K.

Having said that, based on what you have said, certainly $140K is a good offer. But I like to make offers where I have reason to believe that they CAN be accepted?.offers that fit the circumstances. We don’t know enough here to know that.

JPiper

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Re: JPiper and any seasoned investors - Please read - Posted by don, sdca

Posted by don, sdca on May 28, 1999 at 11:07:27:

Ed,

Thanks for reminding us about the value of being in control and of low-ball offers. For those of us with less experience, make low-ball offers can be difficult.

The “realtor speak” is often all we hear.

Thanks for the tips!

Don, sdca

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How do I find the info? - Posted by Jim-WI

Posted by Jim-WI on May 28, 1999 at 09:50:59:

JPiper,
Thank you for your time and the reply.

I don’t mean to sound stupid but how would I check out the loan? In my discussions with her (building my rapport) I did ask her if she would tell me what her loan balance was. Probably a little too forward huh? She wouldn’t say an exact number but did mention that she would sell the home for $179,900. I know that’s not the mortgage amount but wonder if it’s not near it.

What type of information do I need to be looking for to find out how to make the offer fit the circumstance?

Where can I obtain a good “subject to” purchase contract that you or any “clubbed over the head investor” uses?

I’m really new to this part of investing so you’ll have to excuse my elementary questions. Thanks for your patience!

P.S. I’ve set up an appointment to look at the home today. I figure if she’s really motivated then I can’t steal second in slow motion. I think that’s the phrase. Anyway, if I should wait to look at the home, please let me know as well. Thank you!
PPS She’s informed me that they are going to list it with a realtor but put me on their exclusion list.

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And if the seller still won’t tell… - Posted by Kevin(OK)

Posted by Kevin(OK) on May 29, 1999 at 05:53:32:

…you can get the info. at the land records department of your court house. Just pull the mortgage, and it will at least tell you the date the loan was originated and the amount the loan was for. Sometimes it will have the monthly payment, and interest rate, so you can easily calculate what the loan balance currently is.

Good Hunting!

Kevin(OK)

P.S. I guess you could tell the seller that you can get the information anyway and that might get them to release the info., but then again the seller may be offended.