Jim- Along the lines of what Bud is saying…
Something I am noticing with myself,… if I am looking at a property which I really DON’T WANT, it is so much easier to make that low ball offer or ask that ‘scary’ question. Everything is so much easier if ya don’t care! You have to keep reminding yourself that the seller is the one with the problem/need. Convince yourself you don’t really care about the deal, don’t ‘have to have’ it, it sure makes things easier. I am sure even the most experienced investors have emotions which play a part sometimes, but the key is they recognize that their emotions are getting in the way.
Or, maybe they have an investing friend point it out for them (ouch).
First of all, I appreciate everyone’s reply to my posting below. My wife and I were reading them over and all we could say was WOW! Thank you a million times over for your time and replies!
Here’s an Update on what happened at the viewing of the house. After we had walked through the house, I asked her a few more questions and tried to get the loan information out of her. She honestly did not seem to know anything about the loan. Seems her husband takes care of most of that as she mentioned to me during the walk through.
Well, just as I was about to give up on getting this information, she mentioned that they always put 20% down on every house they buy to make the payments lower. I thought this was good info for us since we had called the city assessors office before seeing the house. Seems they bought the house for $178,100 and 20% down would mean their mortgage is about $142,480. With 4.5 years of payments I figure it would be around $140,000 which is what I would have offered the first time. Is this still a good offer?
So I guess the next step is to make an offer. Where can I obtain a purchase offer contract that most of the investors here on CREOnline use? The seller’s husband is also an attorney and they said they could provide us a contract but am leary about whose interest it favors.
Thank you all in advacne for your help!
Jim-WI
PS The lady seemed to be pointing out that her cost per square foot was about $5-10 cheaper than other houses in the neighborhood. How many use this cost in making offers?
PPS Seller also mentioned they are moving at the end of July to new location even if house is not sold. When is the optimal time to put the offer in?
Reading between the lines, I still sense a reluctance to ask her questions. If this were a listed property you could put in a low ball offer to see where they are coming from. But you were talking to the owner directly. You could have used the chance when they said they always put 20% down to ask the obvious question. Do you have to have any cash over that mortgage amount? Or the more passive - How much over that mortgage balance do you think you have to have if I can close quickly. Followed by- how much of that has to be in cash and how much can you provide financing for.
I doubt that she will give you definitive answers because the husband needs to be part of the negotiation. Why use and submit a contract to start the talking/negotiating process. Get them to the kitchen table and NEGOTIATE. Then write the contract before you leave.
If it becomes more cash than you have or want to put into it, determine LTV as to whether you can flip. Or if they will provide owner financing and don’t need cash now, give it to them in a year or two. When you start asking them the right questions I think they will tell you what they want, and guide you to the right offer.
I use the purchase offer form of my local board of realtors and attach my own addendum. I can email you a copy of the addendum if you want it, but it is specific to my local realtors form.
