We try to use one specific day for re-submitting offers…i.e., the 5th of every month…doesn’t always work out that way though…and this applies to only those who have not countered. When we get a counter, we respond within one or two days.
I don’t reduce my original offer when I receive a counter-proposal. If I hadn’t done my ARV research right before the first offer then I would probably just forget that one and go on to the next. I have changed terms in response to counters…like, maybe, 90 days to close instead of 30.
I do, sometimes, reduce my offer if there was no counter from the seller and I’ve had some of these lower offers accepted.
I recently purchased Ron Legrand’s “Fast Cash with Quick Turn Real Estate” coarse (excellent )! Mr. Legrand gives his reasons why he prefers wholsaling verses assigning contracts on ugly houses during the the audio cassette portion of the coarse. He reasons that assignments give your rehabber the opportunity to know what you paid for the house. This leading to ill feelings and possible killing the deal. The implication being that the rehabber might negotiate with the oringinal seller cutting me, the investor, out all together. There may be other reasons; but this one is the only one Legrand talked about. Wholesling, on the other had, I perform a double close and instruct the title company to not reveal my purchase price to the rehabber.
Are Legrand’s misgivens about assignments a typical? I mean is it such a big cause for concern that the rehabber knows what I paying for the house? BTW, what are advantages or disadvantages of wholsaling verses assignments?
I attended LeGrand Boot Camps and I have basically been doing deals using the information I learned there. I’ve “tweaked” it a little bit to place my focus on REO’s. Whenever I talk with re-habbers the first time, I let them know that I’m an “Investor” and that I’m going to make a profit. If they are interested in the property, I let them know how much I’m making on the deal…in fact, the “Assignment Form” From LeGrand states the amount I’m charging for the Assignemnt. I don’t worry about it for 2 reasons. If I’ve followed Ron’s formula for determining MAO [which I always do], I know there’s a “fair” amount of profit for the re-habber[at least 20% of ARV] built-in. The other reason is, if they really want to know how much I paid for it and if the Seller really wants to know how much I sold it for, they can get that info right from the court house…plus, in our area, the newspaper publishes all of the Deed Transfers after they’ve been recorded.
If the re-habber thinks I’m “making too much,” then they can walk. My attitude is, it’s a good deal and you’re not the only re-habber in town. After you’ve run your first “Handyman [“Handyperson”] Special” ad, you’ll quickly realize this. I still have re-habbers who answered the first ad I ran years ago, calling me to let me know they’re ready for another project…and please let them know when I have one that fits their criteria.
Wholesaling vs. Assignment. When wholesaling, you take Deed to the property and pay closing/holding costs, with Assignments, you’re just Assigning your Purchase Agreement over to your buyer… no closing/holding costs.
Frank,
Just wondering!! When do you follow up on your offers? A month, 15days or what? I have made many offers on REO’s for wholesaling purposes and would be interested in the follow up process.
Also, when you submit the second offer or third offer on the same property, do you ever offer less than what you offered originally? I actually ticked off a couple of realtors when I responded to counter offers by offering them even LESS than what I had offered originally. I did this cause I miscalculated on the ARV initially on a couple of properties. Any suggessions would help!
Thanks!