Posted by Michael(KCMO) on April 22, 2006 at 20:23:12:
First, let me say it was good “talking” w/ you in the chatroom the other night.
You’ve been butting you’re head up against this problem of higher prices and not many motivated sellers for quite a while, haven’t you? I remember you posting about it back when you first started. I still don’t have any new suggestions on that other than the “listing” idea. Perhaps I’m like the carpenter who only has a hammer, so sees only nails but I just think this model overcomes so many risks.
If I understood your post above correctly you’re saying you don’t want to list other’s homes b/c that keeps you from committing to a purchase? Here’s something to keep in mind: When the seller won’t come down far enough to get into your “strike zone,” go for the listing. This keeps your foot in the door. For instance, you’re looking at a home you don’t want to have more than $4,000 in if you were to buy it (in real life we’d have to figure in holding costs but to keep things simple let’s just ignore that for now). So you don’t want more than $4K in it but they won’t come off $5,500, $6,000, or whatever. So if they want $5,500 for it you just have to find a buyer w/ $1,500-2,000 downpayment. Subtract that from the purchase price and you only have to come out of pocket about $4,000 - and you really DON’T have holding costs!
And here’s the cool thing, if you CAN’T find a buyer w/ that much down even though you’ve made a good faith effort to help the seller find a buyer, at some point the seller is going to get more motivated and drop the price. When that happens who do you think they are going to come to? You.
You may worry about the buyer & seller getting together and undercutting you. Remember, though, the buyer barely has enough down payment. They don’t have enough to pay cash for it like you are. That only happens when you get a killer deal lined up where you’re buying it for the same (or less) than you’re getting as a downpayment.
I’m beginning to ramble. I guess my point is that you might reconsider the idea. If you’d like to call sometime I’m as interested in you in tweaking ideas.