Possible deal here, what to do?? - Posted by Tracy(MO)

Posted by David Alexander on March 15, 1999 at 20:04:19:

You can easily get a hard money loan at 50%LTV. But, wait find out how much cash she needs and try to only give her that. You could structure a deal where you can make great cash flow during the process. Check out Alex Geruvich’s Either Success story or Money Making idea. You need to know what she really wants and how you can help.

David Alexander

Possible deal here, what to do?? - Posted by Tracy(MO)

Posted by Tracy(MO) on March 14, 1999 at 17:27:24:

Hi all,
Well, I need the help of the experts! I have here a home with a FMV of about $120-$125,000. The home needs cosmetic work like carpet, paint, kitchen and bathroom refurbishing. (Bathrooms need an overhaul as they are in that pretty '70’s style and kitchen could probably get by with a good washing if nothing else.)
Asking price on this home is already 16% below FMV. (That is, fixed-up FMV) I asked seller if they could go a lot less for cash and she said “Well, it certainly IS negotiable!” (Home belonged to seller’s deceased brother-in-law and there is no outstanding mortgage on it but they do not want to carry any financing at all.)
So…what do I do??? There is potentially a very good deal here, but (of course) I do not have that kind of $$ and they won’t L/O. I figure that they will take at least a 20% discount off of their asking price for cash, which would make my highest offer $84,000. I think they will take less.
Any and all advice is much appreciated. I plan to try and make my offer tomorrow.
P.S. This will be my first “real” offer. (Can you tell??) So, we need to talk “baby-steps” here. The only other offer I have pending right now is with my brother-in-law and that doesn’t really count.

Re: Possible deal here, what to do?? - Posted by Bob-Tx

Posted by Bob-Tx on March 15, 1999 at 08:43:52:

Well, one piece of info we need here is what you plan to do with this one if you get it. I will assume you intend to fix it up and resell it.
Asking price 15% below fmv with no willingness to finance…doesn’t look real strong to me.
Can you say…“If I can pay you all cash and close quickly what is the least you can accept for your property/” then be very quiet…
At the right price - no higher than 65% of fmv - you can get hard money no problem. It helps to have that finding lined up, but in the event you decide to write up a contract just give yourself a good escape route and go for it/
Good luck

Re: Possible deal here, what to do?? - Posted by Carmen

Posted by Carmen on March 14, 1999 at 21:09:20:

Have you thought about having them create a note, which they sell at closing? With your numbers, it should work out fine, even at a discount.

I’m not a note broker, but we had a great presentation at the investor club from someone who is. The speaker’s name is Lisa Moren, Marketing Director with American Note. She is also an investor, so she knows the deal. Her # is 970-224-3922, Fax 970-224-3950, e-mail lm@americannote.com. They work nationwide.

I’m sure she’ll be able to explain it much better than I could, but it seems that if you can convince the sellers to create a $90K note and sell it for a “discount” at closing for $84K, that would solve their problems (cash) and yours. I’m not sure what all the requirements are, though.

If you do go this route, I would appreciate hearing more about it - or is that a topic for the other forum?

Another option, briefly, is to get it under contract pronto, then find someone to flip it to immediately within the contract period - as a retail flip with a “decorating discount” if need be (e.g. for $115K, but without doing any work on it).

Re: Possible deal here, what to do?? - Posted by Frank [Pgh PA]

Posted by Frank [Pgh PA] on March 14, 1999 at 19:47:13:

One of my first questions is…“This seems like a very nice house, why are you selling it?” Then I follow their answer up by asking…“Is there any other reason?” at least two mare times. I’ve found that most people, especially strangers, are not always willing to tell the real reason the first time they’re asked, so I try to get to the “real” reason. There are many different approaches to finding out if they’re really motivated to sell or if they’re just looking to find out how much they can get for the house. Joe Kaiser says, “stop looking for properties and start looking for motivated sellers.” Once you find out what they really want, then you can work with them to find out if it’s possible to satisfy them. If not, so what?..Move on to the next one.
BTW…the offer to your brother-in-law DOES count. I’m assuming you know why he wants to sell and what he really needs to get out of the deal. Your offer to him should have tried to help him solve his problem [the reason he wants to sell].
I’m from the school that believes that this business is all about solving problems. If I can solve the seller’s problem and I can make some money doing that, then we have a deal. If either one of those elements is missing, then there’s no deal.

make a split offer… - Posted by David Alexander

Posted by David Alexander on March 14, 1999 at 17:50:02:

Make multiple offers.

Offer them 42k now and 42k in a year or two.
Offer them 10k Down and 74k in a year.

I could go on and on.

you needd to set down with them and figure out one if they have already spent the money in their head, and two what they are going to do with the money if they have it. What do they really want. Do not find out the answer to the second question first, or then the money will be spent in their head. Do they really need the money now. You can also play up the part about in order to sell this house I’m going to be pouring my money and time into the deal and I still have to buy wholesale so that I can make a profit later.
Sounds to me like your in the neck of the woods of the master negotiator himself.

David Alexander

That’s Only One… - Posted by David Alexander

Posted by David Alexander on March 15, 1999 at 10:50:35:

Way to buy property(All Cash), there are plenty of others without killing the deal. I’ll buy property all day long at 15-20% below market under the right circumstances. You can make money up front, from the cash flow, or on the back end. If you listened to Kiyosaki and your always doing your deals for the cash only then you are a trader, that’s on the left side of the quadrant. Just food for thought.

Good Luck

David Alexander

Re: make a split offer… - Posted by Donna

Posted by Donna on March 15, 1999 at 19:25:37:

I have two questions. First, and most importantly, what is the best way to come up with 50% of a purchase price, and second, in your experience, do these types of offers work with very nice properties that are FSBO and just haven’t sold for whatever reason? I just talked to a woman who is making two mortgage payments and is not interested in doing a L/O because she wants the equity she has in the empty property to pay college tuition. This situation has potential but I’m afraid to do anything because I don’t know what I’m doing. Please advise.