making the offers - Posted by BillW.
Posted by BillW. on March 18, 2001 at 08:44:36:
Tom, What you’ll need to do is to become very familiar with your target territory. Know the values in the area inside and out. Then construct yourself a set of parameters that will allow you to make bids that you want. Tell the agent to look for properties that fit certain guidelines and requirements. When the agent finds one, submit the bid. The object here is to jam your foot in the door before some other investor does and lock out the others until you have time to inspet the place. Upon inspection, you then can modify the contract, depending on the condition of the property or possibly modify the terms. You’ll be looking for properties that are underpriced, run down, or owned by desperate motivated sellers and by banks and other lenders only. To give you an example, in one area I work on, property values are about 90 to 110K for starter homes in good condition.(Typical for many areas of the country). I will be looking to buy for at least 20 percent below this and preferably more. I will also be looking for property owned by banks, and out of town sellers, and desperate sellers. If one should become available, I’ll try to lock it up with an offer. (Don’t forget, you must be able to close).If I can lock it up, then go to the next step and inspect, looking for things which I might be able to use to lower the price. ("Gee, you didn’t tell me that the (wiring, plumbing, foundation, etc. -insert problem here) was bad. This is going to cost a lot to fix. I’m going to need a price adjustment for this. " Then you calculate what it’s worth to you and either you make the adjustment and take the deal, or you withdraw your offer. Once you agree and make the deal, you MUST close it! If you don’t your reputation will be trashed and future deals will be MUCH harder. If you don’t have the ability, cash, etc to close, get a partner who can and will. Hard money lenders are OK, but don’t forget, you still have to pay the carrying costs.