Sell before you buy - Posted by lew

Posted by Jim Kennedy on May 18, 1999 at 16:13:00:


I would not recommend sending a prospective buyer to do a “drive-by” until I had the property under contract. This even applies to other investors with whom I have a long-standing working relationship. The last thing I would want to do is tempt a good investor to go around me. Why test their ethics?

As for knowing what a prospective cash buyer would be willing to pay so that you know what to offer, do your homework. I don?t mean to sound harsh, but if you do a little research, you should have a pretty good idea of what a cash buyer would be willing to pay for a particular property. If you plan on flipping the property, more than likely it is going to be either to a rehabber, a landlord, or an owner occupant. They will each have different criteria with which you should become familiar.

Also, once you learn how to get comps in one area, the PROCESS is very much the same for any other area. You should be able to go into an unfamiliar area and determine the value of a property rather quickly. Your next challenge will be to determine the cost of any repairs needed. While these costs vary slightly by area, once again, with a proven PROCESS, you should be able to determine local variables rather quickly.

With this information in hand, it is relatively simple to determine what YOU can safely offer for a subject property.

When I first started out, I got the properties under contract before I divulged them to my prospective buyers. I never had the unfortunate experience of having someone try to go around me, but I have heard some unpleasant stories from others. Now that I have been in the business a while, I have learned that it would not be in my best interest to try to go around someone bringing me a potential deal. If I did, would they ever bring me another good deal? I doubt it! But do you think every investor operates that way? Why chance being cut out of a deal when it is really quite simple to learn the basics and do the deal right?

This is just my opinion but I hope it helps.

Best of Success!!

Jim Kennedy,
Houston, TX

Sell before you buy - Posted by lew

Posted by lew on May 18, 1999 at 15:27:36:

Hello everyone!!

I recall seeing this technique posted on this site or the how in the how to articles. Say for instance I find a property that I consider a good deal. My intention is to tie the property up and flip to a cash investor with a simultaneous closing. What if instead of tying up and negotiating a deal on the home, I first had my cash buyer(s) drive buy the home and tell me what they would be willing to pay cash for it?? That way I would know just what to offer on the property based on the response of my buyers?? This could wor well to my advantage on area’s that I’m not sure of the comps. Any feed back is appreciated.

Re: Sell before you buy - Posted by Jim IL

Posted by Jim IL on May 18, 1999 at 22:30:47:

First, NEVER send a potential buyer to look at a property that you do not have tied up. Even if you have worked with them before, they may still buy direct from the seller and cut you out.
Also, to send them to a home when you do not control it or have it tied up is kind of misleading.
Say for example that you find this GREAT home for a REALLY LOW price. You tell your buyer to “drive by” and when they do, a RE agent is there showing it to someone else.
Now, they stop in and are allowed to view it inside and out. they leave with the RE agents card, and get the deal from the agent, NOT YOU!!!
Instead, get to know your market. Target an area that is manageable, and learn what home values are in it.
Then, get to know the area cash buyers. Learn thier buying criteria, and other factors. Then, tie the house up under a contract and sell it by “assigning the contract” or a simultaneous close.
Just include some “weasel” clauses in your contract, and come up with more than one “Exit plan”, IF you can not sell it to another investor.
ALWAYS have a way out!
Then, go make offers.
I assure you that most offers are rejected anyway, so you are pretty safe to start making offers and formulating your plan as you go.
If you get a good deal, the money does appear.(especially when you have it under contract and become “backed into a corner” to look for it!)
You can ALWAYS sell a good deal.
If you have not already, buy a course, read a book and study closely the “how to” articles here, and you will learn the right numbers to apply to offers, and criteria to use.
Good luck,
Jim IL

Re: Sell before you buy - Posted by Richard Roop

Posted by Richard Roop on May 18, 1999 at 17:57:49:

Your idea has merit and I think I might have even done it. However, it is better to learn about property values in your area which will help your on future deals as well.

It doesn’t take much to tie up a property. Just a sales agreement with a small deposit. Make it contingent on an inspection (which is normal) then you have no risk.

If I am sending my investors to drive by a house I want to make sure I can deliver if they want it. Otherwise, my investor may think I have wasted his time.

Keep your cash buyers happy and you can use them over and over.