finding the deal?

Question

I have been looking everywhere for a deal in southern california. I can not find one. The properties never comp out. for example one property Someone was asking 110,000 siad arv was 150,000 with only 5000 rehab. the property comped to 110,00 his asking price. so no room left for profit. everything I check works out the same way. people seem to be trying to sell at a premium. I need to know what to do to find a deal becuase the stuff i read on articles and stuff are not working for me?

Max Drizin · Answer

You should always be making offers on properties that you like, even if their numbers don't work out. I can't say I've ever paid asking price for a property, and I don't think people should. Sellers list an asking price above what they will take, especially in today's market. The goal of a smart seller, at least, is to have you negotiate it and they can give you the lower price you want, but with terms for favorable to them, since they lowered the price. Stupid sellers, on the other hand, are just that. Either you can negotiate them down to your price and your terms for a great deal or they won't budge on anything. In the latter case, they won't find a buyer unless someone even dumber than them comes across it and sees it as a deal. In your case, I'd take a hold of all the information about the property and your rehab costs that you can, and make an offer like that. Show the person the comps, explain why your price is reasonable and realistic, and tell them that they won't find a better deal than what you are offering. If the owner isn't an agent or working with a selling agent, they probably don't know the real value. Owner-occupied sorts of places always have high prices because their owners attach value to the property that really doesn't exist.

Mike Jakobczak · Answer

Max and Mitch are bang on, When I use to deal with home owners I'd give them all the numbers up front of what I look at when analyzing a property and factor in my projected profit and give them my max purchase price. I'd also show them that once you factor in a realtor's cost and the amount of time on the market, that my offer was very reasonable. Most would be discouraged and would call me back in a few weeks once they realized I wasn't talking crap!

Mitch Kronowit · Answer

Aaron Mazzrillo (fairly new to BP) said during a presentation here in Orange County that you don't find "deals", you find "opportunities". The property you mentioned was an "opportunity", i.e., you found a seller willing to part with his property. THAT'S HALF THE BATTLE. It just wasn't a "deal" at the numbers involved. If the seller was motivated enough, you could have shown him the comps, convinced him how ridiculous his asking price was, discovered his underlying reasons for selling, and come up with an offer and terms that worked out for the both of you. Voila! The "opportunity" just became a "deal". Of course, if the seller isn't that motivated and just waiting for the right "sucker" to come along, move on. There's still plenty of people in SoCal that are truly desperate to sell their home.

Will Barnard · Answer

Just because they say they are a wholesaler does not make it so. Real wholeslaers bring value to the table via a large enough spread in a deal. Many pretend to be or are wannabies and as such, they have no lcue how to negotiate a good deal or how to evaluate exit values and rehab expenses, which are 2 of the most important aspects. There are deals in Apple valley, but you must find the contacts and build the relationships to get them. Most deals here in So CAl are not found on the MLS. Sure you can play the numbers game and destroy several trees by making hundreds of offers to get 1 or 2 accepted, or you can work on buidling relationships with those who are capable of delivering product with good spreads. REO properties are one resource and private sells (perhaps from absentee owners) are another. Pick a strategy, learn everything there is to know about it, and then apply that knowledge. Have you heard that knowledge is power? It is not, knowledge applied is power and relationships are key, particularly in the RE biz. Sounds to me like you have been looking in all the wrong places which is why you are not finding deals.

Max Drizin · Answer

That's exactly what I would do. It's always funny when a seller comes with ridiculous prices and I get to show all my data for it. Half the time, it takes a little reality check for the seller to understand that they won't get the appraisal from five years ago, or last year's tax assessment. On a side note, I've always seen assessments as completely worthless in getting a price. Of course, the state or city is going to assess the value of a property as high as they can, since it means how much money they will be getting. There's no reason to be bashful about telling the seller how much you think a property is really worth. If you offend a seller with a low offer, you wouldn't have bought from them anyway.

Akali Dennie · Answer

Hi David. My suggestion would be to get your first property via a public auction. You will find some great deals this way as long as you do your homework and title search. To be successful in this though, you would have to be a cash buyer. If this route is not feasible, then I would suggest that you go after the REO or Short Sale properties.

Account Closed · Answer

SO I should make an offer anyways using my valuations right? The reason I posted this is because the valuations I am given seem to be outright lies. even when dealing with other wholesalers. When I say outright lies I mean the property value is about twice what my people comped it to. Coincidently or maybe not the asking price is always spot on to my valuation.

Bill Gulley · Answer

Are you making offers? In my area, there are no deals as in Detroit either! RE is local and it should not be assumed that every area has properties available at pennies on the dollar. If you have a good rehab crew, check with the city and ask for a list of properties on the dangerous building list. There might not be any but you could check..

Kevin Priester · Answer

Its a numbers game David. The more times you talk to a seller and find that the deal doesnt work, puts you closer to finding a deal that does work. Don't get discouraged..there are deals out there. What types of marketing are you doing?