What do to do with Dm leads that are asking above 70%.

Question

I am trying to maximize the potential of my Dm campaign and I have an idea. Feel free to tell me that this is terrible or point out why it won't work. Why not put the property under contract at their asking price (as long as it is say 10-20k under market value) and try to sell it as a home with equity already built in. This strategy would only work for homes that are either in good shape or only need minor updating. Explain thoroughly to the individual what you will be doing upfront (see if they are okay with you disclosing address etc) and explain that there is a possibility that the home won't sell.  You could advertise the home on CL, to realtors you have worked with, and on Facebook. Eventually running your own website for prospective owners to look at. Similar to a "no haggle" car lot people would come to you knowing that they are getting a good deal and didn't have to jump through hoops.

Just to clarify I am not talking about telling someone I will pay your house on ____ date and then letting it fall through/losing earnest funds. I am more talking about using an option and giving full disclosure. I would even say generally we see these properties sell when they are going for 70% of market value. I do however believe that in this area we may be able to work together and do better then that.If it sells you figure out a set commission. If it doesn't sell they haven't lost anything.

Your target market is then retail buyers who want to start out with some cushion from the get go.

Jerry Puckett · Answer

That really depends on what is motivating your Seller. As a licensee, representing the seller, you would then have a fiduciary duty to the Seller to make sure they got the best price they could.

If I understand you correctly, you're still wanting a quick sale at a reduced price, just not low enough to be particularly attractive to an investor.

I have used an Option as a sort of last bite at the apple before, but I was still shooting for a cash or hard money sale. I think what you're talking about, actually touching the retail market with a wholetail deal.... @Curt Davis,  @Dev Horn and @Michael Quarles  are right....getting paid....legally.....is the part that won't fly.

Michael Quarles · Answer

I am at dinner with @Dev Horn on this one... You'll need a Brokers License attached to do that...

Besides in my state you can only sell up to 8 contracts a year without it anyway.

What you can do is sell ALL of the leads to an agent for a lead fee.. The kicker is ALL. if you allow them to pick and choose then you'll need a license.

Ryan Dossey · Answer

@Tanner Trokey  I sent you a colleague request. We are currently only working in Saint Louis and most of our properties are in West County, Saint Peters, and Ballwin.

Tanner Trokey · Answer

I do not know if your target market is the St. Louis area, but I have spoken to many cash buyers that buy in the St. Louis Market at 75% even up to 80% ARV. in some areas like west county.

Ryan Dossey · Answer

Thank you guys very much. Sounds like the only way it would work is if I was buying them outright myself and then "flipping them" at retail. Which is not something I can do at this time but is an idea for the future.

Ryan Dossey · Answer

I am curious what @Jerry Puckett and @Michael Q. recommend. I know you guys are more seasoned then us and probably get asked this question all the time. Other then flipping them to a realtor as a referral (which is something I am looking into) any other creative solutions? Just trying to maximize our calls.

Ryan Dossey · Answer

Would my proposal be doable (as more of a long term project) if I got my Realtors license?

Dev Horn · Answer

I fear that the proposal described in your original post would constitute "acting as a broker".  The only way you can buy as a wholesaler or ultimate cash buyer is to contract to buy the house as a PRINCIPAL - you cannot do it as an "agent" for or representative of the seller.

Ryan Dossey · Answer

@Curt Davis The points you bring up are all very valid. I know when people normally wholesale a property they do a double close. As far as the title search goes I guess the way to avoid that is by basically listing the property as for sale by owner. The advantage can be if you set up a decent website and know how to generate traffic you can get to the point where they go quickly and you are basically just advertising on behalf of the home owner. The home owner would benefit because they aren't paying 6% to sell the house. If structured that way other wholesalers could pass properties onto the website and receive a bonus if it sells. From a legal stand point would I need to be a relator to do this? Or would being a realtor make this much harder to do with all of the red tape.

Curt Davis · Answer

If your not a licensed realtor then how will you get paid?  If you put the hoe under contract then find a retail buyer who will most likely be doing FHA financing, once their lender does a title search and sees that you are not the owner of record there will be a red flag.

Most likely retail buyers are going to be looking for closing cost assistance, repairs done from inspection report and the buyers agent commission to be paid.  You then have to get the actual seller to consider all of this.

The only real way this will work is if you find a cash buyer who doesnt have an agent.

Good luck

What do to do with Dm leads that are asking above 70%.

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