REALTOR INTERESTED IN NEGOTIATING

[Taryn J.]

Good Morning!

I am new to this and need some advice - direction.

I found a property, it's a double wide mobile home sitting on 1 acre of land.  The mobile home was renovated so no repairs are needed.  The realtor stated the home has been sitting for some time now and the owner wants to sell quickly.  The asking price is $110,000 3 br 2ba, 1237 sq ft. no one has lived in it yet.  My question is, how should I start the negotiating to make a profit?  If the owner accepts, I know I will then have to find a cash buyer.  

[Robert Seed]

@Taryn J. Good question.  

Taryn, first off, proof of funds is easy, just go to this website: http://besttransactionfunding.com/  or many others that can provide you with the proof of funds letter to submit with your offer.  If the listing agent doesn't like it, that's their problem, you just need to be confident and not let them push you around.

Next, you need to understand what the ARV (After repair value) of the property is. For example, in this case, you said it needs no repairs, and say they are listing it already at ARV of $110k, so what you will want to do is take 70% of that amount less your desired wholesale fee and make that offer.

For example: $110,000 x .7 = $77,000 less $10,000 wholesale fee = $67,000.

Make an offer to them for $67,000 and see what happens.

If they say they won't take an "assignable contract" ask them why not, as for any commercial property I purchase I first put in my name and then assign to my new LLC I form during the escrow period. If they don't like that, and will not accept an assignable contract you can still do what's called a double closing, meaning you buy the home and sell them home on the same day and you can use that same company that gave you a proof of funds letter to provide the cash to close, and resell the same day.

OK, I'm really simplifying things here and there is a lot to learn.  I recommend finding a local investor that you can bird dog for first, and ask them if they will help teach you how to properly value properties.  Work for them for free until you learn what you need.  Read a ton, but don't get too distracted by too many strategies.  

Also, don't get too focused on one deal, like this one for instance.  Make an offer at $67,000 and see what happens, they will probably not accept it, which is fine, but if they do, you can probably find a cash buyer pretty quick.

When I was doing a lot of wholesaling, I was making 25 - 100 offers a day.  Listing agents get mad at you, insulted by your offers, etc etc... that's OK, they don't have to like your offer, and if 97% say no, but 3% say yes, you can grow a good business.   The key is making a lot of good offers. 

Side note on this specific deal: mobile homes on land can be tricky due to lending requirements and constraints on foundations. What you want to ask the listing agent is: "has the home been de-titled, meaning, it's no longer a DMV vehicle, but rather, attached to the land and sitting on an FHA foundation". This will enable it to receive traditional financing from a bank, whereas if it has not been de-titled, it will be more complex and you may need a cash buyer, possibly owner occupant, which could be hard at that price.

Lastly, I'm starting to look for more mobile home parks in North Carolina and maybe you can wholesale to me and make some money finding us homes for our parks.  

Good luck to you

Roby