Should I Not Spam Offers? And if Not, Why Not?

Question

So a JV partner of mine said the other day " Just fax offers all day for 50% of the asking price"

Of course he goes on to say once we have on accepted we will do our due dilligence.

My thoughts on this after reading on this board for a while are that I would put myself in a negative light with some REO agents if I did that.  We will have the cash to close on the offers that get accepted, and will not have to double close or anything fancy.

But primarily wanted to get input on whether or not I should spam offers.  And if not, why not?

John Newland · Answer

Developing a relationship with an REO broker is a great step, however, it still will not get lowball offers accepted because you have a good rapport with the agent.  What it WILL do is put you on their contact list of qualified buyers, so when the really good deals become available, you are contacted before the property hits the market and have first shot at it (along with the rest of their list - at least it beats the rest of the MLS buyers.)  I am a broker myself, but I get a heads up from a lot of REO brokers in the area on hot deals before they hit MLS because I've shown I am also a capable cash buyer that WILL close and NOT load a bunch of weasel clauses in my offer.  It also helps that I step aside and allow them to collect both sides of the commission :)

Will Barnard · Answer

Steve also makes some valid points in his response. Going after REO's that are 90 day+ listings is a decent strategy and sending an email of a projected offer price is a sound strategy to save everyone involved time.

Hope that makes more sense.

Joshua Dorkin · Answer

I'm with Will - relationships are key . . . sending cold spammy faxes or emails are not the way to go IMO.

Will Barnard · Answer

Jimmy,

Spamming low ball offers is a waste of everybody's time and you will present your self in a very bad light, jsut as many other rookies have been taught to do.

This business is ALL about who you know and you get to know these contacfts by building and nuturing relationships with them.
I am living proof that this method works while other methods rarely do.

Steve A. · Answer

I have one alternative that worked for me.  I used to have my real estate agent send a quick email to listing agents of properties we were looking at (it was easy because he could link email addresses from the MLS).

We would sort through REOs, pick the best 15-20 that would make good flips.  My agent would send a quick email that said nothing more than "I have a cash buyer interested in 'x' property for 'y' price.  Should we send a formal offer?"

We would get some helpful feedback without wasting everyone's time.

The most positive feedback came on ugly homes that were on the market 90+ days in which we threw out purchase numbers 70-75% of list price in the emails.

Jimmy C. · Answer

Thanks to all of you for the sound advice.

I will be utilizing it as soon as our POF is straight in the account.  Right now its scattered over 3 accounts and only 1/3 of what we will have in a month or two.

When (not if) I am successful with our first REO deal, I will come back to this thread and post the success story.

Oh I almost forgot.  I will not be spamming offers at all.  Thanks again.

Bill Gulley · Answer

Having had a couple of properties sold over the past, when I got low ball offers, I made a mental note of the buyer. Later on, if a listing agent told me I got an offer, I asked who it was from, if I had gotten low balls from them before, I'd tell the agent to turn it down then.

I do recall one guy who wanted to buy with zero coupon bonds (LOL) I kept countering to him with 5K increases in the price over the par value to the asking price. In other words, a 100K house, he would give bonds worth that day 60K, I would counter at 145K, so his cost would be 105K!

Frankly, if you send me a low ball offer you're insulting my intelligence, I'll get ticked. If it's low and justified, I'll look at it.

You might send low balls to mom and pop homeowner, but you won't last long doing that with investors or RE types, IMO.

Brandi Williams · Answer

Steve I really like your method. We are currently looking at a few REOs. I contacted the listing agent yesterday and may try emailing her about my offers. Thanks for the tip!

Jimmy C. · Answer

So if I target the top REO agents, and build a relationship with them, then my offers will be taken seriously right?  At that point even if the offer would normally be considered low, they would not lose respect for us, correct?

I know that we wont be making offers that we cant close on.  That being said, we dont want to buy and sell for charity, so the offers will have to be low enough to turn profit.

Jimmy C. · Answer

Yeah I know what you mean.  I know that if they accepted the low ball offers we would spam, we would close and make sure they get paid.  But I think like you said 99% of them will never get accepted.

Instead I guess I will go the way of the REO rockstar guy.  Develop relationships with the top brokers in the areas we want.  Let them know we can close cash, show them POF, put a deposit in their title company and everything else to be taken seriously.

THEN we will spam offers. LOL!

Should I Not Spam Offers? And if Not, Why Not?

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