Questions for Potential Off-Market Sellers?

Question

Good evening all,

A while back I did some driving around my area and found some multifamily properties that were off-market that I'd like to pursue. At this point, I haven't made any prior investments yet so any of these could be the first one for me if they meet the right conditions for me to buy. I already have a pre-approval letter and am intending to start contacting owners through my real estate agent but want to be more prepared. To the more experienced investors I'd like to know: what set of questions do you usually ask when first contacting owners of off-market properties? I imagine one of them, it not the first one, would be "are you interested in selling your property" of course but what others would be good to ask when first reaching out? Or do you leave at just that initial question and ask more after confirming that may be interested in selling? Also, what approaches do you personally use for pursuing off-properties and how has that changed due to COVID-19?

And I'll put it out there that my expectations of anything working out is relatively low considering the COVID-19 situation at the moment but I still want to use this time take initiative and be productive.

J W S · Answer

@Hadar Orkibi I will keep that in mind and @Evan Polaski I feel like I'm a similar type so I'll try that approach. Thanks again for the advice everyone!

Evan Polaski · Answer

@J W S  I think your best bet is to find a friend/mentor that can help you.  Being a real estate agent myself, there are far more that are really good at marketing, but not good with construction, financial analysis, and negotiating.  As @Hadar Orkibi mentioned, listing brokers do hold a lot of info, but you are specifically looking for off-market deals so there is no listing broker.

Personally, I am a "learn by doing" type, so I would just start with properties you may not be too interested in, and call them.  Just get your feet wet and build confidence.  See how your questions are received, and tweak the wording and when you ask it, to see if you get better responses or worse.  Then start working up your list as you have more confidence on the phone to the ones that you really do want the most.

Hadar Orkibi · Answer

@J W S sometimes using "your agent" can help, especially if you are inexperience.

But more often then not you are much better off dealing directly with the Listing broker, reason is not for paying a lower price, but also avoiding 3rd hand information and the listing broker often controls the transaction and the sellers.

J W S · Answer

@Evan Polaski My initial thoughts were to have my agent do the contacting and forward the specific questions I have (considering my lack of experience). I am re-thinking that since, as you mentioned, there'd be less commission involved if I simply represented myself.

Hadar Orkibi · Answer

@Evan Polaski from my experience the "conversion rate" is depending on your target market and list.

when i say conversion i don't mean closed deals, I mean a respond and ongoing conversation..

with cold calling the key is to first get a Cellphone that is actually belonging to the owner, more often then not they are disconnected. when I started targeting my list I had about 12-15 respond rate, then it went down because we took people off the list and follow them up periodicity  directly

Evan Polaski · Answer

@J W S, I am a little confused, are you going to be contacting, or your agent?  If it is your agent, they are likely going to want a 3% commission.  One upside for an off market deal for sellers is that there is no commission.  Obviously, you can always pay the commission directly to you agent too, but then you are paying 3% more for the property.

As an owner, who does get approached about my properties reasonably frequently, it is a very fine balance when you call. You get about 30 seconds of my time to get to the point, so you need to tell me who you are and why I should keep spending time away from work or family to talk.

I would imagine 98% of your calls will be no's, with 2% being maybes (these are complete guesses).  With that, your goal is not to get a deal today, but to start being the person they think of when they do decide to sell. As such, a call is great, but following up with a personalized letter, so they have your contact info is probably a great idea.

J W S · Answer

@Bjorn Ahlblad That's a good point, I hadn't thought about it like that.  @Hadar Orkibi That's a good approach and those questions make sense. BTW they're all 4-unit properties. Thanks for the responses everyone!

Hadar Orkibi · Answer

@J W S, How many units MF is it?

BUT First thing to do when cold calling is to introduce yourself and share with them why you calling.

say that you are local investor and noticed the property, and wanted to know if thy would consider selling. it is likely that they may say " We haven't thought abut that, but we may do for the right price"..

Or, they may say "yes" or "not ready yet.... "

Anyway, you want ton get to the point of knowing the unit mix, occupancy, who pays for utilities, current rents and I allays try to ask if their payments are current?. that's an open question that may come back with " there is no loan on the property its fully paid for" .

The last question is if "they have a figure in mind?" Or "What would i need to offer for them to sell?"

More often then not they provide the info and I ask their permission to "do some research and come back to them in 2-3 days"

Good Luck!

Bjorn Ahlblad · Answer

@JWS I would not lead with that question, might not even ask...........I'd let him/her tell me. Ask about the market, how long, what made them choose this area, building etc. What stage are they at, and what's their plan? Build some rapport. The 'do you want to sell question' is too obvious and limiting. IMO anyway.