First call - Next step ?

Question

Ok, so I've only sent out roughly 15 post cards and got a call today from one of my post cards, it really caught me off guard. I was thinking I was going to have to send out thousands of cards to get 1 call.

When the man called I was familiar with his street/house and talked briefly about his house. He's owned it since the 80's and he is an absentee owner, he only lives a few miles down the road. He rents it out and just wants to sell and get out of it.

I asked him if I can call him back in a little while when I get get to a pen and paper as I was driving at the moment.

My mind is racing, what happens if he does not want me to go inside and bother the tenant?

At this point I want to schedule a time to meet with him at the house and do a once over to check big ticket items over and determine what needs to be done to make it market ready, determine whether this is a good rental or a fix n flip. I want to then contact one of the realtors I have made connections with to get an idea of a ARV. Put together my offer and meet up with them man again to propose my offer.

How long does this usually take a seasoned investor from the time you leave the house to the time the offer is in the homeowners hands? I work 60+ hours a week so I am doing my best to not put this on the back burner and expedite the process the best I can.

IF he accepts the offer what would be the next steps? Trust me I have read hundreds of posts on here and read most all of the mainstream books, but my head is full of farts right now as I was not expecting this to happen this quick. I have a title company in mind that is local. Do I deliver my "contract" to the title company and then they do the rest?  Would the title company be the one I give the earnest deposit to? Is that even necessary as this is an off market deal? No other offers on the table so I don't know if earnest money is even necessary?

Marcus Auerbach · Answer

@Lee Haenschen first of all, congratulations - you have the REI bug! I remember how my heart was racing when I had my first FSBO on the line lol

You are already ten steps ahead, just because you got a call, that does not mean you will close, it does not even mean you will make an offer. I would say you have a 10% chnace to make a deal, for now you are just talking to someone who received your post card. Look at this as a practice lap; you may not even like the property; Seller may be asking an unrealistic price etc. So, the most important thing is to detach yourself from the outcome, lower your expectations and relax as much as possible :-)

Find out as much information as possible about the property. Get a rough idea about the value and find out as much as you can from the owner, in particular about his motivation to sell? Why is he selling, how fast, what price does he have in mind. Just a normal conversation. If that sounds good and he is motivated, go see it, take many pictures and take your time to look at everything, it will take you more than just half an hour.

Here is another recommendation. Find an agent who is good (>25 deals a year) and has done FSBO's, ideally is also an investor. You can just call a large brokerage in your town (like KW) and ask who they have that would fit your bill. In my experience the Seller is usually very open to having an agent involved and pay the buyer side commission, there ar just so many moving parts, a lot of money and legal risk. This way everyone knows the deal is done by the books and reviewed by compliance, title done correctly etc. Plus the agent knows what to look for at the house, can connect you with a good inspector, lender etc.. Looking back to when I started as an investor it seems silly that I did not bring an agent along, probably because I did not have one, and the ones I met knew less than I did. Once you have done it a few times and you feel confident about the process you may not need an agent anymore.

Lee Haenschen · Answer

So I called him back today and of coarse, was not a good time for him again to speak. I asked if this time was better and apologized for the "off" timing last night. He said "well actually I am at physical therapy, but make it quick"

I said " I can call back later if that would work better" " no no go ahead and ask your questions"

So I fired off a few questions which led to roughly 5+ minutes of casual talk. He seemed to open up as a nice older gentleman. The home is tenant occupied and he wants to give the tenant a week notice before he lets someone in to view the home. He said give me a ballpark figure. So I shot out $60-80K (most homes of its size are selling for around 125-140) I didn't have time to talk to any realtors to get an arv so I told him this is just shooting off the hip.

He replied with "well young man that's 20K lower then the last offer I got" I asked if the other person who offered made the offer site unseen? and yes the offer was site unseen.

I left the phone conversation satisfied that I did all I could over the phone, told him that I would love to come look at the house if he could arrange a time that would work for the tenant. At this point it's baby steps, like mentioned above I doubt I will get to even see the house.

Lee Haenschen · Answer

If you asked what they had in mind for a price and they want what the house is worth after renovations, would you decline to even come look at the house ?

Lee Haenschen · Answer

Already dealing with a small level of push back. I called the gentleman back last night and asked if it was a good time to talk he said " no call me tomorrow" . Very mono toned and one word answers.

Amanda Kessler · Answer

Congrats on the first opportunity! It's normal to get nervous, but you shouldn't be. You sound like you know what you need to do, so just go and get the job done. You've got this!!!

Lee Haenschen · Answer

Marcus I do 100% understand that this situation is likely just practice. I'm not expecting anything more than a learning experience out of this. I just dont know how to progress past making the offer.

Clark Kirkpatrick · Answer

Get an agreement of sale signed. Put the earnest money amount in the agreement of sale (a small amount - $500 or less might be sufficient). Give the EMD to your title company and have them start title work. Call the local government to get your transfer inspection scheduled. Bring a contractor to the house to get rehab quotes. If you're getting a loan, then call your lender and start that process. If you're buying with cash, get the cash into the right account so you can wire it or get certified funds from a local bank on closing day. Schedule the actual closing day and time. If you're wholesaling it, get your cash buyer lined up. Get insurance quotes and get a policy that'll start the day you close. Get the utilities transferred to your name, effective on the closing date.

First call - Next step ?

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