Sellers are calling, now what?

Question

I drove for dollars in a couple of farm areas, and am looking to buy and hold. I wrote down every address that looked to be in relatively good shape, but looked vacant/overgrown etc. I went to the tax records and hand wrote yellow letters and mailed them last week. I sent out about 42 and have gotten 6 calls so far. I am very happy with the response rate. My question is how to deal with the calls. Mike Quarles says to have them give you a price first, but so far, both people I've tried that on have just kept saying, well, what do you want to pay? How do I get past that first hurdle?

Also, anywhere I can read about how to do a short sale?

Subject to?

I'm having a really hard time searching the site by subject because everything that comes up is like 6 years old. Any help would be appreciated. Thanks

Also, anywhere I can read about how to do a short sale?

Subject to?

I'm having a really hard time searching the site by subject because everything that comes up is like 6 years old.  Any help would be appreciated.  Thanks

Hattie Dizmond · Answer

Are you asking them what they want for the property or what they think the property is worth?  It's a subtle but powerful difference.  Asking them what they want is an emotional question.  Asking them what they think it is worth immediately calls into question what the market supports.  It also gives you a perfect springboard, if they come back with something like "what will you offer?"  You can then say, "Well, I would hate to try to place an accurate value on the property without first seeing it.  That wouldn't be fair to you, because I would have to make far too many assumptions.  I'm certain I can help you with this situation, if you will show me your property"

Just remember, when you start talking to them about the value of the property, it isn't you determining that number, it's the market.  Most...not all...owner occupants are going to believe their property is worth more than it is.  Sometimes that is simply wishful thinking, because they think need more than it is worth to make their problems go away.  Other times their belief stems from sentimental and emotional attachments to the property.  Those are the hardest to overcome, because they aren't based on any kind of rational thought.  Those people place a higher value on the property, because the memories tied to it are priceless to them.

Either way, you're job is less about getting them to give you a number first and more about helping them to understand why their property is only worth what the market will support in its current condition.  And, remember, the deal analysis is all about the numbers, but the transaction is all about solving their problem.  Focus on their problem and how you can help them with it.  Above all, never taint that initial conversation trying to not be the first one to give a price point.

Jay Hinrichs · Answer

@Craig Shute

one thing that can be learned is that hand written locally postmarked letters to a very small target audience will get replys... As opposed to sending out mass mailings..

I know some folks have posted that they don't get replys.. some shoe leather and drive for dollars may up that for them.

Here is what I used to say when I bought homes like this.

I would use the third person and make kind of a Joke.

I would say:

I was talking to another homeowner the other day and we discussed price.. And this person said they thought their home was worth 500k  and I knew it was a 200k home so I knew they were not serious or motivated in anyway.. I can tell by talking with you that your not that way and you probably want to sell for a reasonable price... then get them to agree that they are reasonable and continue on.. that worked for me

Account Closed · Answer

That backfires in most cases in my area. Not sure why.  Part of it is suggesting there is a "situation" when there isn't one.  It seems to create a line in the sand.  I try to draw out the situation, if there is one.  I say "If your property is vacant, in very good condition, needing no repair or updates you would be best served by listing it with an agent.  They will find a homebuyer getting a home loan who will pay the most for your property. I'm happy to recommend an agent if you need a referral."  It's lets them know I'm not going to be that buyer.  Give them a chance to perhaps cop to what's going with the property.  I never go see a property anymore until I know we are on the same page.  This gets me a lot of call backs later, after reality sets in, when they've accepted that the original 1960 kitchen does, in fact, need "updating".  Or that they won't be dealing with their entrenched, non paying tenant, or relative or the hoarder house in their life time.  Or that the tax sale or foreclosure is now 1 month away instead of 6 months away.

I get a lot of calls from people just looking to sell at retail without paying an agent commission.  Obviously I can't buy at a 6% discount and come out ahead. But instead of saying that, I tell them they'll come out ahead if they list with an agent. Seems to create less suspicion of an investor looking to "steal" their property.  Of course I love it when the conversation actually starts out with "I've got this situation......".  :)

Whitney Tyson · Answer

Give them a number. If you have done some research in the area you should have a ball park figure of what you are willing to pay. Give them a number with the terms they want, but the price you want. Then give them a second option with thier price and your terms(owner financing, no down payment, etc). It gives them the feeling of power, but you get the property. Hope it helps

Matt R. · Answer

Awesome. One thing I learned from my lone craigslist ad, was to ask if they have any other properties. ?..sure enough they did and that was far better than the original. I am still greener than green but I will always keep that as part of conversation from now on.

Doug Pretorius · Answer

Kristine Marie Poe I've always used that exact technique with buyers too. If they can qualify for a mortgage they'll pay less going the bank+agent route. That's when the "Well...actually I had this hiccup with my credit awhile back" admission comes along :)

Hattie Dizmond · Answer

Kristine Marie Poe

That's a great approach!  Thanks for sharing.

Craig Shute · Answer

One of my subject properties, the bank has accepted my very low short sale offer so I'm very excited! Closing should happen soon! I intend to write a post on the whole process once it's done. Thanks for all the advice!

Doug Pretorius · Answer

@Craig Shute As I approach my 15th year in this business I like to keep things simple. I want properties that I can turn into cash flow with the least amount of time and effort. So...

1) I buy 3 bedroom homes in move-in condition = no reno + minimum time on market.2) I'll pay what the owner owes as long as they don't owe more than the house is worth and their mortgage has good terms = no price negotiation + no down payment + no new mortgage.

I know plenty of people like to pay cash and negotiate and rehab, and they are rewarded well no question, but personally I can't be bothered with all of that. Give me a seller who will hand over the keys if I can just make their payments go away, and a buyer who needs a little time to qualify any day of the week.

My entire business can be summed up in 6 words:

Take Over Payments

Rent to Own

And those aren't cliche slogans, those are the actual marketing messages for sellers and buyers.

Hattie Dizmond · Answer

There's a couple of things I do...

1.  If it's a property I've found either through word of mouth or driving my farm area, I'll always run a quick analysis, before I send letters.  I save the analysis data into my CRM, so that when they call I'm already prepared.  At this point in my REI journey, I don't have a large enough volume of leads to have to weed out the "tire kickers" for properties I have individually inquired on.  So, I want to see every one of these types of properties and speak to every owner.  It's good practice for me, and I already know this is a property I'm interested in.

2.  If the call from the owner is coming as the result of a direct mail campaign (i.e. absentee owners), then those calls are coming in via a Google Voice number and going direct to voice mail.  I get a text/email with a transcript of the message, and I do my initial analysis, before I ever call the owner back.  With these guys I do try to get some details about the condition of the property and what they think it is worth vs. what I think I might be able to pay for it.  But, I work off of the 70% rule.  That's my starting point for everything in the initial stages, because I won't know what my potential exit strategies will be, until I see the property, assess the level of rehab required, and find out the seller's situation.

Sellers are calling, now what?

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