What to do after Calls from a Yellow letter?

Question

I am getting ready to send out 100 yellow letters.
Once I send out 100 yellow letters - fingers crossed I get some phone calls.

My rough plan is to set up an appointment. Pull some comps beforehand. Meet the seller at their property - Build some rapport & figure out if/why they are motivated to sell. Then what?

Without having available financing - what do I do next?

If I try to wholesale the deal - what is my next step?
Could I rent to own/CFD/Lease option/take over payments- and then rent the house out?

fire aim ready ready aim fire i dunno. Nervous to get responses then negotiate with seller and really have no idea how to execute.

Any input appreciated.

Jim Viens · Answer

@Kirk R. The contract you have them sign is a Purchase and Sale Agreement. It's a standard real estate contract stating if they sell their home it HAS to be to you. There are good solid sample contracts to use here on the BP FilePlace page (link is under the Resources tab at the top of the web page). You may want to run the contract by an attorney in your area to make sure the language is legal in IL before you use it, though. Once it's signed you'll want to take it to a title company and open escrow on the transaction. They'll hold the signed contract until closing.

Folks go both ways on the buyer thing. Some swear by having a solid buyers list before you find properties. Get to know them and what kinds of properties they're looking for and in what areas. That way your property search is more like a shopping list. Others say go find properties and if you have a solid enough deal buyers will not be hard to find. I see pros and cons to both sides. Once you have a buyer lined up for the property you execute an Assignment of Contract wherein you assign your interest in the Purchase and Sale Agreement to the new buyer for a specified assignment fee. From there you take the Assignment to the title company to put with the P&S Agreement. Let them know the new buyer will be contacting them with the closing date. From there you can either go to the closing with all parties and collect your check or wait for it to be mailed to you by the title company (PAYDAY!)

This scenario applies primarily to a straight, traditional "cash" purchase. In your OP you mentioned rent-to-own, contract for deed, etc. These strategies all involve their own unique twists. If you're just starting out I, personally, would advise you to get a few transactions under your belt before branching out into "creative" financing unless you have a mentor familiar with those techniques to show you the intricacies. But that's just me.

Good luck!

Jim Viens · Answer

Here's what I've done so far: Set up the parameters for your target list (example: 12345 zip code, 3br, 2ba, 40+% equity, absentee owner, no corporations, etc). Send out your letters. When a prospect calls, go through a list of pre-qualification questions (these can be found in other places here on BP). If you determine that it's a good, motivated lead set up an appointment to view the property. You can look up comps either while you're on the phone with them or afterward. During the walk through build rapport with the seller and make notes of what needs to be done to the house to make it market ready for either retail sale or renting. Once you've worked up a repair estimate and gone through your numbers I would call them back for another face-to-face meeting to make your offer (I prefer back at the subject property...it's full of reminders of why they want to sell). I put together a little info packet that included my LONG list of work to be done with estimated costs. I go through that with them to give them an idea of what kind of expense it will be to make the property market-ready. Then I make my offer and DON'T SAY A WORD until they respond!! This is where negotiation starts. Hopefully you get them to sign a contract for a number that works for you both and you can then contact your buyers with the new offering.

Hope that helps! Good luck!

Jim Viens · Answer

No problem @Kirk R.  That's what BiggerPockets is all about! :)

Kirk R. · Answer

@Jim Viens

Thanks so Much Jim.  I pulled up an "Agreement for Purchase and sale of residential real property" & read it through.  I think I now am comfortable sending my yellow letters.  Not sure why I didn't start with the end in mind.

Kirk R. · Answer

@Jim Viens - I appreciate your response.  Very well written.

For $50 off listsource (have to spend at least $50 I think) I bought my list of 300 -  65+ people in my area - an email I got had a picture of the list.  The part that cut off of the email picture of the listsource parameters was to check the absentee box DOH!  I don't think I can get that $50 back.  Is the 65+ list worth mailing?  I am thinking just go back and spend another $50 on the absentee list.

I can do pretty much everything you said - field the call - meet at property - build rapport - comps - list & costs of repairs - & I'm sure I will be able to do it better as I get experience.The part that I am a bit fuzzy about is:

Hopefully you get them to sign a contract for a number that works for you both and you can then contact your buyers with the new offering.Not sure what I would have them sign?  Once I get the signed contract - Then I would probably just CL the property to find buyers?  Figure out the buyers after the signed contract or..?

Again thanks for taking the time.

What to do after Calls from a Yellow letter?

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