First Potential Wholesale Deal!... possible Jackpot?

Question

Greetings BP Community!

So I received a call today from a seller. He is a landlord ready to retire for good and looking to sell 8 or 9 different properties! I followed a script and got an appointment to meet on Friday at his office. I feel like I'm getting ready to score a touchdown, just gotta keep the ball in my hands!

From now until Friday, I will get my contracts ready and work out the numbers for each property. He wants to sell the houses as close to tax value, but he is willing to negotiate.

My questions: can anybody relate to this type of situation? What would be the best way to handle it?

John Horner · Answer

First of all, way to get out there and take action!  Glad to hear you have LEADS coming!  Which brings me to my next point:  This is a LEAD, not a DEAL.  Many newbies hope and wish that every lead that comes in is a potential deal (I was the EXACT same way).  The truth is only 1 out of every 20 or 30 leads turns into a deal.

This guy wants tax value for his properties, and you need to pay 65% minus repairs, let's say 55% of tax value, so what makes you think you can get him there?  With 8 or 9 properties, he'd be looking at maybe a $100k hit by accepting your offer (totally guessing at the price range you are in).

In answer to your question, I would ask in 5 different ways if he is willing to lower his price.  If he still says no, tell him you don't think it's a good fit and move on to the next lead.  One of the mistake that new wholesalers make is spending time meeting sellers and visiting properties before they vet the owners.  To most owners who say they are willing to negotiate, they mean 5-10% max, not 45%.

Moses K. · Answer

Have you purchased homes before? What I've noticed is people who've never invested before sometimes show their lack of experience at the deal table. Especially for a wholesale deal where you're not bringing any capital to the table, you have to inspire some kind of confidence in this seller that you can close the deal. So I would definitely work on some kind of basic script for questions you know he will ask.

Brandon Kargol · Answer

The deal has been postponed due to a family emergency on the sellers behalf. Negations continue in a few days.

Tom S. · Answer

@Michael Ford

Yes, I'm curious as well if you have an update.

- Tom

Carlos Coppin Jr · Answer

@Michael Ford just curious have you made any progress on this lead?

Michael Ford · Answer

Thanks everyone for your help! I'll keep you guys updated on how it turns out!

Brian Gibbons · Answer

I think "I can pay cash or terms" approach is best for most sellers.

Be the doctor with the seller.  See

http://www.biggerpockets.com/blogs/3/blog_posts/17...

Understand you are dealing with a retiring business man that is looking protection of what he has built up, not acquiring wealth.

Best of luck!

Jason James · Answer

I just locked in a deal from the same type of seller. I agree that you need to find out his motive. The seller I was working with absolutely no longer wanted to be a landlord and was ready to make a deal happen. He wasn't "thinking' of selling he was ready and motivated. Also I wasn't wholesaling I was there to buy the properties. My goal was to buy the properties with owner financing because in my phone conversation with the seller he indicated that the properties were paid off. The point is to get as much info as possible before you meet so that you can develop a plan of action ahead of time. Then if you verify he is truly motivated you can meet with a clear plan. This also helps you to stay true to your plan. It’s easy to meet the seller and then get excited and agree to something you really didn't plan on.

Don't get too pumped up. Take it slow follow your plan and hold your ground. If there is no deal to be had don't force it. Move on to the next one.....

Good luck

Brian P. · Answer

Don't know all  the facts but off hand I would consider using his income tax situation as your approach if talk is not going well for what you want to do. All cash sales may not be in his best interest and bringing up the subject up front saying if this is going to be a problem for you I would like know so we may explore other ways to go and find the best way to go for you.

I don't think your a tax expert but seller financing, lease options, and other methods can be used to defer or spread out capital gains. and getting a tax expert into the deal for advice may help. and may lead you to being able to wholesale or flip these properties.

Luke Moses · Answer

I would find out early on if he wants to sell or needs to sell.  Seems like a pretty big undertaking for you first deal.  Do you have a experienced mentor to take along?  I would write up individual contracts for each property and get as much time to close as you can.  You might only be able to unload a couple of the properties but a couple is better than none.  Admittedly, I have never done this many units at once!

Best of luck!

First Potential Wholesale Deal!... possible Jackpot?

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