First driving for dollars house and going to see it tomorrow! advice?

Question

Talking with the homeowner I found out he thinks it is worth 170k. I asked what repairs needed to be done. He described electric panel upgrade, kitchen, 2 bathrooms need upgraded. newer floors. After that i asked if he would be willing to take less which he did say yes but then changed the subject immediately after. I feel like I've devoured plenty of books on negotiating and i am totally jazzed and looking forward for it. If you have any advice on the negotiating process and how i should approach it from your experience or any advice will be greatly appreciated! My plan is to go in with a spreadsheet of prices and go through the house with the owner to make him more aware of the work and hassle it needs. after that i will show him his expense to fix and sell using and real estate agent and closing fees. Im leaning toward hitting him with an offer of 70% of arv minus repair estimate and a small cushion. comps show it could sell between 195k-210k fixed up. So starting at 115k for a cash offer with an exit strategy of wholesaling. then transition into seller finance which i am willing to go up to 130k to try and wholetaile it on the open market. Again any advice or general big picture i should try to achieve during the negotiation please drop a comment! thanks.

Account Closed · Answer

With the phone call off of my mailing campaign i know they have equity as that was one of the filters. I did pay my sisters to go with my business cards and go to certain walmarts in my farming area and put my cards on their windows. First guerrilla campaign tactic was 130-ish business cards out and 7 phone calls off of that. Of those 7 phone calls 100% off them said their house was worth xx-amount and wanted more. None of them would take less then the first number they gave me. They all had similar answers when I asked why they wanted to sell. They knew someone that just sold or had someone in real estate saying it was a good time to sell. No phone calls off of flyers at RTD stops with tear offs of my contact info...so far. My next step is to door knock a couple of houses tomorrow. I'm targeting preforclosures that have an auction date this wednesday or next wednesday and tried selling on the mls but pulled their listing. A couple of the houses have low equity, 40-30k in equity. With these houses, if i get a contract, is to sub-2 the loan and rent to own it with an option price that will cover the back payments. And only if i can get the bank to ok the sub-2. Im avoiding any short sale opportunity as I don't have proof of funds for cash or haven't found a partner to fund those yet.

Account Closed · Answer

Well I was stood up. i called him back and his voice mail has clued me in. He is a real estate agent. I have been sending out 4500-ish mailers a month and a good majority of phone calls have been agents calling and trying to figure out what I'm doing. But his renter is nice and we shared a cup of coffee while I waited. Good news is while I was leaving I received a phone call from a mailer and he seemed semi-motivated. I went immediately over to his rental. This one did not go as well as it could of. I built good rapport but mid way through adding up repairs with him, he received a phone call he had to take. I should have stop and waited for him but I at the moment I didn't think of it. He rejoined at the end of the house. I had everything finished and asked where we can sit down. He tried to side step the negotiation part of it and told me to add up my expenses and call him with an offer. My main goal is to negotiate face to face instead of calling him and saying i can pay x-amount for your rental and have him saying no thank you. After overcoming a couple of objections i started adding up quickly the repair spreadsheet i brought. Then he hit me with the winning objection. He had a plane to catch to Mexico as he has a plantation of cashews to tend to. So, my plan has been to create a business letter communicating why my offers are what they are. There is plenty of objections to overcome. Biggest i feel is he mentioned he has a sister inlaw that is an agent so he knows its worth around 460k. I pulled comps and I couldn't see anything similar or near his house supporting this claim. I did find another similar house being offered at 429k that if sold would support his thinking. I included that in the letter and showed him they started at 550k 6 months ago and are now off the market but went down to 429k without selling. i drove by this house and it need exterior TLC and yard maintenance right off the bat. I can only assume the inside is the same. I included the comps that showed it could sell for 355-365k after repairs. I fully explained my seller financed offer and did a one liner for my cash offer. His fax number he gave doesn't work. I called and texted him just before writing this asking for an email or another fax number to send my packet over to him. And I pointed out a lot while he was walking with me that needs upgraded or repairs. Im hoping it helps get him off of 460k. And the houses selling over 400k in his area are 2000sq ft plus to his 1400sq ft. 2 car garages to his "needs to be teared down make shift car port." He let his renters build a car port but it was bowing/sagging and used tarps as siding. He wants 460!?! Anyway, 460!?! haha. I hope it goes well.

Bryan L. · Answer

People talk a lot about finding a "motivated seller". But that's only part of the equation. The other part is equity. If your seller owes $200,000 on this place, then what will you do with it, even if he is "highly motivated"? There are techniques for low (or no) equity deals, but I really don't want to go there myself.

Chris Martin · Answer

How did it go?