From "motivated" to "offer" - what's your pitch?

Question

So you've got a seller on the phone and they're motivated. What do you tell them next?

My plan is to say something along the lines of, "OK - Great. Let me do some research and I will get back to you today or tomorrow with an offer. Does tomorrow at Xpm work for you?"

It would be when I call them back that I actually tell them, "OK - I did the research and what I'd like to offer you is $X, etc. I can email or overnight the contract for you to sign - which works best for you?"

I'm wondering if others can share both the handoff of gathering info (which requires time and a call back) and then also your closing pitch (presenting the offer and getting it accepted).

Guy Gimenez · Answer

@Joshua McGinnis

This isn't so much a math issue as it is a strategy issue. I ALWAYS ask the  seller if he/she will entertain leaving existing financing in place. If there is a loan on the property and seller says yes, I then ask about the terms of the loan (interest rate, payment (PITI breakdown), remaining years on mortgage, approximate payoff, as well as how long we can hang onto the underlying note. If the home is free and clear, I ask if he/she would "consider carrying a short-term note".  If they agree, I let them give me the first O.F. numbers (interest rate, term, balloon, etc.) and then negotiate from there when possible.

The point is this. Getting a seller to leave existing financing or carry a short-term note doesn't involve jumping through hoops to get hard/private money or institutional financing and it's much easier and cleaner this way.

Bottom line is that each deal has to be evaluated to determine how the math works out. If the existing mortgage is not fixed or has a high interest rate, it changes the complexion of a deal. If the seller will carry the note for 15 years at 5%, it could be a very sweet deal. But as always, the numbers of the overall deal is what makes it a deal or a dud.

Curt Davis · Answer

When I make my offer I usually go something like:

Do you know how much you want for the home?  They say I want $X.  I say, how did you come up with that number.  They tell me.

normally I would say if I paid all cash and closed quickly could you take a lower price but your not doing this.

You need to know what other homes in the area are selling for so you can make an offer and stand by it.  I simply tell them my offer is based on what other homes like it are selling for in the area.   Sometimes the deal wont be a deal now but I always tell them to keep my name and number and to call me if anything changes.

Guy Gimenez · Answer

@Assaf Furman

Depends on seller's motivation. If seller has no real motivation, they won't entertain it. If seller has a significant problem that I'm solving, they will entertain just about anything that causes that pain to go away.

I will typically give the owner two or three offers at once so the seller feels they have a choice in the matter.  Always a cash and sub-to or O.F., and then some other suitable offer for the situation (short-term L/O, equity split, etc).

I explain that what I need should not matter to them, but what they need certainly matters to me. Learning to communicate effectively and build a relationship by phone makes all the difference in the world.

Christopher Salazar · Answer

I usually just give them a very rough estimate on the phone while doing some research while on the phone. But I never get off the phone until I give them a number, even if it's very rough. There's always a chance you will never get them back on the phone.

I also give them two times to chose for a follow up. That gives the impression that they have some control in the conversation.

Guy Gimenez · Answer

NEVER get off the phone without asking the seller if he/she will consider leaving existing financing in place....it's usually the lease expensive money you will ever get.  And if you're wholesaling, it typically makes the property more valuable to the end investor.

Assaf Furman · Answer

Got it. Makes perfect sense

Assaf Furman · Answer

Are you referring to a sub2 deal here?

If so, how do the sellers react to the fact someone else will take over their loan payments?

Joshua McGinnis · Answer

Thanks @Greg Baker It's been on my reading list for a while so I will check it out sooner rather than later.

Thanks @Guy Gimenez I admire the folks who have nailed down creative financing strategies. This is an area I hope to get more comfortable with over the coming years. It seems like one of those subject areas where you learn it best when go through it either personally or by putting a deal together.

Joshua McGinnis · Answer

@Guy Gimenez can you give me some back-of-the-napkin math on what a deal with existing financing in place would look like?

From "motivated" to "offer" - what's your pitch?

Most Popular Reply