Hello BP family. I'm working on my first deal after about 3 months of marketing, and need some advice on whether it is worthwhile. This lead in particular was generated via my high equity absentee owners list (500 names), purchased from Listsource, and mailed by Jerry Pucket and his team at NRI LLC. I'm in no hurry to "make a square peg fit in a round hole." My expectations are set appropriately, and my current strategy/budget is for marketing to 500-1000 absentee owners consistently for the next 6 months, regardless of securing my first deal or not. The following is an overview of the interaction between the seller and I, as well as my actions taken so far.
On the first phone conversation with Mr. Seller, I spent the first 15-20 minutes building rapport, and basically listening. He's a math professor nearing retirement, working full-time teaching at the local community college to help pay down debt. Most of which is student loan debt. The only motivation that I could pick up on during the discussion was that he and his wife are worried about the amount of debt they have, the monthly student loan payments, and retirement right around the corner. I took notes, filled out my seller information sheet, and scheduled a follow-up phone call in 24 hours with Mr. Seller, so that I could do my research on the property.
The property is in my local Charlotte market, and is your typical bread-and-butter 3/2 brick ranch built in 1962. Square footage is 1825. Last tax appraisal was 2012 for $101k. Estimated ARV is $78k. The comps are all within 1 mile, and sold in the past 9 months. I have not checked title yet, nor sought a recent appraisal/inspection, but will do so if I can find a creative solution for Mr. Seller.
Mr. Seller purchased the property from two of his wives siblings through probate. His has been making monthly payments to the siblings, and the property will be free and clear in November. The original intent of Mr. Seller was to purchase the property, fix it up, and sell to his son. An estimate of about $15k of renovations, including a new roof, major systems, and interior were completed prior to allowing the son to move in. The agreement between father and son, was that the son would live rent-free for a short period, and ultimately purchase the property at some time in the future. No contract, deadline, or guidelines were established. The pay-off from the son was to be used for debt repayment and retirement for the parents. As the situation sits currently, the son has "disappeared to the beach" and is no longer interested in purchasing the property. Mr. Seller does not know if he son will be returning, and has no problems clearing out the house and selling. He is adamant at not becoming a landlord, however.
On my follow-up call to Mr. Seller, I wanted to further establish our relationship and test his motivation level. After allowing him to speak more about his pains in commuting across the city to teach, and discussing the inefficiencies of the educational system, I asked Mr. Seller what is the amount of money that would solve is problem(s). $115k was his number. I knew immediately that I could not get to that number. In my head I was thinking around the $50k range, but I did not counter with this number to Mr. Seller. I did not want damage the trust and rapport I had established so far, by throwing such a low number out there. I did, however, counter with a statement followed by a question:
"Mr. Seller, I understand that $115k is the number that will make all of your problems go away. That number, however, is far above what the market will bare at this time. Perhaps sometime down the road you might could get that price for your property, but right now the market is just not going to produce that return for you. I still think there's a solution for you Mr. Seller. I'm aware that you and your wife have an emotional connection to this property, and are not ready to give it away for pennies on the dollar. I am also aware Mr. Seller, that you're tired of driving across Charlotte during rush hour, and teaching in a system that doesn't adequately prepare our children. That you would love more than anything to get rid of your debts, lessen the burden of those monthly student loan payments, and retire in the next few years with integrity. Mr. Seller, I'm not sure if I could even do this, but if I could come up with a solution that would give you the price that you want for your property, but at the terms that would make it mutually beneficial for me, would you be interested in that?"
Mr. Seller answered "yes," so I wrapped up the conversation and scheduled a call for early next week with some options.
So here I am BP family. I have a luke-warm motivated seller, who is open to negotiating terms at his price. I need advise on some potential ways to structure the deal. I was thinking something along the lines of a solution that gives Mr. Seller a little money upfront, or maybe some each monthly for his student loan payments, and a final payout in 2-3 years of the $115k. I'm not really sure. In any case I know that this a valuable learning experience, and I will be writing up and delivering a contract regardless. Just for the sake of practice, lol.
Thanks to everyone in the community in advance for their feedback!
