All Forum Posts by: Brandon Krieg

Hi Isa,

I am an appraiser (in addition to other things).  So, the most accurate (and probably frustrating) answer to your initial question is: it depends.

The appraiser will use market data to determine the value add of the finished basement space, and see if it is comparable to the value of finished area above ground.  It is all based on market data, and what buyers of similar properties value (and how much they value it).

In order to be more helpful, I can give you some general thoughts based on my experience.  But remember, it varies based on the area, the specifics of the home, what the market is doing, and more.  So, take some of this with a large grain of salt.

First, there is the definition of 'Living Area' (usually referred to as GLA on appraisals).  This only applies to area FULLY above ground.  So, by definition, a walk-out basement or area with an egress window does not count as GLA.  This is strengthened by the recent change by Fannie and Freddie to ensure everyone is adhering to ANSI measuring standards (the new change went into effect on 4/1).  So, based on your initial description, the home will have 1300 sf of GLA whether your client touches the basement or not.  This is not my opinion, this is the Michigan standard for appraisals.

Secondly, finished area below grade generally DOES add value to a property.  A basement bedroom can be legal if it has the appropriate size/ceiling height/egress/etc, and a true bedroom below grade generally DOES add value to the property.  However, in general, the market often does not value finished area below grade at the same 'rate' as finished area above grade.  So, while the value will be enhanced by the changes, it will not be enhanced AS MUCH as if the 600 sf and additional bedroom were above grade.  Does that help?  Again, this could vary based on specifics.

@Jason Munger - You are correct.  Backup strategies are important.

At this point, if it doesn't work, I will just keep it for myself.  But that is extremely uncommon (to answer your other question).

@Gus Kazek - I found that when I had the TIME to hand write letters, I got the best mail response rates I've ever received.  I no longer have that kind of time, but it does work very well from my experience.

@Jodiann Tomlinson - The list of tips is a mile long!

But for today, let's go with this one... learn to look at properties like your end buyers will.  That means read books and research how to analyze a property for a flip, or for cash flow.  If you understand your numbers, you will be in a MUCH better place for making offers and getting deals sold.

Of course, there are a hundred more things that go into success, but that's a great place to start.

@Tani Tucker - I agree with @Lydia R. Local meetups are your best bets.  I bet there are a lot in the LA area.

Also, use the geographic functions here on BiggerPockets.  That can help narrow your area.  I have found deals through great people I initially met on this site.  Good luck!

@Account Closed - There are two theories here.

First, you can keep it very casual.  Just ask a few questions about the property (if you don't already know the basics), and then set up a time to go see the house.  You can ask about it's general condition, layout, and updates.  Keep it short and sweet, and set up the appointment.

Second, you can 'screen' potential deals.  This is harder if you're cold calling, because YOU'RE the one contacting them.  In this case, you would want to ask a LOT of questions (lots of repair questions, if they may be motivated to sell, etc).

If I were doing more cold calling now, I would go to the casual method.  Frankly, a lot of the information you get from the 'screening' methods don't hold up very well upon further analysis.  Generally, I prefer to just walk the property.

@Account Closed - If you have enough trust with the end buyer, you can just have them sign the contract, and then trust them to 'square' you with the agreed amount.  If they are worried about legality, just give a quick call to a good attorney and explain it.  They should be able to tell you the right structure for your area in about 2 minutes.

Better that than losing a good deal!

@Glenn Johnson - I agree with @Jim Goebel.  Honesty is always the key.

It can help to clarify things with the contract as well.  You can tell them that the TERMS of the agreement won't change - just the person on the other side of the table.  They will get the same amount of money in the same amount of time, with the same agreement.

In almost all cases, this works.  Most people don't care WHO is writing the check, so long as it gets written.

However, if they are not interested in working with a wholesaler, that is their choice!  It's their property.  If you run into that, on to the next deal.  (:

I agree with @Lydia R. and @Jose Flores generally.

To add another point, don't make offers you think the seller will accept.  Make offers where you KNOW it's a deal IF they accept.

This may seem like a subtle difference, but it's important.  Make offers that make sense based on the numbers.  The seller can accept or reject the offer, it's their choice.  But if you have a contract on a mediocre deal, you are going to have a LOT of frustration and headache trying to get it sold.

If you have fewer offers accepted, but they ALL turn into deals, it is much more efficient.

@Brittany Lewis - There are a ton of tips anyone could give!  But I'll start with a huge one for me...

Be persistent.

Success in wholesaling is not an instant endeavor.  It takes a lot of time, learning, and struggling before it all starts to click.  This is not BAD.  It does not represent failure.  It is simply a necessary part of the process!  If you are moving toward a worthy goal, you are successful.  Just keep grinding, learning, trying, failing, and moving forward.

If you are able to persist, you will learn what you need to learn, do what you need to do, and succeed.  If you give up, you move back to square one.  So keep at it!

Other than that, ask plenty of questions on here.  Lots of helpful folks around.  (: