All Forum Posts by: Kwok Wong

- I hate letters of intent. They're usually full of exaggerations or emotional pleas that are essentially lies. I pass them on to my clients, as the law requires, but I advise them to ignore 99% of them.

- You don't need to offer the full asking price as earnest money, but a large deposit definitely helps woo the seller into believing your offer is serious. Yes, there are many different ways to get it back, so the risk is low. I know a buyer that would offer 10% down for earnest money, but he made it contingent on his personal inspection of the property within X days. He would show up, realize he didn't like the view of the water tower half a block away and back out.

- Getting under contract and then reducing the price because of findings is common, but major reductions are likely to tick off the seller unless you have strong justification. Again, you just never know. I have a house under contract that was listed for $550 and the buyer offered $520. Sellers generously accepted because they know some things need repair. The buyers had a structural engineer inspect and then asked for another $60k reduction to stabilize the foundation. I've managed this home for 15 years and it has no signs of movement, as confirmed by the engineer, but the sellers accepted the offer because the home is fully paid for and they just want to walk away. So the buyer's technique got them a $100,000 price reduction. You never know.

Hi Nathan, thanks for your thoughts on the earnest money and negotiating a reduction.

What if I focus on realistic numbers on the letters of intent? Is there any evidence or support I can include to make my letter of intent more credible? What would you need to see in/with my letter of intent to be convinced of my commitment? Thanks for your input.

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Quote from @Chris Seveney:

@Kwok Wong

Good luck with this strategy as you will tick off every agent and they will not want to work with you or have you pay them upfront.

What makes you believe someone will accept 50% off list price? Then your strategy of offer full price and then negotiate down / what if they say we will fix the repairs then you would be forced to close and lose your EMD

Not sure where you came up with this but many will view components of this as unethical and why investors get a bad rap from politicians

Hi @Chris Seveney, thanks for your honest feedback, I really appreciate it. I looked into it and found that some people on forums and podcasts suggest aiming for a 30-50% discount off the list price. I have been running numbers lately, and that range seems to work best for my situation. Now, i am feeling a bit stuck on this, Any advice you can share? Thank you very much.

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Quote from @Stuart Udis:

Why are you focused on negotiating set percentages off of the list price... the FMV value is all that matters. For illustration purposes, two identical homes on the same block with a FMV of $100K are listed. One is listed for $120K and the other for $100K. Under one scenario you negotiate a 20% reduction and purchase the home for $100K whereas under the other scenario you negotiate a 2% reduction and buy the property for $98K. The 2% negotiated reduction is the better transaction. Beyond that if I am understanding your post correctly, you are in a market where the settled price is 97.9% of the list price. What makes you believe buyers will accept offers that are 30-50% below the list price when you are in a seller market with seemingly a lot of buyer demand. It sounds like you are going to be a tire kicker wasting your time and your agents time with unreasonable expectations. Also, I strongly urge you not to make a habit of going into transaction planning to trade terms based on inspection report findings. There's nothing wrong with seeking concessions if there are issues that arise in the report, but using this as a strategy will garner you a reputation within the community if you are repeatedly going under contract and then seeking large re-trades. If the property appraises for less, of course you should back out or seek a reduced price but you're not getting a better deal, all that means is you went under contract with bad terms in the first place.

Hi @Stuart Udis, thank you very much for your response. I want to BRRRR and break even cash flow. But, without 30% - 50% discount. it's difficult to achieve that. How would you approach this given the market condition? Greatly appreciate for any suggestion or opinion on this.

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Aloha,

In a market where the sale-to-list price is 97.9%, homes sold above list price is 18.7%, and homes with price drops is 51.4%, I’m exploring how to respectfully submit an offer with a 30% to 50% discount on the listing price.

Beside from the following actions, are there any additional steps I can take to ensure my approach is considerate to both the seller and my agent?

Submitting a letter of intent.

Focusing on properties that have been on the market for more than 60 days.

Offering the full asking price as earnest money (should I even consider doing this? how do I prepared to back out if necessary?)

Getting an offer accepted and then negotiating a reduction based on the findings from the home inspection and/or appraisal.

Offering my agent's commission

I would appreciate any guidance or suggestions to make my offer as respectful and professional as possible. Thank you!

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@Jonathan Greene

Thank you very much for the great advice on finding comps. I appreciate you taking time to share your expertise!

Mahalo Nui Loa,
Kwok

1 Vote

Quote from @Jonathan Greene:

Quote from @Kwok Wong:

Hi @Jonathan Greene, @Chris Seveney thanks for your response and I apologize for the short message.

No, I do not have other out-of-state properties. This is my first out-of-state BRRRR. The property is a single family located in the East of Irvington, Indianapolis. I put a simple CMA report in a Google sheet if you want to take a look.

There is actually eight sold comps. However, all the sold comps are crossed out after following a three-tiered system to determine the ARV:

T1: Stay within one-miles radius, sold for fewer than six-months.
T2: Size of the properties are within 200 sqft., must share certain attributes (bedrooms, bathroom, etc.).
T3: Compare property type

In "The Book on Flipping Houses" by J Scott, it mentioned about adjusting the value of the comps to ensures that they resemble the subject property as closely as possible. And I am wondering if it can apply to this case. Thanks for your time and energy. I appreciate your input.

Mahalo Nui Loa,
Kwok

They aren't running the comps correctly if you can't find a single comp to fit that metric for single-family homes in Indianapolis. There are going to plenty of sales that are close enough. I wouldn't worry about the square footage all that much because it's not always correct. I would make sure your bedroom count is the same, and baths within a half bath. If you are looking at your T1 and there aren't enough, you expand a little on each, going to 2 miles, but not to more than six months unless you are so rural, which you are not.

Thanks for your response again. Based on what you mentioned,

1. When you say the agent is not "running the comps correctly," what specific factors might they be overlooking that I should pay attention to?
2. If there are no comps that exactly match my criteria (e.g. bedroom count), how much flexibility is advisable when searching for comps? For example, we can expand to two-miles radius, where is a good stopping point if there still aren't enough comps?
3. Are there particular tools or resources you recommend for finding and analyzing comps accurately?
4. Do you even adjust the value of your comparable properties? Or it's generally not ideal?

I appreciate any insights you can provide!

Mahalo Nui Loa,
Kwok

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Hi @Nicholas L., thank you very much for your response again and the threads.

I do plan to buy a property with 30% to 50% off and have it "acts" as a margin of safety. I love that you are straight with me.

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Aloha guys,

I am looking at a potential deal that has been on market for over 60 days to BRRRR out-of-state. I asked my agent to send me a CMA Summary Report. After looking at the report, there is no solid sold comps. Should I adjust (+/-) the price of the sold comps? Or let this go? What should my next step be? Thanks for any input.

Mahalo Nui Loa,
Kwok Wong

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Hi @Nicholas L.,

Thanks for your honest response.

I am looking for on market, have been talking to an agent found on the BiggerPockets Agent Finder and decided to work with this agent.

I also have been talking to a property manager and asking for insights/advice for the location.

For the rest of the team, no. I thought my next most important step for me would be finding a deal with deep enough discount for me to make mistake.

My agent/property manager will be my boot on the ground and supervise the rehab.

My local market (Honolulu) is expensive and limited fund, I chose to BRRRR out-of-state.

No offense at all and would love to hear more about your thoughts and learn more.

Mahalo Nui Loa,
Kwok

0 Votes

All Forum Posts by: Kwok Wong

Kwok Wong has started 16 posts and replied 41 times.

Post: How to submit a respectful lowball offer?

Post: How to submit a respectful lowball offer?

Post: How to submit a respectful lowball offer?

Post: How to submit a respectful lowball offer?

Post: What to do when no sold comps?

Post: What to do when no sold comps?

Post: What to look for in a Seller's Disclosure and Lead based paint?

Post: What to do when no sold comps?

Post: What to do when no sold comps?

Post: What to look for in a Seller's Disclosure and Lead based paint?

Kwok Wong has started 16 posts and replied 41 times.

Biggerpockets Logo Post: How to submit a respectful lowball offer?

Biggerpockets Logo Post: How to submit a respectful lowball offer?

Biggerpockets Logo Post: How to submit a respectful lowball offer?

Biggerpockets Logo Post: How to submit a respectful lowball offer?

Biggerpockets Logo Post: What to do when no sold comps?

Biggerpockets Logo Post: What to do when no sold comps?

Biggerpockets Logo Post: What to look for in a Seller's Disclosure and Lead based paint?

Biggerpockets Logo Post: What to do when no sold comps?

Biggerpockets Logo Post: What to do when no sold comps?

Biggerpockets Logo Post: What to look for in a Seller's Disclosure and Lead based paint?

Post: How to submit a respectful lowball offer?

Post: How to submit a respectful lowball offer?

Post: How to submit a respectful lowball offer?

Post: How to submit a respectful lowball offer?

Post: What to do when no sold comps?

Post: What to do when no sold comps?

Post: What to look for in a Seller's Disclosure and Lead based paint?

Post: What to do when no sold comps?

Post: What to do when no sold comps?

Post: What to look for in a Seller's Disclosure and Lead based paint?