I am new to the wholesaling market. As a newbie I understand I can do an assignment with FSBO very easily. However where I feel a little confused is how do I make an offer to the home owner? Also how do I know that the home is below 70% market value just to be sure? Does this mean the comps would tell me what the average house in the area for fair market value would be? Once I figure that part out do I make a verbal offer or written offer in a contract style to the owner? What do you recommend? FYI I don’t want to over think it I just want a clear understanding how it works from finding the house to making the offer correctly. Thanks!
Hey Blocke, you have asked probably the most difficult question that I have come across in my wholesaling business. And it’s not easy to answer. For me I had to learn what houses were going for in each area and I’m often wrong.
I start off with Zillow and it’s usually not very accurate but sometimes it’s close and it’s a good starting point. Then I get the tax records and the county places a tax value on the property and it’s usually not accurate but sometimes is.
But the tax records has a lot of valuable info, like when the house was built, the square footage, when was the house sold last and that price.
But still it’s a big guessing game.
If the homeowner calls and says I just remolded, it was appraised for 280K and I want to sell if the price is right. Tell him to call a Realtor and get off the phone quick.
If the homeowner says my house needs a lot of work and I can’t afford to fix it, run like hell over to check it out.
If the neighborhood is full of graffiti and scary looking gang members standing in the front yards giving you the stare down your offer is going to be 20% of ARV, if it’s a good working class older neighborhood your offer will be 40-60% of ARV depending on the condition…
It’s a learning curve and I heard many newbie investors never get started because of this.
I sometimes ask my Realtor friends for help, and my estimates are often close to what they say.
But many times I don’t do comps, the homeowner has a junk house, he wants $30,000 and nothing will change his mind, I get it on contract for that price, I add 5-15K for my fee and I am shocked when it sells.
I have made verbal offers while talking to the homeowners, also over the phone, in letters and post cards and even by email and txt.
I suggest you don’t worry about everything, just get out there and get some deals, you can screw things up, it wont kill ya.
Just have some fun with it, learn some listening skills.
Rando
Thanks for the information Rando I do appreciate it. Trying to find deals is a tough part since I don;t exactly know what I am doing. But I am willing to learn and do the work. Do you use Craigslist for advertisement? What other websites do you recommend for advertisements?
I use Craig’s List exclusively. I estimate I’ve made over 100K off of them in the last few years. But not so much anymore cuz after you advertise your insane deals on CL you have a serious buyer’s List.
When I first started I didn’t have any marketing capitol to purchase absentee owners lists, bandit signs. So I only placed ads on CL that I buy houses. I didn’t get much action till I made multiple email addresses and started placing dozens of ads in nearby towns and cities, even out of state and I did a deal in Las Vegas and Montgomery.
I also recruited bird dogs and got a bunch of deals from them.
First year I didn’t even have a vehicle & did my first 6 deals completely from home, I had to borrow a car to pick up my checks at the Title Company. Now that I have vehicles and marketing capitol I still buy and sell from my home office and most of the time I never see these houses or meet the sellers or buyers.
If you email me I will walk you thru a few deals for 50%
Wow, that was great advice. I am also a starter wholesaler and this has taught me a lot. Thanks for the great advice.