Hey guys! Mo here. First I just want to say this is the most informative site I have ever come across.
Anyway, i’m a newbie and I want to concentrate on wholesaling. I found a vacant house with a FSBO sign. I want to call him tomorrow, but I have no idea what to say. I want to get the house under contract and sale it to another investor.
What questions should I ask so I won’t sound like a newbie? Also, if the house is in bad condition how do I know how much to offer? Other houses on the same street have been appraised from 195K-220K according to the county appraisal site.
PLEASE HELP!! I CAN"T WAIT TO MAKE MY FIRST DEAL!!!
Better to sound like a newbie than to get CAUGHT being a newbie who’s trying to sound like a pro. Keep it simple and do your honest best.
If it’s vacant, conspicuously stand in front of the sign writing down the phone number, just to be sure the neighbors know why you’re about to snoop around making notes. Then snoop around and make notes.
Find investors to buy contracts from you. Call “I buy houses” ads, billboards, TV ads, etc. Tell them you’re starting to look for properties. Because you just looked at one. Find out if they buy contracts–if they are lease-optioners or for whatever reason they don’t buy contracts written by other people, get their info and keep them in file for later (cos they may still be useful). But if they buy purchase contracts, then find out what percentage of After Repair Value (ARV, aka Maximum Retail Value) they will pay. You don’t need to describe the vacant house to them, but if you do, then don’t give them the owner name, street, MCR, APN or anything like that. If they ask, say “I’ll give you that if I get it under contract.” If they insist, hang up. You don’t want to know them. They do NOT need to know the address yet and you do NOT need to know what they’ll pay for any particular property. So don’t even ask. You only need to know what percentage of ARV they’ll pay, and then YOU have to figure out what a particular property’s ARV actually is. But–you can ask them what it would likely cost to fix whatever problems you made notes about. Ask them what you can use for comps instead of the county appraisal–those are usually wrong. Way wrong.
If nothing else, set up free accounts at Yahoo.com and Domania.com. They aren’t good comp engines, but are better than the county.
“Hi, I’m Mo. What are you asking for that house on ?”
If he says $ARV, and the most your investors will pay is 75% of that (you should assume that this 75% includes your assignment fee and any closing costs the buyer is to pay), know right then that you’re almost certainly wasting your time. But just on the off chance you’re not–and for experience–say “Well, I was thinking 145,000 cash with a day close. Does something like that work for you?” (BTW: 157,500 is 75% of estimated ARV 210k, but 145k gives you room for closing costs if you are to pay them, and several grand for your assignment fee.)
If it works for him, ask him if he has a fax machine, work out how to get the contract to him, write it up and get it to him. If it doesn’t work for him, ask him if he has other properties for sale or knows anyone in that area who does–becaure you’re looking to buy in that area [among other areas]. Whenever appropriate, thank him for his time and move on.
Well, that was more than I intended to type, but I couldn’t stop. I suggest doing it in that order (which means: go back to the house and peer through the windows to see the place’s condition, if you didn’t when you were last there). I hope it helps.
If you’re in Phoenix, I’m looking for birddogs. It sounds like you have the spirit.