Out of state owners/ Possible mtoivated

Bird Dogs, Wholesaling
1

This is my first time dealing with out of state owners. The seller used to live here in my home town city of St. Louis MO
but was offered a better job in Wisconsin and had to move. They had the house listed with a realtor for 47,000 but it didn’t sell so he took it off the MLS, the house is located in a nice area. I talked to the seller and he advised me that the house doesn’t need any repairs.

I asked was the house on a lock box he said no he will have to drive 8 hrs from wisconson to show me the house. I asked him what was he trying to get for the house he said 47,000, I asked him was the price flexible he said yes but he don’t want to just give away the house.

He said he was thinking about listing it with a realtor again if he didn’t get anyone to buy it off craigslist. I told him I will drive by the house and take a look of the outside since I don’t have a key to get in and fax him a offer. If my offer was a good number for him he could drive down and we will do a contract on the property. The only thing I’m worried about is not having access to see the inside now so I can see whats going on. Has anyone ever delt with a situation like this? If so, how did you handle it or how should I handle it question for all the seasoned wholesale investors.

2

Make it easy for the seller to say yes. If the seller says it doesn’t need anything, but didn’t sell using professional help, then it probably isn’t worth the asking price, or close to it, despite not ‘needing anything.’

Otherwise it would have sold, all things being equal.

That said, you should:

a. Get comps for the house…
b. Make your offer, based on the comps…
c. Send your offer to the seller.

Once he accepts your offer, you have him mail the keys and the contract back to you in the post-paid envelope you included with your offer…

If you wait for the seller to jump a bunch of hoops, he’ll likely re-list the house, or get frustrated with you making him drive 8 hours… just to give you a look-see. Forget that.

Assume the seller isn’t lying. Inspect the house and renegotiate, if necessary.

Bottom line you want the seller to do as little as possible. He’s already been worn down with a failed listing. He knows the house isn’t worth his old asking price (probably trying to cover the commission). He says he’s flexible, but doesn’t want to dump it. Fine.

After he’s read your offer, and you’ve shown how little equity he’s got at full retail after paying all the conventional costs, all he has to do to unload this house (and perhaps a mortgage payment), and get a check (or not), is sign your purchase offer.

The title company can send the closing docs to the seller, to notarize and return, in order to close. Never is the seller required to drive eight hours, or become unnecessarily inconvenienced.

FWIW

3

I was thinking the same thing about him mailing me the key after he except my offer. I told him I don’t want him to have to drive 8hrs just show his property. I was hoping he had it on a lock box but when he said he didn’t I was thinking to myself I hope this guy hasn’t been driving 8hrs back and forth just to show his property people.

Your right Javipa. I don’t want to upset this guy having to drive 8hrs and no deal is done.

I’ll run comps and go from there.

Thanks Javipa

4

I’d argue the fact that he is thinking about re-listing he is not quite a motivated seller. If he’s had it on mls once, pulled it, tried it again on Craigslist, and is ready to try mls again than he’s obviously not ready to move the property at the right price.

5

Your right Ashon, trying to relist it doesn’t show motivation right now. Maybe after it doesn’t sell with a realtor on a second try he’ll be motivated to sell lower and move on.

6

Good idea about making it easy for the seller. Did you ever ask why he is selling it? Or what he owes on the mortgage if any? Drill down a little bit more in your screening process and you might be able to get a better view on his thinking process. :beer

7

He is selling it, because of a job offer in another state.

8

Make him an offer contingent upon your seeing the inside. Get all the items out of the way except the inspection of the inside.

I would NOT ask him to send me the key.

TOO MUCH Culpability and Liability on your part.

You are defenseless…he knows the inside and YOU do NOT.

You get inside and it is a MESS…what is your defense if he says YOU did it.

Have him mail the key to an attorney, friend, escrow company, home inspection company, etc…almost anyone who can let you in…EXCEPT you.

Tell hom you will pay the charges of anyone who lets you in and accompanies you during your inspection.

Small fee for NO liability.

9

We can’t operate that defensively. We bring someone with us to look at the house if this is an issue.

We’ve been in hundreds (if not thousands) of houses over the last three decades, without the owner, or another representative with us, and had no meaningful hiccups whatsoever.

We’ve had a seller, or two, question us about locking their place up tighter than they left it, and couldn’t crawl through the bedroom window they left open, or the garage door, etc.

Other times the seller told us which window was unlocked, if we wanted to crawl inside to see the house. If the seller wants to sell, he’ll make a way for us to see his house.

Otherwise we do ask the seller’s permission to look in the windows for the time being. Nobody says no to that.

If he doesn’t trust us to look at the house by ourselves, most of the time, that probably means he’s not that motivated about the deal in the first place.

It’s a grind for a seller, after about the third trip across the street, for sellers to open their houses up. They’re nearly ‘always’ happy to let us get in without them having to show up and let us in, and don’t have it on their minds to ambush us with a damage claim.

Even in the remotest instance where a seller insisted we did damage, he would have to have proof.

Possessing a key isn’t any more proof, than a real estate agent with access to a lock box would be held responsible for damage.

Both instances offer access to the house without supervision. Liability just doesn’t happen often enough to warrant this kind of cya effort.

And just for giggles, involving a third party; Who’s willing to babysit someone else’s prospective buyers for look-sees …for gratis?

BTW, consider wearing your scuffed up hard hat and orange safety vests if you’re gonna do a guerrilla inspection.

Nobody will give you a second look, regardless of what you do trying to see what’s inside a house, even if you go in through the front living room window. The neighbor’s and busy-bodies will think you’re there ‘on purpose.’

If you really want to step up the misdirection, put orange cones in front of and behind your ‘inspection’ truck.

Now you can inspect the crap out of a vacant house without arousing suspicions. Of course, it really doesn’t take that long to check a house out, so maybe the vest and hard hat thing is more than enough.

10

Good points Bill H and Javipa, Thanks

11

Great insight Bill H. I agree with your advice.

12

There are several dif possibilities with this deal. Offer him 35K Cash. if he says he owes 42K Offer to lease purchase at that price or the price he wants, and bring in a new buyer that has 3-5K down and take that as ur assignment fee and set it up between the buyer and seller and walk away. I have done these to where the lease option runs the entire length of the loan when title transfers. Forcing the buyer to refinance at some point may result in failure.
It looks like it may be difficult to wholesale this deal. I get great deals cuz the houses need serious repairs. ALso this guy might have to sit on this house longer to build up more motivation while hes paying 2 mortgages.
It seems like a Lease Option might be the best solution on this deal.

13

There maybe a possibility that the original listing agency still has a copy of the key. Plus, if it was listed on the MLS and is not too old of a listing, there may still be pictures linked to the expired listing. I would see if I could locate those (you could check on trulia and zillow - they are so out of date the property is probably still listed).

If the owner trusts you to send the keys - I would accept it. Take photos of all damage and security issues as a precaution. You could show a sign of good will and offer to put a lockbox on the property for him. This small gesture may go a long way to softening him up to a fair asking price.

If he decides to drive the 8 hours, line up everything one time. Do a pre-title search to make sure that the title is clean. Get your inspector to come to the showing. Get a verbal from the inspector. Have a purchase agreement ready to sign at the end of the showing.

If you are smart and have financing all ready - you could close that very day. The money would sit with the title/escrow company until all the final closing paperwork is completed. This way, the owner only comes once and the deal is made.

14

I agree with Javipa’s reply on this. Run your comparable sales first and make your offer to the Seller. Make sure you understand his situation thoroughly to get his motivation for selling. That way you don’t waste his nor your time. Also, I don’t know if you’re up to it but in cases where I can’t really get the seller’s motivation for selling and I can’t decide if the situation can lead to a deal, I tell the seller upfront that I’m in the business of buying homes 30-60% below market and that what I have to offer is just an option for him in case his priority is getting rid of the property quick and getting paid cash. If he is really motivated, he will at least think about your offer. he knows anyway how difficult it is to sell his house at his price.

15

Before the seller makes that 8 hour drive. Befriend a local Realtor and ask them to run comps in that area similar to the property you are considering putting under contract. If you can’t access the property and see what the inside looks like, there a couple things you can do:

  1. Ask the seller since they live so far from the subject property would it be ok to get a key made for the locks on the house. If seller agrees, then make sure once you have finished viewing the property, secure all locks on the house.

  2. If seller does not agree to option one then ask him to give you a detailed description of what each room of the house entails.

  3. If you’re still not sure put a clause in the contract saying buyer has 10 days for inspection

Hope this helps! To your success! :smile