Hi. I have done a few wholesale deals and I really like this type of property (ugly and vacant) so I want to improve on my wholesaling techniques. I find that when I mail out my letters I get a variety of responses calling me back. I find a variety of sellers (some not serious, some who just want to see what I am about, some are serious and just want to get rid of the property). I find that when a seller calls me back he/she wants me to make the first offer. I don’t like doing that so I come back with “if I pay cash and close quick what will be the lowest you will go?” I don’t have a problem saying that except that it sounds so canned. Also I run into a wall when they say “make me an offer”. What is a reasonable next line to say when they ask me to make the offer. I find this is one of my biggest stumbling blocks. Unfortunately I don’t have enough experience and am not a good negotiator. I would love to learn how to negotiate and practice it. I am just so green at this and don’t know how to speak smoothly without giving canned responses. Can anyone give me suggestions?
Hello Terry-
I have several ideas that work for me. Certainly, feel free to make adjustments to fit your situation.
- As soon as a customer calls you, collect all the relevant data that you need to begin running comps. Have an interview sheet with a list of questions about repairs, age, style, number/size of rooms, square footage, address. These are just starters. Begin to develop a relationship over the phone. You are their friend because you are willing to help them solve their serious problem.
- How motivated are they to sell on a scale of one to 5? What is their story? That is what negotiating is all about, really. It is not you against them it is you with them against their problem.
- Do your comps before you go to their house, if possible. That will give you a firm foundation to lay out an offer. Estimate rehab costs, holding costs, how much you want to earn, and how much your investor/buyer wants to earn. Find out the Fair Market Value of the home you are looking at. Look at one of my earlier posts today to see the personal formula I developed when starting this business.
It takes some homework to make a great deal for you, your seller, and your investor/buyer. Don’t forget to do a title search before the Assignment of Contract takes place; it is not fun to find out, just as you are about to receive a tidy check, that the property has a lien against it that the owner forgot about. Be wary of cutting corners or making offers without doing due diligence. You could very well wind up leaving money on the table for someone else to grab!!
Best of luck and congratulations on getting those leads!
Debmz
I ask the same question agian and also state that I understand that you would like me to make an offer but I would like to know how much you would like to get on this property so that the number would make both of us happy before I start my investigation on what I would offer you all cash
First before you contact a seller, you need to have your comps and have your MAO calculated. I always ask a seller how much they want, how much they think it is worth, and how much is owed. The only thing that really matters to me is how much is owed. That will determine whether I can do a wholesale, or have to do a subject to, or short sale if they are in foreclosure. My first offer is usually 5-10k below my MAO, so I have some room to negogiate, and if the accept that low I can pocket some extra cash, when I assign. Never go above your MAO there is just no profit there. If I actually have to negogitae up to my MAO, I am sure to tell them that it is my last offer, and why. I don’t botther with how motivated they are, if they accept my MAO, they are motivated enough, if not they’ll most likely call back when their property doesn’t sell. I don’t feel like I waste time on these sellers, because I know that they will most likely call back sooner or later, and I am always working more than one deal at once, that is the only way to survive in this. You can’t invest all of your time in one, deal because if it falls through, then you are stuck, and the bills won’t get paid, well at least for fulltimers like myself, without any cash flos. I really need to pick some of those up, my market is great for it now. Anyway as I always say run your business, don’t let it run you.