I have been reading about and listening to tapes on wholesaling to learn what it is all about. I understand all the main concepts, it is the little details that are escaping me.
One of my main questions is this, when a seller is calling you and you are discussing their asking price, then you get to the part where you are discussing what you are willing to pay, how do you know how much to offer without seeing the house or doing any comps on it first?
I was listening to Bill Bronchicks teleconference and he was scripting a conversation with a seller on the phone (he was using this to illustrate the power of silence and not talking to much during the process - it was a great tip). During his script, he was asking the seller how much he was looking to get for his property, then he went on to tell the seller how he was only able to offer X amount of dollars (of course a much lesser amount - but it was pretty much a fixed amount). How did he know what number to come up with right on the spot like that. What if the guy was asking to much to begin with and was underrepresenting the condition of the house?
Is this the generally practice? This one is stumping me - I guess I’m missing something here. Anybody at all with experience on this - please jump in and set me straight.
Thanks in advance,
Debra
Hi Plum
I personally prefer not to discuss anything over the phone. My main objective is to get into the house. Most people understand that you would need to see the house before making an offer. After I get off the phone I know within minutes how much they owe, what the comps are and what they paid for it, and when. Setting the appointment is easy,
Caller: Hi I was calling about your ad
You: Great, who am I speaking with?
caller: this is John Rambo,
You: Hi, Mr Rambo, I would love to answer any questions you might have, I can come see you tomorrow @ 5:48pm
Caller: uh!! how about 6
You: Ok I can adjust some things , what’s your address, “blah blah fluff fluff” I will see you tomorrow @ 6
You set the time be in control but not controlling, you know there is no difference between 5:48 and 6 but you having to adjust your schedule, you must be very busy.
hope this help a little.
trwilliams
That is such a short and sweet script TR.
My better judgement told me I should not even try to offer an amount before seeing the property.
Does anyone else have a successful script they would like to share with me?
Most likely, he knew the area well which is why it is important to get familiar with the markets you are working. Or, with all the available online tools these days, you could just enter the address they give while on the phone and get a close valuation/comps. You really do not need to make an offer right away even though it is best if you know the area and you are able to do so.
I think the main point is to find out the address, if they are motivated or not and how much they are asking for. You can determine this with just a few questions. After you get the address, it should not take you very long to at least get an idea if it could be a good deal or not. There are a lot of sites online that give you a home valuation for free. Even though these are not a 100% accurate, at least it will give you a starting point. If you have a subscription to a site that provides comps, within minutes you should be able to find out about how much is the property worth just to make a first offer. Then you can look at the property and renegotiate based on what you see.
Debra,
I get literally dozens of calls each day - from sellers, rental applicants, etc. I do not have the time or inclination to look at houses without knowing if it’s a potential deal. Therefore, I definitely discuss price with all callers and only look at the ones I can buy at a big discount.
To do this, you must KNOW property values in your area. Experienced investors don’t need comps or appraisals to determine value. Experienced investors have looked at hundreds of houses and know what houses sell for in their area. As a newbie, you can do this also by going to look at a bunch (maybe 100) houses in your area before you begin to invest.
When I receive the calls from a potential seller, I get right to the point. When did they buy the house? How much did they pay for it? Why are they moving? What is wrong with the house? How much do they want for the house? When they tell me their asking price, I respond accordingly. If they give me a price that is a HUGH DISCOUNT, then I ask them if I can see it now and take my checkbook with me. If it sounds like a routine good deal (50% to 70%) of ARV, then I schedule an appointment to see it (today or tomorrow, if possible). If the give me a price that I think is over 70% market value, then I tell them that we are investors and must make money on each house we purchase. I usually suggest that they contact a realtor if they need retail from the house. I tell them that we never pay more than 70% of the market value and that I think that would be a maximum of $XXX for their house if it is in the condition that they told me. If they instantly lower the price to meet my number, then I’ll go look at it. If not, then I tell them to keep my phone number and if they change their mind to give me a call.
That’s how I do it.
Mike
Mike,
If there is one great thing I have learned from reading your posts, it is the part about learning your market by getting out and looking at 100 houses. I never spent any time doing this. I have been away from home for quite some time, but I was home for a couple of days last week and went and just looked at 20 houses that were for sale in one of the area’s I am considering investing in. 20 isn’t nearly enough, but it’s a start.
The knowledge and experience I gained just from looking was invaluable. I will be looking at a lot more the next time I am home. If there is one thing you won’t learn sitting at a desk, this is it. The thing I got from this is I had to actually see the houses, the neighborhood, the layout, price, and other things to get a feel for the values. Nothing can take the place of experience. I can look at prices in the paper all day long, but without knowing what kind of houses are in these areas, the numbers are somewhat meaningless. Like you have said, I want to be at a point one day where I see a house for sale in a certain area and know what it is worth withing a reasonable amount. This will turn out to be a big factor in me gaining knowledge of my market.
I have just started, and I know that getting into the field and looking at houses can only help me become successful. I appreciate this knowledge as much as any I have learned here. It is practical knowledge that will help any investor.
Regards, Tony.
Tony,
Congratulations on getting started with REI. You’ve made a great start by getting out there and looking at houses. I don’t think that I’ve done a very good job of explaining WHY this is necessary, but you discovered it anyway. It’s not knowing cold hard facts you’re looking for, but rather the nuances of each house. These are the things that make all the difference.
You can read an ad in the newspaper that says a 3
bedroom, 1 bath house is selling for $40,000 below market, but you won’t know it’s a dud until you visit the house and see that it has a smelly sewage treatment plant next door! These are the kinds of things that you learn when you actually go look at your target neighborhoods.
You’ve started a process that most newbies are too lazy to attempt. For your efforts, you’ll be rewarded with a much greater likelihood of success.
Good Luck!
Mike
Thank you RV and Mike for all that valuable information.
I have only been at this for a couple of months and have had a lot to learn. I joined two REIA’s in my area but they have not really been as helpful as I had hoped with the “inside” information or the realities of investing. They are basically just bringing in speakers who are selling their product and farming the “newbie” investors for their leads. I extract what tidbits I can (and truly am glad to have them) but it is turning out to be slow of a process.
Getting out and looking is so simple it’s perfect. Thank you !!