You’ll Never Know What Sellers Will Do Unless You Ask
Posted on December 27, 2007
I’ve been investing in real estate for over 35 years and throughout the entire time; I’ve had people tell me how lucky I was to have started years earlier. The familiar refrain goes like this, “Back when you started, houses cost much less and you could make the numbers work. Today, prices are so high there aren’t any good deals.” I’ve had people tell me this every year for as long as I’ve been investing, yet I continue to find deals and buy good investment properties every year.
What few people understand is that you can’t pay market value for investment properties and use conventional financing if you want to make a profit. That would be like a retail merchant paying retail for his merchandise and expecting to sell it for a profit. You have to buy investment properties wholesale if you want to make money and the only way to do that is to find properties that can be purchased at wholesale prices or with discounted financing or some combination of the two. The way to do that is to make offers�lots of them. You’ll never know what sellers will do until you ask and the way to ask is with written offers.
A great example of this just happened with my son Matt. He is in the military and recently received orders to report to Fort Rucker, Alabama the first week in January 2008. He will be there for apache helicopter flight school for the next couple of years. He asked me what I thought about him buying a house to live in instead of renting. I told him I thought it would be good idea, especially if he could find one he could buy right, because he could then keep it as an investment property when he relocated after his training ended.
Matt said he would like to find a house with at least three bedrooms and two baths, because he could rent the extra bedrooms to other pilots who would also share the expenses. He has observed what I do for years and has read all of my Weekend Millionaire books, so he had a good idea about how to start locating properties. The challenge was, it was mid November and he would have to move by year end. That’s not a lot of time to find a house, make an offer, get it accepted, close the purchase, make any needed repairs plus get moved in.
Matt is very resourceful! He got online and located a local Realtor willing to be his buyer’s agent and began researching houses in the area. Within a couple of days, he had located several that were for sale which would meet his criteria. He asked me if I would go along since this would be his first purchase. The day before Thanksgiving, we flew to Alabama, arrived there just after 8:00 AM and were picked up at the airport by his Realtor. We signed the buyer’s agent agreement and headed out to look at houses. By noon, we had visited seven properties, completed a detailed inspection of six of them and over lunch Matt determined that four of the six we inspected would meet his needs.
Following lunch, we returned to the Realtor’s office to prepare offers on the four houses. I had brought along my laptop computer which contained the Weekend Millionaire Offer Generator program and we used it to determine what his offers should be. We got an estimate from the Realtor of the income each property would bring if rented and we used the inspection forms we had completed to estimate the cost of repairs that would need to be made. By entering this information into the program, within less than 30 minutes we prepared wholesale offers for all four properties. The offers were so far below the asking prices that Matt was concerned they might offend the sellers. What happened next is a testimony to the fact that you’ll never know what sellers will do until you ask.
Each offer included the statement, “This is one of multiple offers being made simultaneously. Please time code your response as the buyer will only purchase one property and that will be the one with the first accepted offer.” All offers were faxed to the sellers at 2:00 PM and they were given until 5:00 PM to respond. We wanted an answer that day.
By 4:30 PM he had received responses from all four offers. One was a flat rejection, two were very reasonable counter offers, but one was accepted as written. Although his offer price was far below the seller’s asking price, he learned that they were currently living in Germany and were very anxious to sell the house. He would never have known that had he not made them an offer.
Matt has excellent credit and was able to close on the purchase on December 7th, just 16 days after his offer was accepted. He has since been able to get the interior completely repainted; carpet replaced and has replaced the vinyl in the kitchen and baths with ceramic tile. He will easily be able to get settled in by yearend and has already found a roommate to rent both of his extra bedrooms and share the utilities.
Here’s a tip! Never, never, never decide in your mind what sellers will or will not do. Make offers that will work for you and let the seller’s decide for themselves if they will work for them. Investing in real estate is a numbers game; one in which you have to make many offers to find the wholesale deals. Now Matt will have people telling him he was just lucky, but they’re the same ones who will also say you can’t find good deals in real estate any more.
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