Every case seems to be different, which makes this business so frustrating and so exciting at the same time. After your initial, “What would you take for all cash and a quick closing”, and after your next statement of, “can you do any better than that” and then a long period of silence, there are a couple of negotiating routes you could go.
1./Might be something like, “I need to buy the house at a level where I can make a profit just like anyone else. Should we even be talking any further on this or not.” Again silence and hopefully your seller will become uneasy with the silence and start talking of what they would really be willing to do.
Or 2./ "I can not buy your house for all cash at the price you want. If I could solve your immediate problem could we have a deal. " Again keep quiet and let the seller talk.
By dealing wiht the seller face to face, you will see how he reacts through body language and the way he says things that might tip off his REAL MOTIVATION so you can come up with a workable solution.
I have a neighbor who has been separated from his wife for six months. He wants to sell the house and move into an apartment. He hired a realtor but has had no success in selling the house. In the meantime he is struggling with the house payments. I like to buy the house (CHEAP). What is the best way to approach him? and what kind of deal should I offer him?
Re: Buying Distress Property - Posted by TClements
Posted by TClements on November 14, 2002 at 13:37:59:
if you were to purchase the property, what would you do with it? the first thing you may want to do is consider what exit strategies you would be comfortable pursuing. (buy and hold, l/o, retail flip, etc.) once you understand those strategies, find out what the owners needs or motivation is (cash out, cash flow, back pmts). then determine if the owners needs can be met by purchasing the property and following through with any one of the exit strategies you defined. notice i said multiple strategies, it is important that you are prepared with mutiple exits from this property, in case the strategy of choice does not work out. if you go into an investment with only one way out, you could fail miserably. once you have determined the feasibility of the investment, proceed cautiously and fully understand what due diligence must be performed. if you decide to pursue this opportunity, take into consideration what i’ve said, then post more detail here. once you’ve done that, you’ll get all the advice you need right here at this site from experienced investors.
It will depend on what his mortgage balance, interest rate on that mortgage and how many payments he is behind that will go a long way in determining if you can buy at a low number. If he doesn’t have much equity or if he’s upside down, buying low will be difficult. If there is a good chunk of equity you might have a deal assuming your neighbor will let you have the deal. Many people in trouble would just as soon see the property go back to the bank than have an investor make money on their house.
So you will be dealing with two main items here. The mortgage situation and your owner. If there is a lot of equity involved will your owner walk for say $1,000 moving money or you making up back payments. The only way to find out is to get belly to belly with him and hash out the deal.
You always have great advice, thanks! I’m in a similar sitch, and FYI–I haven’t “broken my maiden” yet-- so I 'm hopeful for Sat. meeting with owner. It’s a house that was listed, cancelled MLS contract, now a FSBO. It’s a mess! Owner not even living in it Left me message–long saga of how she needs to move back to Hawaii, sick mom. So I suspect she’s rather motivated, can’t seem to let go of her house. So I guess my real question is after my initial…“if I pay you cash and close quick, Legrand speak”, is there a point where I can make your belly to belly suggestion more pointed, and communicate to her all the problems the house has and know one is buying it at the retail price she has on it. Or just walk away after focusing on her needs, and make it more pointed the next time we speak–and we will. Or never make it more pointed?
I guess there’s no scientific way, and that’s why you gotta get in there, and just do it. Suggestions always welcome, and helpful however!! Thanks.