Better to be an investor - Posted by Karl (Oh)
Posted by Karl (Oh) on August 22, 2008 at 22:04:37:
Jeff,
I most definitely let a seller know that I’m an investor. My whole pitch is based on them understanding what I do for a living, and what the realities of the mobile home market are. So here’s what I say to a seller when I’m buying their mobile home. This assumes that their price is too high, and youâ??re trying to work them down to make it a deal.
First of course I meet them and chat a little and let them know that I’m friendly and I’m not going to strong arm them and try to break them in half. I want them to be comfortable with me and like me, so they’ll speak more freely to me about their situation, to help me determine how motivated they might be. I always work from the assumption that there are an infinite number of deals out there to be had, so thereâ??s no hurry on any one deal. What I mean is don’t be a motivated buyer (unless its a screamin’ deal!).
You can walk through a home and decide in just a couple minutes what you would be willing to pay, depending on if you’re moving it or keeping it in the park, etc. So I have that figure in my head. Then I ask them what they’re trying to get for the home (even though I usually already know from their phone call) because I want them to look me in the eye and say their number to see how committed they are to their price. Its funny how sometimes a seller will talk tough on the phone about they’re price, but every once in awhile they’ll fold like a deck of cards when they’re face to face. Now at this point if their price and my price are close, and itâ??s a fair price, we’ll put a deal together. You don’t always have to draw blood just because you can. If their asking price is reasonable, talk them down another $500 and write them a check. Thereâ??s nothing more fun that buying a home for a great price in 10 minutes! But thatâ??s not usually the case, thereâ??s usually a big difference in our two positions.
After I’ve looked at the home and broken the ice a little, here’s my standard pitch. I tell them what my business is, that I’m a dealer that sells homes like theirs on payments. I have to, because no one has cash to buy homes. Usually they’re right in the middle of the process of learning this. I say that I mostly buy bank repos, usually 5 or 10 at a time (sorry, not true, I always buy them one at a time, but I think it helps my pitch), and I get them for great prices because I pay all cash. I buy very few “for sale by owners”, because frankly we usually can’t agree on a price that I’m willing to pay and a seller’s willing to accept. Iâ??m trying to let them know in a nice way that thereâ??s a whole other market out their for cash buyers thatâ??s working against them selling their home. So at about this point I tell them what their home would be worth if it was a bank repo. â??I know youâ??re asking $10k, but Iâ??m buying this same home for $3k from Vanderbilt. Yes, you have a very nice home thatâ??s certainly worth what you’re asking for a buyer who wants to live here, but right now I’m getting much better deals from the banks, so I just canâ??t pay your price.â?? So I’ve just told them that we’re probably not going to be able to work out a deal. I’m hoping to get them to chase a little.
Then I ask them how they’ve been trying to sell the home, and what luck they’ve been having. Thatâ??s when I hear how frustrating it is to try to sell a mobile home. So I offer them advice. Can they sell the home on payments? Because really thatâ??s the only way to sell mobile homes. No, they really need all cash. Have they run an ad in the paper, put a sign in the window, put up signs at the store or Laundromat? The reason I go through all this is to let them know how much work and time it takes to sell a home. And hurry, lot rent is coming due. Even though Iâ??m giving them good advice, they just want someone to give them cash! They donâ??t want to have to work at it! Iâ??m just trying to soften their position.
So usually at this point I give them my card, offer to help them any way I can, and to call me if they get to the point where they can move enough on their price for us to make a deal. I tell them that I’m not their best deal, but I can be their last resort if they get to that point. And here’s the important part. If they do call me back later, I want them to remember me as the one guy who was polite and honest and helpful. So if they’re going to sell their home for a bag of peanuts, better it be me than the other investors who were jerks.
Hereâ??s what has happened a hundred times. One or two months later I get a call from that same seller who now wants to accept my offer. When this first happened to me, I called Tony Colella and told him this story. He said â??Yeah, we call those 60 day dealsâ??. It seems that it takes about 60 days to motivate the average seller to cut a home lose at the right price.
The last FSBO I bought was from an older gentleman who had already moved out of the home but was still paying lot rent in a unfriendly park nearby. He was asking $8k for an â??89 2 bed/1 bath with a deck and awning in very nice shape. He told me right off the bat that someone else had already offered him $7k. Great, Iâ??ve wasted my drive over here. But I still did my 10 minute song and dance, and told him that the home was only worth $3k to me, but give me a call if his other deal fell through. He said OK. I said what do mean, OK? He said Iâ??ll take your offer. I said what? You have another offer for $7k! He said that guy hasnâ??t shown up with any money yet, and I want to sell this thing now! So I bought the home right there. Here I was ready to wait the guy out for 60 days! Anyway, I moved the home for $4k, and sold the home on a note last week for $16.9k.
Karl