Posted by Karl (Oh) on February 18, 2003 at 21:44:07:
Last September I had a seller start at $15k. In November I bought the home for a little over $3k. The seller was properly motivated.
I never go in thinking I have to get a seller to move some percentage off of their price. That’s not really the goal. I’m just trying to buy homes for cash prices that are fair (by my definition), but still low enough for me to make enough money to do the deal. And that means I have to know what I can sell any home for. I know what I’m willing to pay for any home, if we can get to that price, I buy it. If not, I don’t. A lot of the homes I buy are ones I walked away from one or two or three months before.
Posted by littleguru on February 18, 2003 at 21:26:13:
I’m to the point where i think i’ve located motivated sellers but i was just wondering does anyone have some examples of what someone’s asking price was as compared to what you paid. like is an ask of 8,000 talked down to 2,000 possible does it ever happen? How much can i talk these people down in price.
Karl is dead on in his advice. This business has little to do with tin and so much to do with motivation. We make the most money when we LOCATE a motivated seller and we LOCATE a motivated buyer and CULTIVATE a deal whereby we have them “pass in the hallway” of a local bank during closing on the home (I use banks so I can get the contract notarized). What I mean by this is the best deals are where you buy the home from one distressed seller and sell it to another motivated buyer on the same day (or even week). Not done very often, but it really is the goal.
You will find motivation in UNOCCUPIED homes in parks with For Sale By Owner in the window. OCCUPIED homes are to be avoided, in my opinion, in the beginning of your career. The owner still sees the home as an “asset”, and not a “liability”. My favorite line in dealing with sellers is this: “When you feel you no longer have an asset, but a liability on your hands, and you are ready to ACCEPT a fairmarket, wholesale offer, you call me”. I have been called back many times by a newly motivate seller who suddenly realized the box they no longer occupy is not worth $8,000 (like the broker told him), but it was costing him money and he wanted out. That is when you get the home for about 25% of the original asking price. It rarely happens on the first meeting, or even the second. For a guy to call you and sell you the home at a 75% discount, he has to trust that you won’t treat him with disrespect and gloat about “talking him down” 75%.
Karl is correct and those deals are out there. However, they cannot be “found” but “cultivated”. He sounds like he is pretty good at this.
“Better listen to him, Pinto, he’s pre-law.”
“I thought you were pre-med?”
“What’s the difference?”
It’s late and I’m resorting to movie lines. Better go to bed.