Posted by luke on December 22, 2006 at 17:11:58:
Right…you physically put the money in your pocket at that time.
What I’m saying is you set yourself up to make that money by either buying cheap or adding a lot of value when you rehab.
Luke
Who here has actually bought a FSBO?? - Posted by luke
Posted by luke on December 19, 2006 at 22:02:13:
I’m curious who, if anyone here has actually purchased a FSBO in accordance with the 70% - repairs formula.
Anyone??
I’ve found that FSBO’s are FSBO’s due to one of two reasons:
1.They are holding out for the absolutely highest price and are trying to avoid paying agent commisions. (To put more money in their pocket).
- They can’t afford to pay a Realtor becuase they have no equity.
The only way I could see making money off of a FSBO is on someone who doesn’t know what the true value of their house is and sells its for super cheap out out of their own ignorance.
So has anyone successfuly done this?? I’m not going to demand you back up, or proof your answer but please don’t try to BS us.
Anyone?
Re: Who here has actually bought a FSBO?? - Posted by DaveD (WI)
Posted by DaveD (WI) on December 20, 2006 at 19:30:21:
Don’t pigeonhole yourself… even though lots of houses are done that way for your very reasons. Regarding #1, those would be unmotivated sellers. Next!
FSBOs are bought all the time by us. Usually, an ugly beater the realtors DON’T WANT! That takes care of your point #2. We’ve made a bundle on ugly houses.
Thin equity deals can be profitable, but lots of stars have to be aligned to make it work.
I take serious exception to your last point. A truly ignorant opinion of your own making.
Most folks know roughly what the value of their house is… or could be if they fixed it up. Some don’t. Whatever. But they don’t care… for whatever reason. Mostly, they are interested in getting a quick nickel… or any nickel. Especially if they are getting legally leaned on, if you get my drift.
If you made this post because you haven’t found a good deal from a FSBO… then you haven’t found a motivated one. Once you have a conversation with one, you will never forget it. Good luck.
Re: Who here has actually bought a FSBO?? - Posted by Brian_wa
Posted by Brian_wa on December 20, 2006 at 12:37:23:
I just picked up a property for 253k. This was the one where I gave about 6.3k in earnest money directly to the owner because she needed it. I worked and slaved my butt off over 2 months for this deal.
It’ll need about 20k to fix up. AVR will be somewhere between 380k to 425k. I’m keeping this house for at least 1 year because I don’t want to pay too much taxes.
Brian
Re: Who here has actually bought a FSBO?? - Posted by BTI
Posted by BTI on December 20, 2006 at 10:35:10:
Luke
Your observations are right on target for 90% of the usual FSBO’s, the rest have other reasons, but in most cases a FSBO being a motivated seller is the exception.
I was an investor for 10 years when I decided to get licensed and one of the reasons was FSBO’s, I was knocking or checking out all these FSBO’s where there was no deal for me and I thought at least if I had a license I could turn this effort into some money for me by listing them, so I became an agent.
In my area we didn’t call them FSBO’s, we called them 10 percenters because they were always asking at least 10% more then the property was worth, and if they sold they got at least 10% less then the property was worth.
I don’t remember buying any under your formula but I bought several that were profitable enough for me to go ahead on. I also think this conversation has to do with houses. Right now I am looking at a property that is FSBO but was listed for almost 3 years with a commercial broker.
I had driven by it several times in the last few years and last month an idea hit me as I drove by on my way home from the hospital. It may be possible to pick it up up $1.2 mil, do $900k in rehab and improvements and have a property marketable at $4.5 mil.
Of course its not that simple, I still need to get many things straightened out without tipping my hand before I tie it up. If I try to tie it up now, the contingencies in my contract would give the seller to many clues, and being cheap at the moment I don’t want to put out the option money that would be needed in this case without the contingencies in place, and again tipping the seller off to what it’s really worth.
BTI
Re: Who here has actually bought a FSBO?? - Posted by Natalie- VA
Posted by Natalie- VA on December 20, 2006 at 10:20:17:
I’m sure there have been others, but this one comes to mind since we bought it from a real estate agent. You would think she would have known the true value. We were working on a rehab down the street and stopped by after she put up her FSBO sign.
Anyway, it was in 2004. We paid somewhere around 90k, did around a 10k rehab and sold for around 130k. We made over 20k in profit.
–Natalie
90% of Mine Have Been FSBO - Posted by Jimmy
Posted by Jimmy on December 20, 2006 at 07:45:44:
no BS. and neither of your observations are close to being true for the deals I have done. we are talking something like 65 properties over 5 years.
the explanation for my very different experience may be what it is that I like to buy.
I am buying major rehab projects for 1-4 unit residential stuff, usually in clusters, and usually from dead/retiring/disgusted/overwhelmed landlords.
I routinely will have a rehab budget which exceeds my purchase price. These are not the kinds of deals where realtors want to play.
I find them in newspaper ads, from word-of-mouth, from my tradesfolk on the ground, from housing officials, drive-bys, and…once, in a blue moon, from realtors.
Re: Who here has actually bought a FSBO?? - Posted by John(NC)
Posted by John(NC) on December 20, 2006 at 05:06:18:
The first investment property that I purchased was a FSBO,that was advertised in the local newspaper 4 years ago.
I purchased the property,which included a vacant lot for $190,000.The property appraised for $270,000.I paid them the full asking price,because I knew it was a great deal.When the appraisal came back,the wife broke down in tears,realizing they sold it too cheap.
While they may be few and far between,great FSBO deals do exist.
BTW-I did save the classified section,which contains the FSBO add.Every now and then I look at it and realize it cleared my path to freedom.
Happy Hunting,
John
Re: Who here has actually bought a FSBO?? - Posted by Pete CA
Posted by Pete CA on December 20, 2006 at 01:58:50:
I just bought 2 reo’s for 65% and 67% of fair market value. They were both listed for much higher but I made a low ball offer. They had been on the market for 90 and 120 days. I offered really low 60% and they countered a bit higher so I got a sweet deal. I have found that FSBO’s are not really good deals. they are usually just people trying to sell for market value but they are too cheap to pay the 3-6% commission to the agents. With so much free knowledge about home values it’s nearly impossible to not know what your home is worth. The best deals are from banks who need to get the properties off the books, people in divorce, death in the family, or just behind in payments and have no other way out but to sell. If you have access to the MLS do a search for “bank owned” “real estate owned” “REO” and talk to the agent who represents the bank that is selling the house. The agent will know first hand which property the bank needs to move so you have your best shot with those. Get in good with REO agents they are the ticket to getting some decent deals. Good luck and good investing.
Re: Who here has actually bought a FSBO?? - Posted by Doug (ON)
Posted by Doug (ON) on December 20, 2006 at 24:00:05:
Nope, can’t say I have. The closest to your formula I got was 80% of FMV, the house didn’t need any repairs.
I do however find lots of FSBOs who are willing to sell creatively, for exactly the reasons you mentioned: Overpriced and no equity.
The overpriced part is easy to get around… just wait them out. Sooner or later they will wake up to reality but by then it will be too late to get market value from the average buying public. Retail buyers know what houses are available in the area they want to buy, and once a house has been up for sale for a few months they start to wonder what’s wrong with it. Then the seller can’t slash the price fast enough to get rid of it.
There is LOTS of money to be made doing creative financing, but you need to know your market VERY well, you can’t just blindly follow someone else’s formula. What works perfectly well for me in my market probably wouldn’t work at all for you in yours. Remember to always read courses for the CONCEPT, then use your own knowledge and wisdom to apply it to your situation.
Re: Who here has actually bought a FSBO?? - Posted by Luke
Posted by Luke on December 20, 2006 at 19:39:41:
“FSBOs are bought all the time by us. Usually, an ugly beater the realtors DON’T WANT! That takes care of your point #2. We’ve made a bundle on ugly houses.”
Someone else also made that point and I can see that angle.
“I take serious exception to your last point. A truly ignorant opinion of your own making.”
Wow, you come on strong for such a harmless question.
There was another poster on this thread who did just I said. I agree that most people do but then again I agree that most FSBO’s are not motivated.
I haven’t yet found a good deal from a FSBO, that’s why I posted this thread.
Well, thanks for your input. It does confirm what another poster said about buying good deals from FSBO’s if the property is trashed. Just to caveat that, he did say that he managed to get them below FMV in there as-is condition which to me sounds like a good deal.
I guess after reading all this, FSBO’s of nice properties generally don’t bring forth many good deals.
Luke
Re: 90% of Mine Have Been FSBO - Posted by luke
Posted by luke on December 20, 2006 at 16:49:05:
Hmm…I guess I can understand if the property is pretty trashed.
I guess I’m talking more about decent properties that don’t require a lot of rehab where you make your money when you buy verse rehabs when you make your money fixing it up.
Congrats on your success though.
Luke
Re: Who here has actually bought a FSBO?? - Posted by Luke
Posted by Luke on December 20, 2006 at 16:50:45:
Great deal!! I just closed on a house yesterday where the husband and wife were clearly depressed they were loosing their house for so cheap.
So much for these Guru stories about seller loving you for stealing their house.
I’m sure it does happen but it seems it would be the exception not the norm.
Congrats!
Re: Who here has actually bought a FSBO?? - Posted by DaveD (WI)
Posted by DaveD (WI) on December 21, 2006 at 08:38:37:
Sorry to come on so strong. I was just trying to be direct, and sometimes my spareness of words gets me into trouble. Keyboard laziness, I think.
Let’s break down that last paragraph.
“The only way I could see making money off of a FSBO…” OK, now who’s being lazy? Spend a little time figuring ut why folks get into trouble, and why they want to sell by themselves (hint: which may just get them into deeper trouble). Think human nature.
“is on someone who doesn’t know what the true value of their house is…” What is value? Who determines value? Usually, whoever is going to pay. Value to you, me, and the seller are probably three different numbers. True value? To who?
“and sells it for super cheap out out of their own ignorance.” Ugh, I’ve bought from attorneys, personal reps, long time landlords, moneyed folks “trying” real estate. All smart people. All knew when it was time to cut bait. None of them ignorant.
Early on when I was stumbling around I thought the same as you. I was wrong. Because of ignorance.
If FSBO’s don’t work on nice properties, are you suggesting the best deals come from agents? Now there’s a laugh.
Incidentally, I’ve bought nice houses FSBO as well. But they were finacially motivated to sell. Don’t lose sight it’s a numbers game. Most won’t want to play with you.
Re: 90% of Mine Have Been FSBO - Posted by Jack E
Posted by Jack E on December 22, 2006 at 17:07:45:
Luke, you realize your money if you sell not when you buy or rehab.
Re: Who here has actually bought a FSBO?? - Posted by Luke
Posted by Luke on December 21, 2006 at 19:47:37:
Thanks for the explanation.
In defense:
Ignorance doesn’t have to be general. It can be in one area solely. Just because an attorney may not be ignorant in many areas of his business if he didn’t know the FMV of his house, he was ignorant to that fact. It just means he didn’t know.
I think where we may be miscommunicatins is in our definition of FSBO’s.
Technically every house you buy without the aid of an agent is a FSBO, however, when I refer to FSBO’s, I’m referring to an individual who decided to sell their house and preferred to do without an agent.
I’m not referring to someone who called in from one of your marketing techniques. I think that’s where the best deals are.
That’s my take on it.
I think your point is that you can get good deals on FSBO’s which I agree with. I just think it’s the exception rather than the norm.
I think the majority of good deals are produced through direct marketing.
I don’t think it would be a good use of time going door to door knocking on FSBO’s. Just my opinion.
Thanks for the interesting conversation.
Luke