OfflineHello everyone,
I have a seller that responded to one of my marketing letters. Here are the details:
* St. Louis, MO
* 4 BR/2.5 BA
* 2,124 sq. ft.
* Built in the '60s
* New siding and roof because house was hit by a tornado
* Listed at $145,000 then $139,900 a month later
* Reduced to $134,900 last week
* Zestimate of $133,382 on Zillow.com
* Estimate of $116,703 on Total Value Real Estate
* Estimate of $112,179 on eppraisal.com
* Listed with a Realtor
* Wants $134,000
I had a hard time comping the property and don't really know what to offer. Can this still be a wholesale deal?
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I hope this helps. I am grateful to Carol Stinson for the remarkable job she did showing the numbers on this. These are her numbers for wholesaling, which she does across the country.
First, forget about estimates. They are meaningless. This is a motivated seller who has dropped the price TWICE. Find out what the comps are for the last 90 days in the local geographical area of about 3/4 of a mile. Maybe one mile if you cannot get 4-5 or more comps. You can also go out six months, if necessary. This will give you the Fair market value (FMV). The formula looks like this:
Fair Market Value times (.70) equals 30% of FMV.
Minus repairs and rehab
Minus your fee (profit)
Times (.97) for holding/closing costs
equals Maximum Allowable offer (MAO).
The MAO is the maximum that you should offer. Go below that as the start of your negotiations and leave the extra, if any for your end buyer. Let the seller make the first offer after you have gained their confidence by building rapport with the seller. One thing I have had to learn is to quiet down and listen. This is how you build rapport and win the confidence of the seller. Nothing I say is as important as my listening to what the seller has to tell me because in there is the information that I need and the information that the seller needs to tell me. After all, it is his/her story that is important.
Patrick
Thank you i was wondering how to do this as well. So the info is very helpful now I know how to calculate my price.
Patrick,
Thank you for that detailed paragraph for finding FMV. I really appreciate you taking the time to do that.
We all learn on this site. In this case I learned from the best of the best, Carol Stinson, who has over 600 wholesales behind her. I look at the passion and confidence she shows when she's talking real estate and I learn as we all do. Dean talks about changing the economy one family, one home at a time. Carol is one of the best.
By the way. If you want to find and create your buyers list in a hurry, there are four ways to best do this.
1) Attend and join a local real estate investor club (REI).
2) Put out bandit signs every weekend (3 bedroom, 2 bath. Must sell. Call xxx-xxx-xxxx). Keep track of where the calls are coming from. It's best to put them out on Friday evening and pull them on Sunday afternoon. There's more information on this site about bandit signs.
3)Get an investor friendly agent and ask him/her to pull listings around the property or area for sold real estate (comps) from past 90 days. In the comment section there should be an area that tells how the property was financed. Or it will say "cash."
4) Craigslist. Use the same wording as in the bandit signs.
There is a lot of great information on this site for free. Also on the insider Elite site. We learn from the best.
Patrick
I have had some success with craigslist. I used the ghost ad dean talks about in his book and got alot of responses. I am now building my buyers list through ghost ads.