The past couple weeks have been pretty slow with calls, in fact I just got my first 3 calls in the last 2 weeks today. Unfortunately two of the calls told me to take them off the list as they either did not own the house or did not want to sell the house. The other caller wanted to know how I knew the house was for sale since they just inherited it. I will call this person back tomorrow to explain how I “knew” the house was for sale although I risk getting yelled at.
Usually when I talked with a caller, I like to present myself as an Option that can offer them multiple Options. In my first contact with the seller I don’t want to come across as a sleazy investor, but more as someone who can offer them a few ways to get out of their situation, what ever that situation may be. In a book that I read over my vacation, Switch, it describes a scenario where if you offer to many options to someone it only serves to overwhelm and confuse them. This leads them to reject fully reject you in order to take on a more familiar and safe option. So be careful to not overwhelm them. Have you ever had trouble deciding which new restaurant you wanted to eat dinner at and then decided to go to your tried and true favorite? I know I have.
After talking with quite a few other investors at the meetup meetings, I’ve come up with 4 options I can offer a potential seller that would lead to a win/win situation for the both of us.
All Cash Offers
This option is designed to place money in the hands of the seller quickly. The benefits to the seller are a quick and certain close, no need to worry about financing falling through. Sellers who are likely to take this offer are ones who need out quickly for a variety of reasons such as pending foreclosure, money to pay bills or just don’t want the hassle of maintaining a house in another state.
A great option for the home owner who can wait for a payday. Owner financing is when the seller, in essence, becomes the bank and finances the purchase of the home minus any down payments. Terms can be very flexible and be setup to suit both the seller and buyers needs. For instance, you could agree to pay a 20k down payment, and then pay the remaining balance upon you selling the house.
With this option you will be able to offer the owner more money because you won’t need to pay finance charges to a bank or hard money lender. The seller will also be able to get some quick cash now and higher price for their house.
A final option I like to offer the sellers is to list the home (or refer the listing to another agent) to attempt to sell it for retail value. This is the most familiar option for the seller and if the above two options are rejected can still create a win situation for both parties. As investors this is our least favorite option, but money is money.
With probate properties I don’t think this option will ever come up because if a house can not be sold for what is left on the liens, it will need to be sold by the estate and then the remainder of the balance will be paid off by what is left in the estate. The killer here is that while a property is still in probate, a sale must be approved by a judge which complicates things greatly. I will say that it’s possible for a house to be sold out of the probate process but I’ve yet to actually witness this. However I do know a few short sale investors who would be happy to accept a lead if I come by one.
If you have been reading my blog for a while, you know that I’m trying to partner up with other investors until I get a few deals under my belt. This strategy really limits my risk and provides me with a great way to network with successful investors. With each of the options above I know an investor who will partner with me and take me through the process. The only down side is that I’m only going to be getting a portion of any profit, but that is a small price to pay for some awesome mentorship.