Call From Motivated Seller - Need Fast Response
Hello all,
Looking for some creative solutions on this one. I had a call from a home owner who was in foreclosure. He made up his back payments and the foreclosure was cancelled. Now he is wanting to sell because he is unable to keep up the payments.
The house is worth around $125,000. This is a pretty nice home in my area. The homeowner owes $70,000 on his first and a small second. He also owes $10,000 to his family who helped with his back payments.
When he called, he said that he would be calling on all of the mailings he had received to see who might give him the best deal. The mailings he received, I'm sure are all from investors.
Now, I would like to make him an offer that he can't refuse and that the other investors may not come up with.
I have pondered over several ways to structure an offer, including a split profit, to taking his mortgage subject to, to a lease purchase.
I would like any feedback on this. I'm sure there are many of you out there who have done these kind of deals.
I would appreciate all input. I am calling the home owner back tomorrow with hopefully the most attractive offer.
Thank you in advance for your replies.
Janis
From the way it sounds, he is the one calling the shots. He doesn't exactly sound motivated.
I would try to get him to sign a L/O contract. You will be the one he HAS to deal with, and the one he CHOOSES to deal with.
If you cant get a commitment, he will just shop you and find someone who will beat your offer by $1000
i'd say don't stretch youself too thin. if you've done due diligence on this place and you know it has no substantial liens on it and the owner has no judgments against the property - then give the best offer you would be happy with and just let it ride. if some bigwig wants to lowball you, don't worry about it. maybe they will, maybe the owner will still like your offer structure better. i couldn't really give an idea without knowing how small that 2nd is, but just don't sacrafice your profit and cya (cover your azz) factor - just to seal the deal.
i wish u the best!
I would do a sub to deal here as well. see what he wants and determine if you can give it to him. don't worry about the other investor's, make your offer that best works for you. Think about it, if you ran the numbers and came up with a solution that allowed for you to make a profit as well as help him out, if someone came in with a bigger offer, they probably over paid. don't try to beat the other investor's, make your offer and be prepaid to walk away if he's in la la land.
Hi Janis,
This may sound really simple and out of the ordinary, however a really effective approach is to simply ask the homeowner what would they like to see happen, or how much do they need to get moving? They may say all of my equity or they may say $3,000 and get me out of this situation.
Tell the homeowner that you can help them out of this mess right away. And even though there may be other investors looking at the property, dont let that make you over-bid.
The other approach would be offer them an amount that would pay off their loans, give them a couple thousand dollars of moving money, and still leave you in an equity position of 80% or better. If they are not motivated, give them your number and tell them that they can call you if things dont work out!
Best of Success,
BAMZ[ Edited by BAMZ on Date 10/23/2003 ]
is that what's happening now in pre-foreclosures? saturated with investors that now the person in the "trouble spot" is actually in control?
Hi ddhamilt,
Not in general. However, since the above homeowner had the smarts and dollars to bring the loan current, they may be more likely to want more dollars of their equity out of the transaction.
Since this propert was brought current, it is not longer a pre-foreclosure, which gives the homeowner more of a stronghold.
Best of Success,
BAMZ
I also like the idea of a lease option from the seller. It sounds like he still has some degree of motivation (i.e. if he lets it go back into foreclosure, he will lose the goodwill from his family that bailed him out last time). If he can justify any equity that should be coming his way, he might be inclined to wait (rather than not getting any) until you have a tenant buy who refinances sometime in the future (or if he doesn't want but a few k, you might be able to pay him off with lease option down-payment from your tenant buyer).
You need to make sure you can get more in lease option payments than are due on the property.
As far as the 10k loan from family. You can work with them on a payment schedule or even get them to discount for a quick payoff.
Good luck.
[addsig]
I liked all of the post, especially Bamz...I would do the same thing. Just listen to what the sellers wants and needs are (in sales thats what they teach you) make the seller feel like he's made the final decission. Try to get some books on negotiating, that will keep you sharp when it comes to objections from potential sellers/buyers.
If I wanted the house bad enough, i would tell the seller that the other investors will try and low ball you, but you can offer him more money if he's willing to be a little flexible. Meaning if you do a lease option, and sell the property, you can give him more money on the back end.
If all else fails and the seller doesn't bite, just walk away...there will be other deals. You are doing them the favor, not them doing it for you.
Hope that helped~
JANIS:
Long time no chat...anyway I see you are still in the GAME!!!
Hooray!!!
Here's a TRIPLE play suggestion you may remember for this deal or on future ones...
PLAN A - Mr Seller for a Full Price Offer (*Less Repairs) WOULD YOU BE WILLING To
1- Keep the current Mortgage Loan in place while I take over the payments, Taxes Insurance and/or repairs if needed...
and
2- Keep all (or some) of your EQUITY intact until I refinance and PAY YOU 100% of Your PRICE in a few years???
or
PLAN B-
Mr. Seller I can agree to help you Mkt/sell your home in ways most other Investors CAN'T or DON'T Want to Be BOTHERED with...I will Personally be responsible for 100% of all payments on your home and will gurantee it.
The person(s) whom I Lease to will actually REFINANCE to PAY YOU OFF in a Couple of Years ...
They make all of the payments and take care of the property AND WE CAN SPLIT the Equity Build Up and/or future APPRECIATION (if any)!!!
or
PLAN C-
"HOPE for MANNA From HEAVEN! "
Mr. Seller I can give you and ALL CASH OFFER at 60% of the FMV for your home RIGHT NOW !
Which Option Do You Think Makes the Most sense for YOU???
Then SHUT UP and let the Owner tell you how he wishes to SELL TO YOU!
I hope this Helps!
Derrick Ali
That is a great post Derrick! I love the line "Hope for Manna from Heaven!"
BAMZ
You mentioned you were going to call him , I highly recommend you meet him in person that way you can show him your deals . One more thing and very important never disclose your offer first , let him tell you what he wants then you take it from there .
Good Luck
Thank you a zillion times. You people are truly awesome. Thanks for the "Hi", Derick! Yes, I'm still in the thick of it. I can't seem to get it out of my mind.
Janis