So here is how my first encounter with a seller panned out. I explained how I found the property in Finding Your First Property. Lets start out with what happened after sending out a hand written real estate marketing letter to the owner of a potential investment property.
Seller Response To My Letter
Two weeks later, I receive a phone call from Sally Dallas. Sally tells us she is the daughter of Ida Mae Fuller to whom we sent a letter regarding the sale of her home. Are we still interested? We tell her yes. Sally tells us that Ida Mae is age 90 and has come to live with them in another city. Ida Mae is tired of maintaining the house and is enjoying her newly found freedom in her new location 235 miles away. What would we offer?
How To Talk To Sellers
Step 1 –> Here is where you need to take control of the conversation. You have a general idea of the market value, but you do not want to be the first person to name a price. You tell Sally that you are not a Realtor® and that you do not want to list the house for sale. Instead, you are a real estate investor and would like to purchase the house outright.
Step 2 –> You continue with the question: “If we were to pay you all cash and could close quickly, what is the least amount you could accept?” Sally tells us her mom wants $80,000 and that she had done some fix-up in the kitchen just before she moved out.
Step 3 –> We respond: “Is $80,000 the best you can do?” Sally says she’ll have to ask her mom but her mom is not home at the moment. “Could we call back?” We agree to call back at 5 PM that afternoon.
After I hang-up, I analyze what I’ve accomplished thus far. I spotted a property that no one else even knows is for sale. I've determined that indeed, the property is for sale. We also note that the asking price of $80,000 is the retail price for that neighborhood.
I determined that the outside of the house will require general clean-up plus some attractive landscaping plants including bright flowers. The plant materials we have in mind will cost $500 and the clean-up labor and planting of the landscape will run another $500. We had looked inside the house through the various windows and did not see any glaring problems. Perhaps another $1000 for cleaning and selective painting would make the interior very presentable.
Buying & Investing Objective
My objective is to purchase the house at a price that will allow me to fix the cosmetics and still sell it on the low side of the retail market for a quick sale. First impressions are extremely important so we want to spend the funds to make the house look pretty, both from the curb (curb appeal) and from within, paying particular attention to the kitchen and bathrooms.
If you’re a man reading this, do yourself a favor and let your wife choose the landscaping and interior decorations. Women are the decision makers when it comes to buying a house. Let a woman create the environment that another woman will appreciate.
Reviewing the numbers, if I set my target sale price at $80,000 and we spend $2000 in fix-up costs, we still have to discount the purchase price significantly from there in order to make a reasonable profit. We do not yet know what the minimum price will be so all we can do at this point is evaluate some of our options.