Real Estate: Are You Expecting a Retail Buyer?

I know I was. Let me back track a little. What I mean by this title is you think you buy a property, do a little rehab and resell it. I mean that is what I have seen on TV. Well that is not how it works. We had a property just like that. If you expect to do some work on a property and resell for top dollar, I am here to tell you that will be a tough road even if you give the buyer a great price. Let me explain with our example.

We purchase a great piece of property. We bought @ 60 cents on the dollar and we were looking to sell at 75 cents on the dollar. Great profit for us and a great deal for the buyer. Well it is not as easy as that. We do have it sold but what we went through to get it sold was more than I thought we would need to do.

We put the house on the market for a great price. We posted it on craigslist everyday. We got lots of calls while we were still in escrow. We got so much activity that we did not fix the property up. We just cleaned it out and thought people would come by the carpool. We held our Open House and people showed but a lot of them came with their realtors and they were not happy that we did not list the property and were not paying any commission. We did not think we needed to - big mistake. It will not cost us money but it did cost us time. So no offers after the first open house.

Plan B: We spent two weeks cleaning, repairing, painting the house. We put in a new floor and cleaned the backyard. We also did a flat fee listing with a 5% commission for the buying agent. We raised our price to compensate for the listing and repairs. Second open house: We got a few people through the house. Not as many as the first open house. But the agents did start to notice the property. We also had agents going to the property during the week to preview the property for their clients. We got questions about the rehab and why the kitchen was not done or that there were no blinds on the windows or dual windows. We acknowledged all of these items but pointed to the fact that the house was well below market value. But this pointed to the way the market is right now. Buyers can be very picky and want it all. They want the price lower and the property in pristine condition and and and... you get the idea.

So we answered all the buyer's questions and gave allowances for some rehab, but the house is sold and we can move one.

What have we learned:

1. Perform full rehab on property
2. No retail selling (unless you are selling at 50 cents on dollar)
3. Sell with owner financing
4. Lease purchase option

So sell at your own risk but it would behoove you to sell with owner financing and not rely on a retail buyer. It will help you sleep better at night. Now that we have that property sold I know I will. Our focus will switch to an owner financed property we have in Ripon. Anybody want to buy or lease a 3 bedroom/2 bath, give us a call or visit our website: JM2 Sells Houses

See Ya,
Mike

Real Estate Course: Day Nine of 30 Day Action Plan

Day Nine

1. Talk to one person every day about your private money program
2. Look at properties from realtors
3. Prepare offers for properties
4. Overcoming fear
5. Call sellers from craigslist

Day Nine starts exactly like the days before talking to someone on your list of people about private money. Get used to it. It will be like this every day for the rest of you life or until you hire someone to do it for you. Can you do it? Sure you can. I will talk about that in the future when we talk about Virtual Assistants (VA).

From your lunches and contact with Realtors, you should have a list of properties they have sent you that match your criteria for houses you are looking for. Go look at the neighborhoods. Become familiar with the type of house the Realtor is referring. If it does not meet your criteria let the Realtor know. Will you find a motivated seller? Maybe, maybe not. But it is an action step to get you out into your market, which you need to learn and understand. It will pay off when you need to close on property quick or lose the deal.

Between calls from sellers and seeing property Realtors have brought you, you should have one deal to write an offer on. If not, write one anyway. Why not, are you afraid it might get accepted and then you would have to buy the property and then you would have to sell the property and you might make money in this business? Yes, everyone has those feelings. Congratulations, you are human. As May Kay Ash tells it, “You Fake it Until You Make It.” I do that a lot. Sometimes I step in it and sometimes I don’t.

As you found yesterday, people are advertising on craigslist all the time to sell real estate. Some are by the owners but most are by Realtors looking for a buyers list (we will develop that in later days). E-mail them about the property or call if there is a number. Call the seller or agent on houses in your neighborhood you like and fill out the property information. The more properties you look at the more likely you will find properties to buy. After all that is the name of the game.

See Ya,
Mike

Real Estate Course: Day Eight of 30 Day Action Plan

Day Eight

1. Talk to one person every day about your private money program
2. Get to know the process: talk to a Title Officer and mortgage broker
3. Go to the county recorders office: How docs are recorded
4. Post craigslist ad
5. Review craigslist ad
6. Talk to sellers

Day Eight starts exactly like the days before talking to someone on your list of people about private money. Do you see a pattern? If you do not have private money to buy your properties you will run out of money quicker than you can say “Bank Loan.” You will only get so many loans from a bank for buying single-family residences. Private money is absolutely critical to your success.

Study and get to know the process of buying property. Sure you may have purchased your own home once or twice but know you want to look at it from the business side. What are your responsibilities to the process, the seller, the private money lenders and what is the timing you need to have everything in place? Talk to a Title Officer – better yet, take them to lunch and pick their brain on the entire process. Even if you think you know, it will give you an opportunity to talk to one person about private money.

Next go to the county records office and ask how deeds are recorded and what documents you need to buy or sell a property. They will help you at the recorder’s office. The more lost and confused you look the more help you will get, so ham it up. The information can be invaluable when you need to record a document for a property.

Post an ad on Craigslist for your area. This is exposure for your business. In fact, review craigslist under the real estate section and see what others are posting. How is it written? How can you adapt it to what you are doing? I have looked at other items people are selling and how they worded their copy and adapted that to what I what from people – either buyers or sellers. You are posting an ad for motivated sellers. Do not expect much. You are just getting your feet wet. But it is free and you never know.

You should start to get some calls on your direct mail piece you sent out on Day 5. Start talking to sellers! Have a property information sheet and just go down the sheet. Remember, this is an opportunity to build rapport with the seller. They may have to sell their property, but they do not have to sell it to you. People want to do business with someone they know or like. So be friendly and upbeat. Be confident you can help them out of their problem. It helps to stand when you talk to someone on the phone. You will have more energy and that will come through the line. If you have never talked to a seller about their home, you will blow it big time. Just know that now. You will be nervous. You will worry that the seller will know you never purchased a home before, or closed a deal on investment property or that you wear different colored socks or shorts all the time (well maybe not the socks and shorts). You will imagine all kinds of things. By the time you pick-up the phone, the seller will be a cross between Superman and Houdini. Try to relax! This will all go away after you talk to 20 or 30 sellers. By then you will be a master of rapport building on the phone and that will allow you to concentrate on structuring the deal and solving the seller’s problems.

See Ya,
Mike