Building Rapport To Lock In The Relationship
Setting up phone calls is fairly simple. You can use google voice or any other anonymous call service. You’ll want the option to be able to answer the phone as when you call someone back people like to see your number and will more likely answer the phone. The idea with the phone call is to build rapport and set up seeing the home in person. you will not be giving the person an offer for their home. Making an offer will be best suited for in person.
You’ll want to have some questions written down before answering or calling. You want to know why they’re selling the home. Next, you want to ask them about the condition of the home. A good question here would be, if there was anything that you would want to fix what would it be? Try to get as much information about the home as you can. Sometimes asking the person to walk through the home and asking about each room is a great way to go about this. You will have to feel out the person if they’re up to that or not. Ask to look at the electrical panel, roof, windows, HVAC as well. Next, you’ll want to make sure you grab the address, how many rooms, and square footage of the home. After talking with this person and finding out their motivation for selling. you’ll want to set a day and time to meet them at the home to walk through the home. again. seeing the person in person will build even more rapport and allow the person to trust you.
At the home, you’ll want to talk with the owner, ask their permission to view the home. Also, ask if it would be okay to do a video walkthrough of the home with your phone. You’ll want to circle the outside of the home. look at the quality of the exterior. look at the HVAC system and roofing. you’ll then want to enter in and video from the front of the home to the inside. Make sure to look at any blemishes and finishes and anything else that stands out as being a problem. then you’ll want to go back and talk to the owner and negotiate.
Negotiate And Get The Deal You Want
Negotiation for many is probably the hardest part of the deal. the biggest thing is going in knowing what your top price would be.
To know what the price of the home would be after it’s fixed up you would need to get ahold of a realtor and ask for comparable homes in the area. Homes sold recently, the same number of rooms and square feet. Homes in the same local area, and preferably the same street. Some realtors will tell you what they think it’s worth. but don’t take their word for it, you’ll want to see the prices and match the homes like for like.
Typically you’ll want to get a home for 70% of the homes after repair value or more. so 70% on a 100k home would be 70k.
Next, you’ll want to have a rough idea of what it costs to rehab a home. There are a few ways to do this. The sqft method and the cost per job method. For me I have found the sq ft method just fine for wholesaling, and although you want to be accurate. You must inform your investors how you get to that number and make sure they know they need to do their own due diligence on getting their own numbers. Two resources I’ve found very helpful are The Book on Estimating Rehab Costs by J Scott, and my favorite way in the book Flip your Future by Ryan Pineda.
A man that you should also read about if your aspiring to negotiate the best deal possible is Chris Voss and his book Never Split The Difference. he talks about building rapport, a technique called mirroring, and asking lots of questions to find out how you both can accomplish the same goal. The idea is the let them go first. Let them set their own number. From what you see here, what do you think your home is worth? They’ll spit out a number and you can talk to them about the cost of repairs and how you need to make money as an investor. Ask another open-ended question and have them help you to negotiate themselves down. Once you feel like they’re close. You can tell them that you are close but we’re not there yet. If they want you to give them a number back go lower than you want by 5k. Another successful way to offer is to put the number as an exact amount. When the seller hears the number they’ll think you’ve got it all figured out down to the last dollar.
There is also psychology about offering in odd numbers. So, “87 697$ is my best offer”. As you negotiate you’ll also feel the seller out. you don’t want to make them uncomfortable with the deal or make them feel like they’ve been cheated, don’t give them a reason to back out later down the line. another bargaining chip is that your not a realtor and don’t have realtor fees. I think a great video that goes through most of this is found by Max Maxwell here
Signing Paperwork Everyone Is Happy With
Once you’ve come to an agreement with the seller, you’ll want to sign that paperwork. Make sure you come prepared with at least 2 copies. you’ll want to make sure your paperwork has a clause giving you the right to assign. you’ll also want an out if you’re unable to find a buyer or money to get the home.
To do this you’ll want to call a real estate lawyer who is familiar with real estate assignments. Some lawyers will tell you this is illegal and others will know the legalities of it and allow you to sign papers with them. you can either get paperwork from them directly and have them do up the clause first, which will cost you a few hundred dollars.
If you can draft up your own from the internet, sign it, find a buyer, and then send it to your lawyer to finalize including payments this is an option as well. you’ll want your lawyer to send you copies of this paperwork not filled out so that you can reuse it in the future. In Canada, you can get yourself a FORM 100, and in the US you’ll want to get one for your specific state. I’ve found most documents on this website here. You can also find those forms for free.
One thing you’ll need is the legal address name. If you don’t have this the paperwork becomes invalid. The address tells you how deep and wide the lot is, which way it faces, and different details not found within your typical address. Be sure to go over filling out paperwork a few times before meeting the seller. You will want to be well read on the document and be able to fly through and fill it out with ease answering any questions they might have. speaking with a local realtor will help explain this process to you. To find the legal address you’ll need to go to your local chamber of commerce or your City website. Alternatively, you could ask a realtor and they would be more than happy to help.
Contact Your Buyers List For The Sale
Once the contract is signed, upload your video to youtube. make sure that it’s uploaded so that only your buyer’s list can see the link. then you will want to create an email or txt to go out to all your potential buyers. Put in details about the after repair value, the comps that you were given, and your estimate for rehab costs. Show your work for how you came up with your estimate for rehab costs, this can be done on a separate page/website link but can also be included.
Talk about its location and its potential for money as a buy and hold or flip. Include the youtube link and a picture of the front of the home in the email along with your asking price. Dependant on how good of a deal you got will depend on how much you can ask. You’ll want to leave enough meat on the bone for the investor. An average asking price would be 10k. how much you charge will vary by the deal, if you get
If you get one for 70% of the after repair value I would ask for 5k. If your asking price is off, you won’t get as many replies about the home and might have to negotiate yourself down. Once the email and text
Sell That Deal With A Lawyer
Once they agree, have them send you 2k non-refundable deposit to secure their position as the buyer. Get them to sign an assignment document, this can be typed out and signed by both parties. Once done, you can submit this to your lawyer to finalize all paperwork involved. Your lawyer will also work with all the other lawyers involved and make sure everything goes smoothly.
Collect That Money
When the closing date comes, you’ll be able to head over to your lawyer and collect your check for the amount you agreed upon minus your lawyer’s fees. Make sure to talk to your lawyer about how much they would charge for something like this and don’t be afraid to shop around for someone who can do it more cost-effectively.
thanks for taking the time to read this article. If you have any questions please drop them in the comments below, also please feel free to share your opinion of what has worked for you. don’t forget to subscribe for updates in the sidebar.