Should you tell sellers right off that you can't offer them near FMV?

"Ok, well let me do some research and i'll do the best I can to try and make this a win-win"

Be thorough and precise in your resarch and be able to dispute any counter he comes with, but in a manner that doesn't offend and allows him to want to speak with you again

I think it is wise to pre qualify your seller. Don' t leave them feeling you misrepresented yourself. Unclear communication will kill a deal right off. If they want retail for their property and you are planning on assigning the contract, fix/flip or wholesaling you are wasting your time and theirs.
We pre qualify in 4 areas when we 1st make contact.
1. Short sale or do they have equity.
2. Are they motivated. Are they currently listed? Declared bankruptcy?
3. We need to talk with all people on title
4. They know we buy at wholesale prices (if they have equity) We explain we are investors that do what we do to make a profit and what the benefits are when working with us. We do not represent them or the buyer!

Good luck and go make some offers!
Michael Mangham
MD Home Acquisitions LLC

I believe Matt suggested in the live call, September 14th, that he mentions to the seller that they are in competition with foreclosure properties. I would get comps in the area prior to talking with the seller.

I make sure that they understand that I am an investor and that as Matt said, they are competing with foreclosures right now. I tell them that I'm sure there house is wonderful (it is to them and can be to me for the right price) but that I have to take into account the market and my need to be able to resell.

Susan

To read my journal go to: http://www.deangraziosi.com/real-estate-forums/investing-journals/54148/...

I recommend going in to the offer with more than one option for them. Such as offering to buy cash at a predetermined considerable discount, then wait for their reaction and if they can't do that move on to seller financing or lease option. don't just give them a price and take no for an answer.

There are many ways to handle this.

First off I would say talk with the home owner and see what there needs are and how you might be able to help them.

From there you can come up with a game plan. It really depends on what strategy you want to use. In some cases you could give them FMV (Fair Market Value).

For instance if you knew the property was in an area where rental rates were going to bring in a good cash-flow above the current payment then the deal might make since for a sandwich lease. If the situation was presented in a way where you wanted to help that home owner out then this might be a win-win for all involved.

Simply offer to take over the payment from the home owner and do a sandwich lease. You can put an ad out there for a rent or lease to own. When you find someone ask for a deposit up front to cover any back payments, repairs and what you would like to pay yourself for setting up the deal. Set the rent at an amount that you are happy with that will bring in a positive cash-flow each month for you above the payment of the property and then set a price that you would like to get paid when you sale it in the future.

Learn more about sandwich lease’s from Greg Murphy in Dean’s book: Your Town Your Real Estate Profits, page 39.

So I guess this is just one example of how you might make a deal happen that would have not made since to a lot of people.

If it is a short-sale then this would not work, but this can work for any and everything up to a pre-foreclosure.

Now I will kind of back up on what I just said. I don’t really understand the strategy myself but I do believe that people do what is called a hostile take over where they do this same thing as above with a property in foreclosure.

I’m not sure if someone can back me up on this information about the hostile take over. My understanding is that you can do the same thing. Take over the payments bring them current and then make sure the payment is made on time each and every month and what is the bank going to do.

Mr. Banker says! Oh we are going to loose money by proceeding with the foreclosure on the home owner because we would rather spend $30k or more just for that process, not to mention all other fees involved. More than likely as long as they are being paid the bank is happy.

I hope this information helped, I’m learning as I go.

As Michael said, the better you get at pre-qualifying sellers, the less time you will waste. The first time you ask a seller why they are selling, you rarely get the truth. However, it is very important to quickly establish their true motivation for selling so you will know what kind of a solution to offer them.

Thanks for everyone who contributed. These are great stuff for newbies! I copy them in a pdf file and sort them in different categories.
I graduated from finding agent 2 days ago. now taking class for sending offer and deal with seller. Thanks guys!

You don't want to tell them right off the bat that you can't pay FMV. Remember their home has sentimental attachments for them and it is worth every penny they ask for!! At least they think it is. After establishing a rapport with the seller and after DD on the property, diplomatically (as Elix stated) tell them the reasons you cannot pay that amount. Once they understand the factors involved (foreclosures as comps, any work needed, etc.), they will be more willing to listen to what you have to say. If they still won't budge, just leave it open for them to contact you in case they don't find a buyer who will pay what they're asking (and they won't). Let them know that you will be more than willing to work with them should they decide they need your services later. After a few weeks, they will more than likely contact you again or you could contact them. Just keep their name and number handy.

Shirley