My Deal Went South !
Hi All,
Buyer said he'd sell us his ugly house for $50 K. We asked him if that was the best we could do - ( we offered all cash and offered to close quickly ) he said "yes, that was the best he could do"
We went to inspect the house with the hope of making a counter offer anyway.
When we called back today he told us he had SOLD the house for $42K.
Please tell me what we did wrong.
The house was NOT previously on the market. We went and found this Ugly house. The time frame from our inital phone call to " I sold my house " was four days.
Broke,
You didn't necessarily do anything wrong, except possibly be a little slow. You have to remember when people are calling you, they are calling everyone else. The good news is that there is always another deal right around the corner.
Now, just for giggles, what was the ARV, and did he say how much work it needed?
brokenomore,
Glad to meet you.
Did you talk on the phone or were you face to face with the owner when you were asking questions?
John $Cash$ Locke
[addsig]
Man, that must be a bummer. Sorry about that. Don't let it get you down. There will be others
Actually, you *didn't* have a deal yet. You just knew about a deal. It's not a deal until you have a writeen contract with the seller.
Had you met with the seller immediately and got the house under contract with a contingency in your contract that states subject to a home inspection, you could have delayed the home inspection instead of the close of the deal. Four days is a long time for someone who motivated to sell.
If you have a good deal, then get it under contract. You can always give yourself a week in the contract for home inspection.
I hope your next deal goes better. Consider this one of those expensive courses in RE investing. Something you wish you hadn't done, but that you can still learn from.
Keep up the good work!
Robert
[addsig]
Yes, actually it is quite discouraging. How do you know if what they say is their lowest acceptable offer really is . He did say he wouldnt take less than $50 then sold it for $42.
Nest time though, I will move faster. It was defintely an expensive lesson, but one that I have learned from.
Also the suggestion about getting the house under contract was an excellent one. And a step that we missed. I think Legrand did mention it in his course. I suppose we just wanted to check it out first but in retrospect we could have gotten out of the offer to purchase after the inspection.
At any rate, thanks SO much for all the support.
One of the many quotes I remember from my Miller/Schaub seminars was
"Never steal in slow motion"
You sould have inspected the house that day and made an offer that day.
"Never steal in Slow Motion"
Words to Invest By...
A learning Experience Indeed !
Quote:
On 2004-09-17 21:08, brokenomore wrote:
How do you know if what they say is their lowest acceptable offer really is .
The answer is you don't, but what you do know is that their lowest acceptable offer is their opening negotiating position. The other thing you know is that everything is negotiable. I went to one seller who had a beautiful house. It was in a low income area, and I knew that if I could get it at the right price, I could move it very quickly. He told me that his absolute lowest offer was 35K, that he certainly would not accept less than 32K, that anything less than 30K would just be unacceptable. He did this in one sentance. I just stayed quiet, and let him talk. I would have paid 35K if I had to. Finally, after it was obvious that he wasn't going to talk himself down any more, I offered 27K, and told him I just couldn't go above that number. He asked me if I thought I could go 28K. After some theatrical hemming and hawing, I caved into his offer. He was happy, because he really beat me up on price. I was happy because I was going to make a deposit at the bank.
Brokenomore:
In this business, time is of the essence. If you have a good lead, you have to act on it and get that contract signed ASAP. There are other 'shark' investors who will come in right behind you at a moments notice.
Next time you line up a great deal, act on it quickly and if the numbers make sense get it under contract and open escrow ASAP.
Best Regards,
Jeff Adam
[addsig]
John Cash...Everything was done by phone....
Im wondering though, Someone suggested an escrow account. At what point should I have used this?
brokenomore,
I felt you were trying to put this deal together over the phone this is why I asked, first mistake on why you did not put this deal together.
During the art of negotiation you need to be in front of the seller, watch their body movements, facial expressions when you start to negotiate. He says $50K you say $40K and somewhere in-between the price is cemented.
When you reach the number that makes sense to everyone you take out your puchase agreement, give them some cash or a check as a deposit then hand them a pen and say sign here.
Here is what my take happened after the phone call, he talked with a neighbor or friend and said he wants to sell his house and has someone interested. The friend or neighbor reaped the benefits of what you started.
From now on if someone says they want to sell, tell them you will be right over, get in your car and get face to face with the seller, this is how you close deals.
John $Cash$ Locke
[addsig]
John,
Do you actually give sellers money, or a promissory note, or EMD with your title company. My rule of thumb is no cash to the seller.
bnorton,
At the house with the seller I fill out a Buy Offer Acceptance & Deposit Receipt Agreement. You now have a legal and binding Agreement to purchase the property.
I give the seller a deposit and we sign the agreement. When I use a Title Company, the Title Company calls the seller and sets a time for the rest of the closing paperwork to be signed. The balance of the money owed to the seller is disbursed out of escrow at the title company at the final closing.
This way all you have tied up is the deposit money you give them, before the deal is finalized.
John $Cash$ Locke
[addsig]
I am assuming that your EMD is a small amount. I normally use a note as EMD. It is safer, and I still have control over the deposit.
bnorton,
$10.00 dollars "cash" is the amount I give the seller and if you have done your job properly with the seller this is all it takes.
I believe the amount of the deposit is not as important as the trust you build when presenting your offer and having it accepted. Trust is the real basis of the deal, as I have seen deals fall apart with a $5,000 dollar deposit and even more.
Sometimes we are lead to believe that certain things like deposits are etched in stone as what you have to give a seller.
When handing the seller $10 bucks I say "To make this agreement binding I need to give you a deposit so here is pizza money for tonight." Of course with a very sincere smile.
John $Cash$ Locke
[addsig]
Good point. I guess in my mind $500 is my EMD of choice. But I give it in the form of a note. But even that requires building rapport. I agree with you that rapport is very important. My concern in this thread is that I wanted to make sure no one was out there writing checks for $500, $1000, or more and giving it to the seller.
bnorton,
There may be people doing this, however I am not one of them.
You would be amazed at the power of the spoken word, practice on saying ($10.00 dollars) with conviction and a sincere smile.
John $Cash$ Locke
[addsig]