Chapter 5

Going on Appointments

Within a couple days, your phone will start ringing with leads.  Prepare a script for how you want to answer the calls.  Be upbeat, say thank you for calling, and ask how you can help.  The caller will typically say that they received your letter and wanted to see what it’s all about. 

If you’re mailing to a flip-oriented list, then say something along the lines of,

“I’m looking to buy property in certain towns that I like.  The best properties for me are ones that need a good amount of work.  I buy them, fix them up, and then resell them.  I can pay cash and don’t typically do property inspections.”

Many times, the owner will say,

“Well, my home is totally renovated top to bottom, has brand new everything,and believe it or not, the toilets are made of gold.”

Should you let this lead go? No! 

My reply is, “Sounds like a beautiful home…probably not a good candidate for something to flip though.  I do sometimes buy homes as rental properties, however, and this could potentially work for that. Would you be okay if I came by at some point over the next couple weeks for a quick 5-10 minute walkthrough?”

Your goal should be to get an appointment, create a connection with a prospective seller, see the house for yourself, and understand their motivation for selling.  The house could be like they said (probably minus the golden toilets), but you never know, it might need significantly more work than what they described.  Even if it is renovated, the prospective seller might need to sell low and fast for whatever reason.  Or maybe they know someone who owns a house better suited for a flip.  Or maybe it will be a complete waste of time, but you don’t know until you go.

You can also use this type of appointment to practice your pricing skills.  Be honest about what you think the house is worth.  Tell the seller what you believe the house would sell for on the open market listed with an agent and see if you’re in the same ballpark as the seller.   Then tell the seller what you would be willing to pay.  Here’s the phrasing that I use:“I think if you listed the house for sale with an agent in a traditional sale, you would probably get around $300,000-$325,000.  I don’t see anything that would keep it from selling--you’ve done a great job of maintaining the property and I don’t think there’s much that I can do here that you haven’t already done. 

Since I need to sell property for more than what I pay for it, my only option therefore is to offer less than what I think it’s worth.  To be clear, I don’t think you should go with this option if you don’t need to sell immediately.  I can close in a couple weeks without a lot of hassle, but you would definitely net much more money selling with a traditional sale. With that in mind, I can offer $225,000, all cash, no inspection, and close in 14 days. 

If you’d like to go that route, I’d be happy to move forward with those terms.  Again though, I don’t think this is the best option for you and think you should sell it on the open market through an agent. I do know a great local realtor and I’d be happy to connect you if you’d like. The seller might say no and tonever contact them again, but as long as you’re transparent about what you think the home is worth and why you’re offering less than that, they’ll typically appreciate the honesty. Sellers know that you are doing this to make money, and very rarely does someone hold it against you provided you don’t try to convince them that your lowball offer is not a lowball offer.

Keep in mind that everyone is curious about what their home is worth, so even if they don’t accept your offer, they’ve still received a well-thought-out, professional pricing analysis superior to a Zestimate for free.  If they do accept your offer, great.  You’ve just acquired a new project.  Follow through with the closing, do whatever you need to do to get it ready to sell, and list it slightly below market for a quick sale.  Then move onto the next one.

If they want you to connect them to the agent you recommended, then awesome.  Call your local agent and get a 25% referral fee.  Some states are weird about non-licensed people collecting referral fees, but find someone you can work with and figure something out.  Agents aren’t in the business of turning away referral leads.

When you do get a call from someone that owns a property in poor condition, you need to drop everything and look at it immediately.  These are calls that can lead to deals.  

Look for things like:
-Outdated kitchens:  easy to fix and great return on investment
-Old bathrooms: easy to fix and great return on investment
-Carpet: can be ripped up easily and replaced with hardwood or vinyl/laminate substitutes
-Wallpaper:  can be scraped and painted or drywalled over
-Bad wiring:  sounds scary but can usually be replaced by an electrician in a couple days
-Bad roofs:  can be replaced by a roofer in a day or two
-Old windows:  can be replaced easily (about $275/window is normal for me)

Try to avoid things like:
-Foundation issues:  can be expensive and unpredictable to repair
-Weird layouts that can’t be improved:  some layouts are not ideal and can’t be fixed by moving walls or opening up spaces.  Buyers won’t like homes that don’t flow correctly.  You’re also liable to find more problems once you start opening things up.
-Properties next to something unpleasant:  avoid homes next to highways, industrial plants, junk yards, etc.

Also look at the neighboring houses and get a feel for who lives next door.  You don’t want to buy a house next to a lunatic or a drug dealer.  These problems can’t be improved, and people don’t want to live next to problems no matter how nice your kitchen came out.  

Develop a feel for which problems are easy to fix and which problems are difficult to fix.  Shy away from anything that looks like a more complicated issue and stick to the easy, predictable stuff.
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