Pricing Your Wholesale Deals
As you know Real Estate Wholesaling is one of the easiest, fastest profitable niches in Real Estate investing. But you must know how to price your properties in order to sell them quickly. You will see a lot of experienced wholesalers will post checks of making 10, 20k, even as much as 30k a wholesale deal. But for most volume based wholesalers there checks might be as little as 2-3k but they will get 8-10 of those checks a month.
Now with the foreclosure market selling properties as low as 30-60% market value. This allows room for markup when flipping properties. If your selling your properties to a retail buyer your profits will be larger. Now when pricing your deals you should always price a little higher. There’s always room for negotiation so buyers will low ball you. But if you have your properties priced a little higher, you will probably get the price your were expecting to get. Now after shopping it around for a few weeks, if you find yourself not getting the price your expecting, reduce the price and start to re-shop the deal.
I’ve seen other investors mark there deals up only 2k, to than have end buyers say they would only pay the price under what the investor has it under contract for. It’s best to come up with a system of what’s the lowest you would take on each deal. For instance you can say you won’t take lower than 3k on a deal, or either a certain percentage
Top 10 Tips for Flipping a House
Buying, renovating and selling a house for profit, known as house flipping, is the latest buzzword in real estate. There is no magical formula to ensure success at flipping houses. However, there are essential tips to help investors earn more money.
1. Do not get emotional about house flipping. It is after all a business. If the numbers do not work, proceed to the next property. Some investors commit the mistake of being too attached to the flip that they sell at a high price and end up holding the flip longer thus reducing profit.
2. First impressions count. Pay attention not just to the inside of the house but the outside as well. You cannot show off all the upgrades done inside the house if potential buyers are turned off by the outside appearance of the house and its surroundings.
3. Personal tastes are a no-no in a flipped property. Your flip needs to be attractive to buyers, not you. You should define who your target buyer is and what is his/her preferences. Color is a vital part of flipping houses. Stick to neutral colors especially when it comes to painting and laying the carpet.
4. Spruce up the kitchens and the bathrooms. They will noticeably increase the price of a house. But be sure that fixtures and appliances match the target price range. If the kitchen and bathrooms look clean, sleek and updated, the house will sell faster and for a higher profit.
5. In house flipping, time is money. After making a detailed list of renovations to be done, come up with a timeline. A timeline is an important way to let contractors know when the next group of workers needs to be in a specific part of the house. One rule of thumb is to work from top to bottom and tackle the big work projects first.
6. Hire a good contractor. You cannot be at the job site all the time. This is where the contractor comes in handy. He can keep a close watch on your time line and also the part of the budget that is his responsibility. He can keep track of problems and readily find solutions. The easiest way to find a good contractor is through referrals.
7. Be ready for paperwork. There are loads of paperwork that accompany house flipping. The most important paperwork you will have to attend to are permits. It takes time to obtain permits so you need to apply for them before work begins. Not having the necessary permits can cause work stoppage and this cost money. Contracts and receipts are doubly important. Be sure to keep them. You also need to obtain insurance coverage not only on the property but the workers as well.
8. Keep track of your progress. Throughout the entire house flipping process, you have to constantly monitor your progress. That way, you will know at any given time where you stand on the project. This will help you keep focused. Time is of the essence in house flipping.
9. Start small or simply, and then work your way up. Your first house flipping project should only entail cosmetic work. You may not get a huge return on your investment but you will surely learn valuable lessons and develop experience.
10. As with any business venture, expect the unexpected. You will certainly encounter something that you simply did not expect. It may be a problem that appears hours before the transfer of ownership. You will almost always run at least a little over budget or hold the flip a little longer than expected.
Where to Find Motivated and Distressed Sellers
by: Alex Pardo
Many different types of motivated sellers are looking to sell their properties outside the conventional real estate advertising cycle. These distressed sellers are absentee landlords, probate estates, divorce filers, those looking for new jobs or school districts and REO\’s or real estate owned properties, which is a property taken back by a lender, usually a bank during foreclosure. You can get instant REO leads with FreedomSoft.
Looking outside the conventional real estate advertising cycle such as signs, websites and classified ads, here are some ways you can find motivated sellers to include in your marketing.
Start searching the Internet. Many banks maintain online lists of foreclosed properties suck as Bank of America and Chase Mortgage. Some great websites that allow you to search by foreclosures are Realtor.com, Zillow.com and BuyBankHomes.com. BackPage.com and CraigsList.com are also great places to look for motivated sellers who are in pre-foreclosure, divorce, bankruptcy and probate.
Some lenders hire an asset management company to handle foreclosures on the lender\’s behalf. Wells Fargo uses Premiere Asset Services, subprime mortgage companies use HomeEq Servicing and Keystone Asset Management is a national agency that deals with defaults.
Search for government agencies such as Housing Urban Development, or HUD, and Fannie Mae for foreclosure homes and the Department of the Treasury for homes seized by the Internal Revenue Service.
While some experts agree that auction companies often get higher prices due to the auction frenzy created among its bidders, you can get lucky and find a real gem at one. Real Estate Disposition Corporation, J. P. King, United Country Auction Services, Williams & Williams and Bid 4 Assets are some auction houses to check out.
Foreclosure.com and Realty Trac are web-based foreclosure companies who charge a fee for providing you with a list of foreclosure properties. They reason that it takes time, trouble and expertise to locate and assemble accurate national foreclosure lists. You may find it is worth the fee to let these companies search for you.
One of the most effective ways to find wholesale deals is hiring a bird dog. Bird dogs can range from casual contacts, such as delivery drivers, mail carriers and service people, to professionals trained to scout for properties. Look for high school or college students who want to earn extra money or new investors trying to break into the business. Have your bird dog take photos of the front and back of the property and fill out a detailed form about the property, then pay them a referral fee or a per-lead fee.
Be aware that not all foreclosures are great bargains and you can run into unexpected and costly problems. If you are inexperienced at buying foreclosures, you may want to hire a real estate agent for guidance and assistance.
In addition to these creative ways to find distressed and motivated sellers, continue to use conventional real estate advertising such as direct mailings, bandit signs and newspaper ads. Attract them to contact you and build a rapport with them. Word of mouth is a great but underestimated marketing tool.
A consistent flow of motivated seller leads is probably the most important aspect of your real estate investing business success. FreedomSoft will automatically provide many instant sellers leads for you as well as capture and maintain leads you obtain on your own.
A consistent flow of motivated seller leads is an important aspect of your real estate investing business success.
Tips for Making Lowball Offers
A common fallout of a real estate buyers market is the tendency for drawing the lowballers out of the woodwork. More and more buyers who may never have considered this type of negotiation, now feel they have the upper hand and are more likely to submit a lower than normal offer.
What is a lowball offer? Although not written in stone, generally an offer lower than 90 percent of the asking price is considered a lowball offer. The biggest risk of this type of proposal is that the seller will be completely insulted and may reject any further attempts at negotiation. If it’s done correctly, however, the seller will make a counter offer and the games are afoot, often leading to a sale where both parties are happy with the results.
Here are some tips to help you find some middle ground between seller and buyer when submitting a lowball offer:
Shop when the market is slow: The best time to buy a house is between Christmas and New Year’s Day. You’re less likely to run up against other competitive bids and the seller will be happy to get some action during this slow time. Keeping this train of thought in mind, one of the worst times to make a low offer is during the spring when everyone is out shopping for a house.
Don’t be insulting: There are shameless buyers out there who will submit a ridiculously low offer just to test the waters. This generally upsets the seller and sets the stage for some tense and unpleasant dealings. You’re offer should not be so low as to be insulting.
Justify your offer: Support your low bid with facts. If the home is priced higher than market value, explain why and provide comparable sales in the area that support your argument. If there are deficiencies in the house, list them along with the estimated cost of repairs.
Know your seller: Try to discover the homeowner’s reason for selling as well as their level of desperation. Perhaps their moving date is quickly approaching, or maybe the home has been lingering on the market for months and the owner is fed up with open houses and maintaining their home as a showplace.
Understanding your seller’s motivation can definitely add leverage to your negotiation power. On the other hand, if a seller is happy to remain where they are until they get their asking price, you could be closing the door on any future counter offers. Some buyers focus only on dealing with sellers who are motivated for a quick sale.
Keep your offer simple: Keep your offer as straight forward and simple as possible. Don’t ask for anything unreasonable or out of the ordinary, shorten the inspection periods, and if possible waive some of the contingencies. You’re getting a good deal, you may have to settle for a few imperfections. Show that you are serious and ready to buy.
Don’t stop at the counter offer: In negotiating a home sale, it’s almost an unwritten rule that you will make an offer and the seller will counter. Don’t pass up your chance to offer a second counter offer; keep the deal alive as long as you can.
It’s not over, until it’s over: If your offer is rejected and you aren’t prepared to go any lower, track the listing for awhile. If it sits on the market for another 2 or 3 weeks, resubmit your offer; who knows, that original deal may start to look pretty good.
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