This month, I would like to share with you a story about a deal I closed just four days before writing this article. Keep in mind that this is an example of my average deal. I close around three deals a month, with about $60,000 of profit each — double the national average. But this particular deal, which took place on Bridle Lane, is an excellent example of how I make successful transactions through negotiation, maintaining a strong team, and pursuing the right deals in the first place.
I do a lot of marketing to local sellers. For example, I use direct mail, my foreclosure system, and Facebook marketing. But I’ve found the best leads come from motivated sellers who find us organically through an internet search.
What’s really nice about organic searches is that this method brings me better-qualified leads. When someone sees my ad on Facebook, they probably aren’t looking to sell their house right that second. But with my website and Google Adwords, my message goes directly to people who are looking for it online. In this Bridle Lane deal, the seller typed the address of their property into the Google search bar, along with the keywords “buy my house fast.” Because the property’s address is in my target market, my website popped up as the first result.
As a side note, I use two different websites — one for buyers and one for sellers. These are two completely different markets and they need two completely different messages. I always recommend avoid combining their buying and selling websites into one website. You can check out the website I use to locate motivated sellers like the one on Bridle Lane at http://www.JayBuysHousesFast.com.
What Makes a Motivated Seller?
This seller had four motivating factors that encouraged them to sell — and sell quickly.
- They were out-of-state owners living in Ohio.
- The house was vacant, meaning it was a non-performing asset.
- The house was only halfway rehabbed, and the owners didn’t want to come up with the money to finish the project.
- The owners would not list the house with a realtor in its current condition. The house was uninhabitable, which meant a traditional bank or mortgage company wasn’t going to lend money for this house.
All these factors meant this seller could not go through traditional ways to sell their house. They needed a more efficient opportunity for their situation. Fortunately, with private money I could offer this seller the solution they were looking for, a fast, clean closing.
Simple Step by Step Process
From locating to closing the deal:
- After finding my website, the seller fills out the property information, including their email, phone number, and the address of the house they want to sell. When they click submit, this information is emailed to me and my acquisitionist.
- My acquisitionist is the first person the sellers talk to. She fills out a property lead sheet with the details I need to determine whether this is a deal worth pursuing, including whether or not the house is vacant, whether there’s a mortgage on the house, and what kind of repairs are needed. She also negotiates price with the seller, bringing me the lowest price they are willing to close on.
- After my acquisitionist and I discuss the prospective deal, my Realtor calculates the comparative market analysis (CMA), while my contractor prepares a budget sheet for what all the repairs on the property will cost.
- If the “Spread”, (the difference between the after repaired value and the purchase), makes sense, then my acquisitionist sends my contractor to the property to estimate repairs.
- Once I have all the numbers from my team, I look them over and determine my offer.
- My acquisitionist makes and justifies the offer.
- My real estate attorney has the authority to sign paperwork on my behalf because I have given them power of attorney, which greatly expedites closing deals.
The Numbers on Bridle Lane
When my acquisitionist first spoke with this seller, their asking price was $100,000. By the time she got off the phone, she’d gotten him to drop the number to $80,000. Later, my Realtor reported that the ARV of the house would be $160,000, and my contractor estimated the house needed $20,000 worth of repairs. Once the repairs were done, I knew I could put the house on the market for $169,900, because of the way we renovate.
The amount of time between the seller finding my website through their Google search and the closing of the deal was just six days. During those six days, I spent just an hour and a half of my time on the deal. That is the real value of automation.
The Big Lesson
When people hear the word “automation,” they sometimes think technology. But for real estate investors like us, it’s important to automate your team too. Choose the right team and train them well. Your acquisitionist can gather the information you need to determine whether a deal is worth pursuing; having a good relationship with your real estate agent and contractor means you get quick CMAs and repair estimates; and working with an attorney you trust can keep you from having to drive all over town just to sign papers.
Automating your team helps you fulfill your promise to sellers that you can buy their house fast. And of course, remember this was all possible thanks to the private money I already had lined up, ready to close quickly!