For those of us who live in “Hot Zones” like California and are having difficulty getting that first offer accepted: there is hope! I’ve tried the 25:1, 50% off listing price method and returned a big ZERO! I know the method works, but I think in some areas of our great Nation the 25:1 strategy needs to be tweaked to fit our unique market. Through grueling hours of research (okay, it was rereading some information from a local wholesaler and it took approximately 20 minutes) I learned why he and his wife are successful wholesalers. They approach are market completely different. They have a method and it works. They make approximately 12 offers a week and close on 4 houses a month. Below is a quick outline of what I learned.
1. Target Your Offers; this means no willy nilly offers with no rhyme nor reason.
2. Your offer should be within 10-15% of a deal ALREADY before you make an offer.
For it be a deal it needs to be 50%-70% of FMV, depending on condition and area.
So: $200k X 60% = $120k for a deal.
Therefore, you need to find a listing no higher than $140k to offer $120k.
3. Prime times to make offers on REOs;
1) Day 1 On Market
2) Massive Price Reductions
3) Fall Out of Escrow/Closing
4) Board Ups (houses that are boarded up)
5) Trouble with the City (code violations, illegal additions, etc.)
If you come upon a hidden “gem” that has been on the market for over 90 days, and the listing agent tells you the bank is desperate then by all means shoot for the 50% of the listed price. I will be trying this method starting 8AM tomorrow morning! I will let all of you know how it goes. If you have success please share it with us. I would also like to thank Kurtis and Cindy (my local wholesaler) for their great information.
“Ability is what you’re capable of doing. Motivation determines what you do. Attitude determines how well you do it.” Lou Holtz, Norte Dame Football Coach