Updated: Aug 18
We at Reunion Investments wanted to take some time to go over a few wholesale tips that have proven to be extremely useful in the markets where we operate.
Getting the home for less than what it's worth.
For those looking to connect with sellers in military markets, you always have to keep in mind that the cost of homes is substantially lower than that of the larger metroplex's that neighbor each market. This can create a number of obstacles for you. Why? Well, one big reason is, homes just aren't worth that much. Approaching a seller with a home that is worth $64,000 is already tough enough, but for investors, it makes it a whole lot harder. You are going to have to offer a much smaller number than what the seller is expecting in order to get your buyers on the hook. Here are a few tips to get to a price that works for everyone.
Help the seller fix the home.
I am not talking about swinging a hammer, I mean connect them with a rehab company that will do partial work to justify a higher price. I know it sounds crazy, but I always connect the seller with Code Blue Solar. They will install solar panels on roofs, but they will have to fix the roof first at no extra cost to the seller, they can give loans up to $100,000 for green upgrades such as lighting, insulation, HVAC, and windows. These small fixes allow my sellers to walk away with more cash in their pockets and my buyers have new roofs and windows without spending any of their own money. Creating as much value for both parties will always lead to success.
Breaking down the cost.
Believe it or not, some sellers don't really understand the cost associated with having to rip out asbestos from walls or fixing rotting wood. One of my most effective strategies is walking through the home with my contractor and having him explain the amount of work that goes into fixing homes that are in bad shape. At the end of our walk-through, he creates a sample invoice and shows it to the seller. This helps generate a frame of reference regarding the actual value of the home and they become more understanding and willing to negotiate the best offer for everyone.
Creating a Package Deal.
Sometimes it's easier if you can build a package of 10 homes at the same price. This allows you to make your sellers feel as though they are in an exclusive group of homeowners that have the best homes on the block. Often times you can lead with a very simple and honest, "I would like to add your home to a package of carefully selected properties to be sold to cash buyers, there's nothing you would need to commit to even if someone made an offer to buy it." This gives them more freedom to consider your offer without any big strings attached and allows your buyers to select from a bigger pool of homes. Most sellers are surprised when you call them and tell them that there is an offer for their home, they will always want to negotiate and that's something you can help them with. Creating as much value for both parties is the key to success.
Rember showing value to both sides always yields the greatest returns and is ultimately the best way to create opportunity as a wholesaler.