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Ninth Week – A Deal Is Born

Danny Johnson / 29 comments

These are the results of the ninth week of opening up of my business for you guys to see how my wife and I are building back up to 30 deals a year. If you missed the first post explaining what I am doing, please visit This Post.

These are the things I did this week:

FINALLY! Got Another One Under Contract
Finally, got another property under contract. This one should be a sweet deal. Unfortunately, I won’t be sharing the details of it until after it is sold because I will be attempting to wholesale it first. Don’t want to show all my cards. You understand. I will, however, show the details once I’ve sold it.

This is a case where I did not think the seller would be very motivated being that he already had contractors working on the house. I went by and looked it over and decided on a figure. Honestly, I was ready for him to get angry with my offer, but I made it anyway. He went on to inform me that he had hoped to get X (which was just 10k more than what I was offering). I hadn’t expected it and was very interested in the house at that price.

Just to make it seem more like a negotiation, I told him I would need to go and see it again to see if I can come up to his number. The next morning I was there at the house and so was he. I told him I would come up 5k at most, which was 5k below what he wanted. He told me he would have to think about it.

Here is a very important lesson that everyone should learn. When someone gives you a number that you like right from the get go, do NOT immediately take it (unless there is a lot of competition and you are at risk of losing it). People need to feel like they got the most they can possible get. Sometimes if they don’t, they regret how the negotiations went and can get cold feet and back out of the deal. Even if it’s just a couple thousand dollars or terms, you should really negotiate.

He ended up calling me back that evening and was ready to deal. I tried to meet him right away to get the contract but he was already out of town and would be back in the morning. So I scheduled to meet him first thing in the morning.

The seller didn’t tell me this, but his attorney was to meet us there also. The attorney proceeded to try and negotiate everything, including price, which of course had already been agreed upon. After he talked about all that ‘he’ wanted, I told him I was not there to negotiate. The seller and I had already agreed on the deal and that I was paying for some things that I do not normally pay for.

After a brief spell, he came at me with, “you know, you are not the only person that buys houses.” To which I responded, “And this is not the only house for sale. So I guess we are in the same position, aren’t we?”

After realizing that there would be no bullying, we had a good time. All went well.

Mailed Drive For Dollars Mailing
49 drive for dollars handwritten letters were mailed today.

Sent Probate Letters
Sent out 16 probate letters, but did not get any new probate leads this week.

Airpark Seller Called Back
I had made a pretty low offer on the house that is on an airport. He didn’t take it and said he had higher offers. He called back yesterday and left a message to call him. Thought this was going to be another situation where they call back accepting your offer after some reflection. He instead asked me if I knew ‘Billy’ (real name kept secret), an investor in town. I told him I did not and asked why he was asking me. He mention that good ole ‘Billy’ had offered much more than everyone else and he could not get a hold of him now. This is typical. It’s easy for someone to spout off a number, but when it comes time to follow through, they fall apart and disappear. Please do your home BEFORE making an offer. I guess after he gives up on trying to track down this maker of bad offers, he could call me. Who knows. I’m not going to wait around. But, if he does call me and wants my offer, you can be sure that I will be confident in driving to meet him and signing it up right away.

Went To Abilene To See Properties
Flew with one of our lenders to Abilene to see some of the properties he is working on up there. He’s a pilot and I wanted to go just to go flying. That is one of the best things about being your own boss and setting your own hours. The fact that I was able to get a call this morning and then end up running out to the airport and taking the day off really makes everything worth while. We did end up getting stranted out of town about an hour away due to weather though. Forecast was much better, but didn’t happen. Had to have someone drive out to pick us up. At least we didn’t get stuck in Abilene. That place is about 5 hours away by car. This is why my post is later than usually this week. It’s midnight now and I am just now getting around to it (my excuse for bad grammar, typos, etc. – at least I have one this week).

Marketing

Total Leads This Week: 10

  1. Bandit Signs – 0 – None have gone this week and I’m sure most of the others were removed with the sweep last week.
  2. Yellow Pages – 1 – For a picture of my ad, visit the ‘The First Week’ post.
  3. Buying Website – 9 – None were very good. For a link to my site, visit the ‘The First Week’ post.
  4. Drive For Dollars – 0 – The new letters went out today, so we should have some leads from this next week.
  5. REO – 0 – Nothin’. I haven’t called any in a couple weeks but am supposed to meet up another for a visit in her office (she really just wants to see my youngest daughter again).
  6. Probate Mailing – 0 -Nada, but the new letters were just sent out today.
  7. MLS – Made offers on several that have been on the market a while.
  8. Wholesale Deals – There were some, but they all stunk and I didn’t bother to count them.
  9. Absentee Owner Mailing – Nothing.

Leads Analyzed

  1. Another Separation Situation

    [Source: Website] 

    Homeowner wants to sell a 3 bedroom, 2.5 bath, 1000 sf house.

    Here are the numbers:

    Asking Price:$Make An Offer
    Amount Owed:$53,000
    Repairs:$Not much – cosmetic (unconfirmed)
    After Repaired Value:$90,000
    Max Offer:$59,000 minus repairs

     
    Seller wants to sell because she is separating from her partner. If the house does in fact need just minimal cosmetic repairs, I might be able to buy this. I told them I would probably be buying right above what they owe. She was really, really anxious about getting rid of the house. She said she would have to think about it as she had hoped to get a lot more. I am following up.

  2. New Construction in Bad Area

    [Source: Website] 

    Homeowner wants to sell a 3 bedroom, 2 bath 1300 house built in 2009.

    Here are the numbers:

    Asking Price:$60,000
    Amount Owed:$0
    Repairs:$cosmetic (uncomfirmed)
    After Repaired Value:$69,000 Owner Financed
    Max Offer:$35,000 minus repairs

     
    Seller is needs money and wants to sell this house. Sounds like a good house, but its location is not so good. This might make a good owner-finance house (sell side) if it barely needs any repairs. Told him my offer would be in the 30’s. Gave a ballpark because he did not seem that motivated and his asking price was sort of high. He is going to consider something that low and call me. I will follow up.

  3. Small House Weird Situation

    [Source: Website] 

    Homeowner wants to sell a 3 bedroom, 1 bath, 850 sf house.

    Here are the numbers:

    Asking Price:$I’m Confused
    Amount Owed:$53,000
    Repairs:$cosmetic (uncomfirmed)
    After Repaired Value:$70,000
    Max Offer:$45,000 minus repairs

     
    Caller was not the seller, but calling on behalf of the sellers. He put me on speaker phone and I had to ask them to repeat everything ten times because I could not understand them. Very annoying. Weird situation and I’m not sure if I fully understand. The sellers bought the house to allow the person living there to remain in the house (was getting foreclosed on). Now the sellers are paying $1,500/mo on this house and cannot afford. The person they are trying to keep in the house IS NOT PAYING! AND THEY ARE ASKING ME TO BUY IT AND KEEP HIM IN THERE! WHERE IS THE LOGIC?!?!?! WOW. Not sure how that happened. Too much is owed and I am not spending anymore time trying to figure it out.

  4. Expensive Commercial Property

    [Source: Website] 

    Homeowner wants to sell a 3 acre commercial lot on one of the best strips of highway outside San Antonio.

    Here are the numbers:

    Asking Price:$1,200,000 (asked what would be the least and he knocked off a quarter of a million dollars – so $950,000)
    Amount Owed:$?
    Repairs:$doesn’t matter
    After Repaired Value:$???
    Max Offer:$??? don’t know

     
    This one got me really excited when I saw it. Through a mishap, I was informed the seller was facing foreclosure and owed $215,000 and that is all they wanted. I would have stopped everything and put that under contract. When asked, the seller said he was in no hurry to sell and the price is $1,200,000. Big difference. This appears to be retail, but I don’t know for sure. If anyone is reading this and deals with commerical properties like this in SA, give me a call.

  5. Out of Town House

    [Source: Website] 

    Homeowner wants to sell a 3 bedroom, 2 bath, 2300sf, 2002 house in a town 45-60 minutes away.

    Here are the numbers:

    Asking Price:$74,000
    Amount Owed:$55,000
    Repairs:$finish out (built 2002, never finished)
    After Repaired Value:$80,000
    Max Offer:$50,000 minus repairs

     
    Seller lost job and wants to get rid of the house because he can’t afford to finish it. This is just too far and he owes too much. Have to move on to the next one.

  6. Facing Foreclosure

    [Source: Website] 

    Homeowner wants to sell a 4 bedroom, 3.5 bath, house in a good neighborhood.

    Here are the numbers:

    Asking Price:$220,000
    Amount Owed:$210,000
    Repairs:$nothing
    After Repaired Value:$225,000
    Max Offer:$146,000 minus repairs

     
    Too much is owed. Next.

  7. Another One Outside Town

    [Source: Website] 

    Homeowner wants to sell a 3 bedroom, 2 bath, 1700sf house outside of town (Pleasanton).

    Here are the numbers:

    Asking Price:$Make An Offer
    Amount Owed:$43,000
    Repairs:$very minor (unconfirmed)
    After Repaired Value:$???
    Max Offer:$??? minus repairs

     
    Seller is facing divorce and has no job. Things just aren’t going well for him. Passed this one on to a wholesaler because it is just too far away and the numbers weren’t looking beneficial.

  8. Townhome in “Really Bad Neighborhood”

    [Source: Yellow Pages] 

    Homeowner wants to sell a 3 bedroom, 2 bath, 1700sf townhome in gangland.

    Here are the numbers:

    Asking Price:$Make An Offer
    Amount Owed:$0
    Repairs:$A LOT she says
    After Repaired Value:$35,000
    Max Offer:$10,000 minus repairs

     
    Seller is older and has moved in with her children in Austin. She kept mentioning how bad the neighborhood is and is getting. The house needs lots of repairs. Sounds like a bad combination. Next.

  9. Nice House, No Hurry

    [Source: Website] 

    Homeowner wants to sell a 4 bedroom, 2.5 bath, house in a great neighboord. The numbers don’t matter because they just want retail price, cash, as-is, close quickly. Yeah, right. Didn’t spend more than 3 minutes on the phone and even that was too long. Next.

  10. Owe Too Much, Nice House

    [Source: Website] 

    Homeowner wants to sell a house in a nice neighborhood. Had tenant that moved out and cannot afford 2 payments. Owe $150k and worth $160k. Might be a good sub2 for somebody, but not me. There needs to be room in there, even if sub2. If you buy sub2 without much equity, give me a call. Next.

Summary

Not as many leads this week. But I did get one under contract this week. So, even though I only had 10 leads this week, this is a better week than the last one.

Plans For Next Week

  • Make Lots Of Offers
  • Put Out More Bandit Signs
  • Get More Probate Leads
  • Get Another One Under Contract



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29 awesome responses to “Ninth Week – A Deal Is Born”

  1. John on

    Danny
    What do expect to make on that wholesale deal?? Also, what marketing source brought you the lead?
    Thanks

    John

  2. John on

    So kind of like a “wholetail” deal?? Tom Torrant had one on his site that he got from direct mail. He said the ARV was $220k, bought it for $110k and planned on selling it for $145k to an owner occp. He also closed on his as well, then put it on the MLS.

    John

    p.s. Can you give the ARV and what you bought it for?

  3. John on

    Good luck…..hope you make a nice profit!

    John

  4. John on

    Danny,
    I know you don’t want to give details number wise, but how did you present your offer to the seller and get it at a great price? Did you just throw a number at them and they took it? This is where “the rubber meets the road”……alot of people would be interested in the negotiation side of the deal.

    John

  5. Don on

    John,

    Congrats on your property under contract. I have a property under contract as well. You mentioned that you are going to purchase the property then sale. I assume you will list the property in the MLS. How do you present the offer to investors when you don’t purchase first? I’m considering offering to investors first. If I don’t get any bites in the next couple of days purchasing the property and listing in the MLS. Your thoughts?

  6. Bilgefisher on

    Danny,

    Thanks for the update on the negotiations. Some very helpful negotiating tips in there. Congrats on such a great deal. Hope all follows through for you.

    Jason

  7. Don on

    Thank You Danny !!!

    I will take your information and run with it. I really appreiciate the valuable information.

    Don
    Washington, DC

  8. Elizabeth Blazina on

    Danny,
    A newbie here and just wanted to say Thanks for sharing. This has become my breakfast for champions in the mornings. I was hoping you might touch upon how you set up and prescreen your investors when you are wholesaling?
    Thanks again
    Liz

  9. Aaron Schwartz on

    Awesome blog! I’m an investor in Abilene and was curious if your lender who has properties in Abilene, lends in Abilene? Thanks

  10. Larry Copling on

    Danny:

    For those “experientially challenged” readers among us, can you take a moment to explain the difference in exit strategies? For example, if you “bird-dog” the property, what do you do to the property, as opposed to “wholesaling” it, or adding it to your portfolio (buy/hold with tenants or tenant/buyers)?

    Great information here, my friend!

  11. Nate K. on

    Dumb question, what is a probate letter?

  12. chris on

    “I put it in contract”
    If you find a seller who is ready to sell, how do you “put it in contract” — I am talking about the mechanics, paperwork, etc.
    btw I must say you are very generous with your sharing of your experiences — you could easily sell this advice for profit. But you must do it because you want to be helpful and you reallt enjoy sharing with aspiring venturers. Thank you!

  13. Nicholas on

    Danny,
    This is a great blog, I really enjoy it. How do you figure out the repair costs? Are you asking the homeowner on the phone what needs to be done and then estimating repairs based upon what was required on other jobs? Or are you visiting each house to gauge repairs?

    Also, what is the process to close a contract w/o a realtor? Do you use an attorney or other professionals?

    Thank you.

  14. Nicholas on

    Thank you!

  15. Mike on

    Danny, Danny, Danny!!! Man I thank God for you and all that you do! I thank you and your wife for all that you guys are doing. Question… How did you find a realtor to help you with comps and DOMs and cash buyers? I’ve reached out to numerous agents and they don’t want to help! I’ve tried to explain how it all works and it just seems so foreign to them, mind you these are agents that work with investors. Any advice?

  16. jessica on

    hi Danny, i was wondering if you could explain a little about the buying process for you. we are looking to start marketing to owners and are unsure of how to go about getting it under contract and who takes care of the legalities, etc. Where do yo get the paperwork to write the offer with signatures, etc., what do you do next? Title agency takes care of the rest or a real estate attorney? If you could just outline the process that would be great!