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Sellers Options Part 4: Fire Sell – Sell It Today!
Joe: Hey, it’s Joe Crump. This is seller options that I’m talking about. These are all the options that a seller has in order to sell their property and this is just one of those options. And that’s, they can sell it at a fire sale, they can sell it dramatically below market value. And here’s, and by the way, this is a series, it’s an eight-part series, I’m talking about all the different seller options. There aren’t very many seller options. And if you understand them all, it’s going to make a huge difference in the way you talk to your sellers and it’s also going to show that the thing that you’re offering makes so much more sense then what they’re trying to do. And if you speak to them intelligently and competently and they see the value of what you’re offering, it’s going to make sense to them.
Joe: So, anyway. Selling it on a fire sale. Sometimes sellers want cash now and don’t want to mess with waiting around to get top dollar. You can move your house quickly if you discount it deeply. I usually try to encourage sellers to use one of their other options, but there are times when they want to have it done and over with, get a bit of cash out and move on. This can only happen if they have a lot of equity in the home.
Joe: You can still sell at a discount if you have very little equity, but it’s more painful. The other way you can sell at a discount if you have no equity is by coming to closing with money. I’ve had folks who owed more on the property than a fire sale price would bring them and they wanted to sell it and get out of it and get on with their life so they came to closing with money to get on with it.
Joe: I had a guy sell me a property for $20K, it had a $70K mortgage on. And it needed a lot of work and he didn’t want to do it. He just wanted to move on with his life. And I explained to him what his other options were and he said, no, that still makes sense. I said, that’s great, here’s the $25K. Now, if you don’t have you don’t have $25K like I do to go out and buy that property, you can wholesale that property, so you could get an assignment, you could get a purchase agreement on it that’s assignable, go find another buyer, charge them $5,000, they buy it for $30K, you get $5,000, the seller gets $25K, they’re cashed out, they’re done, over with, and it’s done in a couple of weeks.
Joe: These types of deals happen very quickly and you can make a lot of money. And that’s the typical concept of wholesaling. There’s not as many deals out there that you can wholesale as there are that you can do the For Rent Method and that’s why I teach the For Rent Method as the primary method. And then as you start to wholesale and start keeping properties, you’re going to come across these types of deals going after the same type of leads that we go after going after the for sale by owners.
Joe: So, I either buy properties like this with my own cash or sell it for a profit to another investor. Again, this method isn’t right for everyone, but sometimes it’s not about the money. Sometimes it’s about getting that house out of their lives. The pros are you get rid of the problem once and for all. The cons, it’s the most expensive way to sell your home out there. You trade money for time. That money makes it happen a lot faster than just about any other method.
Joe: The analysis, only do it this way if you’re in an urgent situation with few other options. The only way it’s going to make sense for an investor to buy with cash is if it’s a great deal. Moderately good deals won’t work. The numbers have to be very attractive because the risk on cash purchases like this are higher than other types of investment. Don’t let anyone push you into this kind of deal. Weigh all your options and then pick the one that makes the most sense to you and your family.
Joe: I’d say this option makes sense to the folks I speak to 10% to 20% of the time. In a way, it’s like having open heart surgery. No one wants to have their chest cut open, be in terrible pain, have a long recovery and get charged outrageous prices to have that done. But, if the alternative to surgery is dying, I’d pick the surgery every time. I know that’s a bit dramatic, but sometimes a situation with a house is dramatic. So this is the way that you talk to somebody as far as if they’re interested in doing an undervalue sale. I think it’s the right thing to do to make sure people understand what their options are.
Joe: I’m not out there trying to steal the equity from somebody’s property, some old lady who could give that equity to her grandkids. If I can show her a better way to do it that she likes, great. Often I find, though, that she just wants to get out of the property and she’ll give it to me at the discount that I need to make a profit, and I try to make the most profit that I can. I try to get the best price that I can and turn around and make money on that deal. Or, you know, if you don’t have the cash, assign that to someone else.
Joe: So, that’s selling a property at fire sale prices. And by the way, there’s two ways that you can sell a property for sale by owner. One is you sell it on terms, and two is you sell it dramatically under market value. So you can get, on terms, you can get full market value. Sometimes even a little bit above market value. But if you want cash out of the deal and you’re doing for sale by owner, the best way, not the best way – the fastest way to sell that property is to dramatically reduce the price.
Joe: Honestly, though, if I want to try to sell my property for cash, I’m going to put it on the MLS, I’m a real estate agent so I don’t have to pay a commission, but if I’m working in a different state I’ll work with an agent that’s local to that area, and I will pay a real estate commission if I want cash out of a deal. If I’m just doing a quick flip as a rehab, maybe.
Joe: All right. Hope that helps.