You work hard to generate motivated seller leads, but you have limited time available to go look at houses. So how do you go about evaluating the deal in you office, quite often while you are one the phone to make the decision to go see the property. There are quite a few tools that you can utilize, that will shorten your time spent on each deal.
1. Dedicated Phone Line: We don’t always answer our seller line, but we do want to make sure we have a message custom made for motivated sellers on our phone line and that all seller calls get called back with in 30 minutes to an hour if at all possible. We can’t always do that if we have the calls going to our cell phone or a main office phone. Here at KCInvest we utilize Google Voice to take all of our calls, which in turn transcribes the calls and emails them to the person on call that day or text the person on call that day.
We can differentiate which calls are seller’s, which are buyers and which are personal. Google Voice is totally free. You can also pay a fee to get an answering company to take your initial calls and pre-screen your sellers and then do a bit of research for you so that you only have to look at the better deals. However, we can tell you that you will have better results having an in house person taking your calls.
So why is this a tool to help you screen motivated sellers? If they take the time to leave you a message, you can tell they are at least marginally motivated. If they don’t take the time to leave a message 9 times out of 10 they are a telemarketer, but we call everyone back, just in case that 1 time out of 10 is a seller so motivated that they are calling and calling every investor they can find until they find someone to buy their house today. We find that this particular seller is too motivated and too smart and quite often creates a bidding war between investors and we end up getting priced out of a deal, but we still call them back.
2. Motivated Seller Lead Sheet: This is a form that lists out all of the things you want to ask and contains scripts on what you want to find out. Here at KCInvest, we print this out on paper and do our best to use this form every time a seller calls or we call a motivated seller back to make sure we gather all the information we need.
Here in our office we use a paper form, if you utilize a website to gather information, it may have an online form and you could also set up your own digital form using something like google forms or podio. CHere in our office, we go old school. We also may have the motivated seller lead sheet that we take notes on, but also have a script sheet on our desk to refer to when we need a reminder of what question to ask.
A quick Google Search will locate several different forms, some I found, with out reviewing in depth include:
- The Mad Scientist’s Podio Cheat Sheet
- Real Pond Scripts (more scripts that form)
- Training Program from Richard Roop & Dan Doran that includes a form
- How to Flip Houses Like a Ninja – ebook that includes a form
- Professional Bird Dogging Manual – ebook that includes links to several different forms.
You may have a real estate investor training course that you purchased at some point that also has a form in it. Whose form you uses is not as important as using one. That way you remember what to ask and have a place to record your notes in an organized fashion so you can refer back to them later if you need to. We also quite often end up with a sheet from a legal pad stabled to our form with extra notes.
3. Google: As I am talking with a motivated seller I will often just go to Google.com and type in the address to see what comes up. Quite often we find that the house is either currently listed with a Realtor or was recently listed or the seller is trying to sell it for sale by owner and we can download a bunch of photos. This does not always work, but I would say a little over 50% of the time I can find photos of the house online by just searching the address.
Take the time to scroll through any photos you find online so you can ask the seller a few more questions about the property condition. You may want to even talk to them on their first call, then do some research on your own and then call them back with a few more questions.
This is also a helpful tool to prompt more questions when you find it is currently listed for sale. For example I might find that the houses is listed by a real estate agent and seems to be a bank owned property and it is listed for just a bit more than what the seller on the phone is asking. This is when I really want to make sure that my seller actually owns the property or what is going on with the ownership of the property as in our office we are buying to resell and it’s kind of tough to wholesale a wholesale property and most of my buyers do not want a house that has been on MLS, not to mention all the restrictions that banks place on houses that they are selling.
4. Google Maps: As we are talking to our motivated seller and we find out the address, the next step we take is to pull the property up on google maps to see where it is located, what the neighborhood is like. Knowing that it is in a residential neighborhood or ccommercial area is very important.
5. Google Street View: As we find the property on Google Maps, we can click on Google Street View to see what the house in general may look like. Keep in mind that Google Street View photos are not real time photos, but they will give you a good idea of what the house and neighborhood look like as things don’t generally change a whole heck of a lot over time.
So as you are looking at the photos you can prompt new questions for the seller about the condition of the house and the neighborhood.
So now we have a good idea of the seller’s motivation from asking questions, we may know a bit more about what the house looks like from finding it online and by asking our seller some pointed questions we can have a general idea about condition, questions like:
- When was the house Built?
- How long have you owned it?
- When was the roof last replaced?
- Do you know when the furnace or AC were replaced?
- Have you updated the kitchen or bath since you purchased it?
If the seller has owned any length of time they can usually tell you when approximately updates were made, if they don’t remember the last time an update was made, you can probably be safe in assuming it is either severely dated or in poor repair.
5. Zillow: My next stop is usually Zillow, not to get the Zestimate but to learn more about the house. I like to see if what Zillow says about the house matches what my seller tells me. Do bedrooms, bathrooms and square footage match. Again I look for photos. Sometimes I can see mortgage information or if it was previously listed and by who. You might find a great deal with this house and be able to call up the previous listing agent and they may have a buyer for the house ready to go for a very quick deal, they might also have great insight into why they house did not sell.
6. Zillow Neighborhood Values: While I am still on Zillow, I want to see what Zillow thinks the value might be. I might take a look at the Zestimate (Zillow’s estimate of value) just for a laugh, but then I work to find the section where I can select houses that are for sale, for rent, and recently sold in the neighborhood. This will show me what people are asking for houses that are currently for sale in the neighborhood and what houses have recently sold for so I can get a fairly good idea of what the ARV of my subject house might be.
I can also take the time to look at the other houses that are for sale or that have recently sold to see what they look like on the inside. Quite often some of these houses will be renovated recently by an area investor, a few will be average lived in houses by area home owners and then a few will be bank owned fixer uppers. This will give me an idea of what my subject house is worth as is to an investor (the bank owned fixer upper prices), what an area home buyer would pay for a lived in house (the average homeowner houses) and what a fully renovated home would be worth.
Now I have everything I need to make an offer. I know roughly what the house is worth when I sell it using Zillow. I know what the repairs are roughly from looking at photos of the house online and talking with the seller, and can plug that into my formula that most investors use which is
Maximum Allowable Offer = (After Repair Value x 70%) – Repairs
If I am a Rehabber, I now know what to offer. If I am a wholesaler I know what my Rehabber buyer might pay.
But what about our landlord buyers, we need to know what they house might rent for and what an average rental in that neighborhood might look like.
7. Zillow Rent Values: Again I am might take a look of the Rent Zestimate for amusement. Then I will go into property values and select houses for rent to see what other houses are being offered for on Zillow.
8. RentOMeter.com: My second tool for determining what a house will rent for is going to be RentOMeter, so I can get a good idea of what the house could potentially rent for.
I can use this knowledge to possibly by pass the all cash offer and work on a creative finance offer. For example as I talk to the seller and find out that they are current on their mortgage and that their payment including principle, interest, taxes and insurance is about $400 a month and that I could potentially rent the house out for $1000 a month, that I might be able to negotiate a purchase price of a small amount down and have the seller seller finance me or lease the property to me for $500 a month, then I rent it for $900 a month and pocket the $400 a month cash flow.
9. Tax Records: We usually will also want to check out the tax records to double check the ownership of the property and to see if the seller is current on taxes. A quick search of the tax records, if they are online, is very helpful.
10. Ownership & Encumbrances.: When we get to this stage, we have usually decided we want to go buy the house and the seller has told us some things that make us want to dig a little deeper to make sure there is a free and clear title, then we go to the Recorder of Deeds to look up things that might be recorded against the house and usually end up having the title company complete an Ownership and Encumbrances Report. Here in our office, we usually take the seller at their word and write a contract based on the seller telling us there is a clean title, then we ship the contract over to the title company and have them get back with us on problems. In 15 years, we have yet had to pay for an O & E. But if you are buying fast, for example you purchase houses on the courthouse steps, you would probably want to have some sort of title search completed before you start your bidding, this is when a good relationship with your title company will be vital.
11. MLS: While we can evaluate a deal, almost 100% with out using the Realtor’s Multiple Listing Service, we never buy with out using it to verify our values from Zillow.
I will be showing you how I use these tools at the Tuesday August 11th MAREI meeting, I hope you can join us to help us evaluate a few houses. Get the details and register at MAREI.org – click on Calendar of Events and please note that first time visitors to the MAREI meeting can attend register for no charge.