Marketing Idea, with my usual concerns

[nck-mail 0]

This idea has been coming together in my head for a while, and I finally got it all out. This is it:

 

#1: Target higher end properties - in my market that's ~$350k & up

 

#2: Put an option on the property; pay a token consideration to make it legal ($100 for a $350k+ house - that's all that's required)

 

#3: Re-package it with incentives (like free landscaping service/housekeeping service/etc. for a year out of my pocket - that's like $2-$3k max), then up the price and innovatively market it to sell it.

 

My payday comes from the difference between the price the sellers and I agree on and what the end buyer pays. With large homes like this even if I put it on the market for $25k or more than what the homeowner is asking of me, it's well within what comps show for it.

 

My median market refuses L/O; if you were selling FSBO & getting multiple overmarket offers in the first few days your house is on the market, would you do something "creative"? I've nearly burned myself out with that story.

 

That's not the case with a lot of higher end homes, though. It's not that the market isn't hot for them, too, it's that they are more expensive and they're trying to sell their houses the same way median price homeowners do - which doesn't work. It's not the houses, it's the marketing.

 

In my market, I have no doubts at all that this will work quite well. If I offer to help these higher end homeowners get their house sold at no cost/risk to them, finding clients (ie, houses to sell) shouldn't be hard. I even put together a sales letter for it.

 

I'm just so wrapped up in fears that I'll end up in court over this. That realtors will cry foul and sue me, even though optioning is very legal.

 

Can any of you poke holes in this for me and help me see potential pitfalls? That way I can fix 'em before I hit 'em, or go around 'em before I hit 'em.

 

Thanks,

Naomi

[Mr.B 0]

I believe that the language of the law very specifically states that if you are acting as the principle in the deal you do not need a real estate license.

 

Anyway, you may want to call For Rent By Owner ads and offer the CA Lease Purchase. Highlight the advantages. I would bet there are tons of Landlords that are thinking of getting out of Rental Game. Lease Purchase just might be exactly what their looking for.

 

Good luck on your Idea let us all know how it works out.

 

~Mr.B

[MichaelC 160]

#1: Target higher end properties - in my market that's ~$350k & up

The thinking being that with a smaller pool of potential buyers, the seller will have more motivation. OK. Logical. Give it a try.

#2: Put an option on the property; pay a token consideration to make it legal ($100 for a $350k+ house - that's all that's required)

Why not make it $10 instead of $100? Surely a homeowner who is willing to grant you a Pure Option isn't going to base their decision on $90.

#3: Re-package it with incentives (like free landscaping service/housekeeping service/etc. for a year out of my pocket - that's like $2-$3k max), then up the price and innovatively market it to sell it.

I'm not sure what you mean here, Naomi. These incentives are aimed towards who? The seller or the buyer?

My payday comes from the difference between the price the sellers and I agree on and what the end buyer pays. With large homes like this even if I put it on the market for $25k or more than what the homeowner is asking of me, it's well within what comps show for it.

Understood. And in a hot market like you describe, I agree that it isn't difficult to bump up the price to a new level and not meet much resistance in the process.

My median market refuses L/O; if you were selling FSBO & getting multiple overmarket offers in the first few days your house is on the market, would you do something "creative"? I've nearly burned myself out with that story.

We've discussed this before. And I've spoken with a good number of people who share that sentiment. I don't agree, but that's not important. What is important is you finding what works in your area and what makes you comfortable and confident.

That's not the case with a lot of higher end homes, though. It's not that the market isn't hot for them, too, it's that they are more expensive and they're trying to sell their houses the same way median price homeowners do - which doesn't work. It's not the houses, it's the marketing.

Nice! Show them a better mousetrap, Naomi, and they'll think you are the greatest thing since canned beer. You do know more than the average homeowner. Get paid for that know how!

In my market, I have no doubts at all that this will work quite well. If I offer to help these higher end homeowners get their house sold at no cost/risk to them, finding clients (ie, houses to sell) shouldn't be hard. I even put together a sales letter for it.

I agree it is an excellent plan on paper. Now you need to test it on the street. Which means calling homeowners and marketing for them to call you.

I'm just so wrapped up in fears that I'll end up in court over this. That realtors will cry foul and sue me, even though optioning is very legal.

If you're looking for an excuse you may have just given yourself one. But, it isn't valid, and I'm sure you know that. With the correct paperwork in place, you can certainly take an option on a property, and then turn around and sell it. You're a principal in the deal. You are not brokering without a license.

[nck-mail 0]

#3: Re-package it with incentives (like free landscaping service/housekeeping service/etc. for a year out of my pocket - that's like $2-$3k max), then up the price and innovatively market it to sell it.

I'm not sure what you mean here, Naomi.  These incentives are aimed towards who?  The seller or the buyer?

 

 

This would be for the buyer. Focus on the freebies and the house is just cake. Kinda like what Sports Illustrated does: focus on the swimsuit calendar and the bobble head Lebron James that come free with the magazine subscription.

 

I'm thinking, at least around here, a free tank of gas should be plenty for the seller considering that I'm looking for the motivated ones anyway. This'll just put 'em over the top. The tank of gas comes only after I have a signed option.

 

I'm having another concern and don't know how to deal with it: The kind of people who own a $350k+ house are different than my comfort zone, the more working class/blue collar/military types. I know people are people, but there are some "class" issues I think it would be wise for me to consider. The only thing I know to do is to show up in a nice dress and shoes and just be me. I guess I'll learn the class thing as I go. The school of hard knocks is just a hard way to learn.

[Kimberly 0]

This idea has been coming together in my head for a while, and I finally got it all out.  This is it:

 

#1:  Target higher end properties - in my market that's ~$350k & up

 

#2:  Put an option on the property; pay a token consideration to make it legal ($100 for a $350k+ house - that's all that's required) 

 

#3:  Re-package it with incentives (like free landscaping service/housekeeping service/etc. for a year out of my pocket - that's like $2-$3k max), then up the price and innovatively market it to sell it.

 

My payday comes from the difference between the price the sellers and I agree on and what the end buyer pays. With large homes like this even if I put it on the market for $25k or more than what the homeowner is asking of me, it's well within what comps show for it.

 

*****Snip*****

 

That's not the case with a lot of higher end homes, though.  It's not that the market isn't hot for them, too, it's that they are more expensive and they're trying to sell their houses the same way median price homeowners do - which doesn't work.  It's not the houses, it's the marketing.

 

In my market, I have no doubts at all that this will work quite well.  If I offer to help these higher end homeowners get their house sold at no cost/risk to them, finding clients (ie, houses to sell) shouldn't be hard.  I even put together a sales letter for it.

Naomi,

 

What you are suggesting is a portion of the NO Discount system. So, yes it works. However, if I remember correctly they recommend it only on houses up to around $300k. The Dealers who use their system supposedly make $5-30k per deal. There was a guy who used to post on another site. That was the system he used. He said he would not touch a deal unless there was $20k profit in it for him. He also arranged the financing for the buyer and usually some of his "profit" was a 2nd mortgage.

 

I'm having another concern and don't know how to deal with it: The kind of people who own a $350k+ house are different than my comfort zone, the more working class/blue collar/military types. I know people are people, but there are some "class" issues I think it would be wise for me to consider. The only thing I know to do is to show up in a nice dress and shoes and just be me. I guess I'll learn the class thing as I go. The school of hard knocks is just a hard way to learn.

 

The kind of people who live in $350k homes are the same kind that live in $150k homes. The just happen to have more money and live in a nicer house. You'd be surprised at how many of those folks have a working class background.

 

If you're comfortable in a dress, wear one. If you're comfortable in slacks, wear that. If you're the most relaxed in jeans, wear that, they also wear jeans! If you aren't comfortable with what you're wearing, you won't be comfortable talking to them.

 

Kim

[puls1234 0]

I still think many out there are trying to make this business much more difficult than it is. Lets not reinvent the wheel.

 

Step 1- Read Michael's Manual

 

Step 2- Reread Michael's Manual

 

Step 3- Do Cooperative Assignments until you are blue in the face.

 

It is so easy and I continue to read posts from people who are trying to think of new ways to do this when the wheel is already invented. Put yourself in his system and reap the rewards financially. Its that easy.

 

Pete

[Doug Pretorius (ON) 9]

Pete, I was all set to say: "Yeah, but..." when I decided to do EXACTLY what you recommended, and then when it didn't work out, come back and say: "I told you so!"

 

So I grabbed the manual and reread it (straight through in one sitting), then I went online and compiled a list of all the for sale and for rent ads for the week (71 in total), then I went over Michael's property management script several times in my mind and out loud...I ended up having to rearrange it a little to suit my speaking style.

 

Then after spending the standard time staring at the phone I picked it up and made the first jittery call, then another, and then the 3rd was a breeze. WHY did I stop at #3? Read on...

 

Call #1:

Ad mentions "rent with option to buy", so it's the first on my list.

I call and I'm so nervous I rattle off the script faster than a 100m runner. I can barely hear the guy over the static on his cell, but manage to make out:

"I"d prefer to sell, but will rent to own for 12 months at $1,000/mo. Do you have internet access? Go to blahblahblah and check it out." (click) He hangs up!

 

Call #2:

Followed the script exactly on this one since there was no mention of RTO. Again, I'm so nervous that I gulp and stutter my way through the script... at least a little slower this time.

The seller's reply to "would you be interested..." is straight out of the book: "I hadn't thought about that, how does it work?"

 

Turns out this is an estate sale of a 3/2 penthouse condo and they don't have enough equity for a realtor. She's going to check with the corp. on Monday to see if rentals are allowed, but I think an installment sale will probably get passed them anyway...we'll see.

 

Call #3:

Followed the script exactly. This time I was calm and steady, just moved through it smoothly without a problem.

All the way through the seller goes like this:

"Yeah", "Uh huh", "Oh yeah, OK", "Ooooh!" ... and the clincher

Me: "Would that be something we can work on together?"

Seller: "YES! That's exactly what I'm looking for! I was thinking about refinancing and just renting it out, but this sounds great!"

 

...and that's why I stopped at 3, because I had to come straight on here and say:

"PETE, YOU TOLD ME SO!"

[Mr.B 0]

Way to Go!!!!!

 

 

~Mr.B

[Kimberly 0]

Doug,

 

Call #3:

Followed the script exactly. This time I was calm and steady, just moved through it smoothly without a problem.

All the way through the seller goes like this:

"Yeah", "Uh huh", "Oh yeah, OK", "Ooooh!" ... and the clincher

Me: "Would that be something we can work on together?"

Seller: "YES! That's exactly what I'm looking for! I was thinking about refinancing and just renting it out, but this sounds great!"

Congratulations!!!

[puls1234 0]

Doug that is awesome. If you did nothing else but call the FSBO you could get 1-2 new homeowners to do a cooperative assignment with you.

 

Pete

[Doug Pretorius (ON) 9]

Mr.B & Kimberly, thanks for the support!

 

Pete, my thinking exactly, and next week there will be 40-50 new ads to call. So even a 1% success rate, with option fees averaging about $5k, I'm looking at a nice living. Of course, as soon as I have my first CA done, in go the newspaper ads. Which I know from experience should generate ~25 calls a month. Then the flyers and the busstop benches and the radio ads and...

[MichaelC 160]

I was out most of yesterday taking care of some business in the morning and then over eating Cuban cuisine in the afternoon, (what else does one do on a hot Friday afternoon in south Florida?). This thread has a few interest twists and turns that I want to address......

I'm having another concern and don't know how to deal with it: The kind of people who own a $350k+ house are different than my comfort zone, the more working class/blue collar/military types. I know people are people, but there are some "class" issues I think it would be wise for me to consider. The only thing I know to do is to show up in a nice dress and shoes and just be me. I guess I'll learn the class thing as I go. The school of hard knocks is just a hard way to learn.

First, Naomi, the class concerns you have are understandable but, (and you will soon see this for yourself), unnecessary. Trust me when I tell you there is no difference between that $350K property owner and the $150K one. In fact, I have found the higher end home owners more decisive and better able to make decisions once they have the info in front of them. This makes our task easier.

I remember a meeting I had set up with the owner of a $750K property. This goes back about nine years. It was in New Mexico at a time when the median property price was probably around $115K. She had placed her FSBO ad in the Sunday paper, and as was my habit I was calling every ad, every Sunday.

When I dialed her number I immediately went into my pitch: "Hi. My name is Michael. I saw your ad in the paper and was wondering if you'd be interested in selling your house with a lease purchase?"

Imagine my surprise when she said, "A lease purchase? Tell me more."

To make an already long story shorter, I met her the following morning. I pull up to this spectacular home tucked away in a corner of the city I didn't even know existed. I rang the bell with sweaty palms, not knowing what to expect.

The homeowner answers the door and she is a knockout, (dressed in jeans, by the way ). We sit down and talk about a variety of things before we even discuss details about the lease purchase I am going to explain.

Guess what? She was normal. She was like, well, me. Only prettier, (although I am quite a piece of eye-candy myself ). Her concerns were no different than every other homeowner I spoke to previously and since. Her bottom line was could I do the deal efficiently and in a way that was safe and fair to her. Once I explained the deal and the benefits, I got the CA. I also got an introduction to her sister, who was an Assistant VP at one of the big title companies in town. She immediately became my go to person for all title and closing matters. Sis also gave me two properties she owned to do CA's on.

Moral of the story? Damned if I know except to say never prejudge any homeowner or any property. People are people. Some are a pleasure to deal with. Others not so. Be yourself, put your best effort forward, and only work with those you want to work with. Not vice versa. Always remember what has been discussed here before: it's the homeowner who is selling something......not us.

Hope this has helped somehow, Naomi.*

I still think many out there are trying to make this business much more difficult than it is. Lets not reinvent the wheel.

 

Step 1- Read Michael's Manual

 

Step 2- Reread Michael's Manual

 

Step 3- Do Cooperative Assignments until you are blue in the face.

 

It is so easy and I continue to read posts from people who are trying to think of new ways to do this when the wheel is already invented. Put yourself in his system and reap the rewards financially. Its that easy.

 

Pete

My name is Michael Carbonare, and I approved this ad. (Sorry. The political season must be getting to me). Actually, thanks for the generous words, Pete. I'm glad to hear things are working out so well for you!

And, Doug, welcome to the fold. There's a method to our madness as you will see if you continue the efforts you just described. I must say I was under the impression that you were doing this all along: calling FSBO's and FRBO's and pitching CA's. I guess not. Keep us posted with Caller 3. And a quick word of advice: the more time that passes from your initial contact until the paperwork is completed, the more likelihood that something will change the homeowner's mind. Do the deal quickly, Doug! Be polite and professional, but be aggressive!

 

 

 

*To this day, that homeowner and I still exchange the occasional email, and Christmas cards every year.

[Doug Pretorius (ON) 9]

Michael, I have called ads before, but not with your property management company approach. Why I didn't just start doing it the minute I got the manual? I don't know. Probably mostly because like everyone else, I hate calling ads. So I tried direct mailing and signs and flyers first.

 

Quite frankly I'm in shock at how well the script went over! First it cuts right to the chase, do they want to do a lease/purchase? Unless they're totally opposed, they're going to ask what it's all about. Then the very next words out of your mouth eliminate any question about your intentions...they know you own a property management company and you're looking for properties for your tenant/buyers.

 

The tone of the rest of the conversation (with both call 2 and 3) was exactly as you describe, Michael, they saw me as a professional offering them a service at no cost to them.

 

The questions I fielded after the "property management" statement were all related to how it works: Does the T/B pay me or the seller? How do I make my money? How long will the lease term be? Will the T/B really take care of all the maintenance?

 

I received none of those awkward questions like: Are you a realtor? or Are you an investor that wants to steal my house from me?

 

I'll post an update as soon as I have the contract signed!

[grannyguru 0]

WOW! Wonderful!

 

I'm so happy for you, Doug!

 

With all your already-existing success in re investing, this should work great for you from now on!

 

Couldn't happen to a nicer, more helpful guy!

 

 

Go for it!

 

 

Alic

[Doug Pretorius (ON) 9]

Thanks Alice!

 

Update: Just talked to him, we're set (tentatively) to meet tonight at 6:30pm, unless something happens and he can't get back into town in time.

 

He's agreed to my numbers:

$164,500, $1,250/mo, $300 rent credit, 2 year term. I'll be going for $4,750 down and give him $1,250 in place of last month's rent that he would normally get if he was renting it out.