Luxury Home Investing – Seller Calls Webinar – June 16th 2010

Tuesday, August 31st, 2010

SELLER CALLS SUMMARY:

Call I – Not ready for the option

Student: Mel

Agents: Gail and Beverly

Location: Jacksonville

The scenario: We submitted an LOI for $1.864 million last week for a house priced at about $3 million that was donated to the Mayo Clinic. Got a return offer for $2.4 million from the board of directors.

It’s in San Marco, a prestigious area of Jacksonville.

They like my name, Marco. What can I say, I’m an adventurer. I tell them that we’re very realtor-friendly. We buy through a lot of agents. We can pull from a warehouse line so we close very quickly and that makes agents happy. A lot of time we list the property with the agent who sold it so they can make money twice.

It’s an English tudor, 7,900 square feet, more than three times the old square footage, with a 3-car garage added. The house is being donated to the Mayo Clinic to fund research.

It was once owned by one of the original founders of Jacksonville and hasn’t been lived in since it was expanded, Beverly says. Everything in the home, the guts of it, and additional rooms are new, though it did retain some original features like arched doorways.

The house has come very close to selling, with some doctors looking at the house. It’s apparently one of the larger homes in the area and on a double lot. Most people who live in the area are doctors, lawyers and the rich, she says.

Some houses have sold for $4 million and more on the other side of the road, by the river, but there aren’t any comps on the same side of the river. The house does have a river view, but it’s not on the water. If this home were on the river you would be looking at $8 to $10 million, Beverly says, in her professional opinion.

The thing is, when we drilled down on the number it didn’t look so great. She finally conceded that in her professional opinion, the house was probably worth closer to $2.3 million than $2.9 million. Based on that, closing twice, marketing and everything else, I’m not sure how it could work. So I told her I’d need to scratch my head and go back to the drawing board.

Beverly still really wanted us to make and offering — “something starting with a $2 —” I admire her masterful combination cryptic and candidness, I told her — but I just don’t know how we could do that. They’re not ready for an option pitch. They basically just told us it’s worth $2.2, $2.3 for us to try to option at that we’d be crazy.

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Call II – Three for one?

Student: Mel

Seller: Fred

Location: Atlanta

The details: Fred owns three properties he’s looking to sell. One is appraised at $5.1 million (replacement value: $6.5 million), listed at $3.5 million. Mel, submitted an LOI at $2.1 million. The seller told him he owns three properties and owns all of them outright.

Fred, who owns the properties outright and has built for lots of high profile celeb types including Rapper T-Payne, says he’s willing to even finance part of these.

The only reason I’m in Atlanta is because my business is here. My wife and my children moved to New York for my daughter’s career, he says.

The property he tells us about is a 7-bed, 7-bath, three-level, a Mediterranean house. It has nothing but plaster mold in all the rooms. High ceilings. All the bath tubs jacuzzi tubs. The property is sitting on two acres, surrounded by five acres of lake, very private. We had it on the market for $5.3 million, he says. Got a few offers but people couldn’t get their financing together. So he lowered the price.

Fred says he’s never thought about selling all three properties together but he’s open to it. He says he’s motivated to sell but not desperate. He has no debt on any of the properties. He called because he was surprised by the low LOI price. I explained to him what we do. We’re not vulture buyers, we just want to do a deal that’s fair for everyone. We generally don’t need to see the house before we make an offer. The numbers just have to work. We have two closing costs, holding costs. You know the rest.

He pressed us to send him an e-mail with an offer. I asked him to provide us with a bottom line for one or all houses. He wouldn’t budge and didn’t want to give us a bottom line. He, like many buyers, wanted us to look at the properties. But as I’ve said, we generally don’t need to see the houses before we make an offer.

We often get into this back and forth so just remember, still to the script. We’re not giving them a price, or if we eventually do it’ll be very low. Better that we get the seller’s bottom line.

Because I’m already going to Atlanta I arranged to meet with him directly. He says he has a feeling we can get something worked out. As do I. The objective of the call is to build rapport. Is he motivated and someone we can make money with? He seems to be. Mel thinks he’s willing to take an option. He seems good to go, but if we rush into the deal, what’s going to happen? We lose the deal. So we’ve got to take as much time as necessary. We like to make deals quickly, but we don’t ever want to be in a hurry.

If this one works out, Mel could be the Sultan of Atlanta. Either way, he’s going to build a killer buyer’s list that’s for sure.