Exhausted Estate Executors Equals Excellent Wholesale Opportunities in Probate

We closed our latest wholesale real estate investing deal on 09/29/2010.  We bought and sold a property on the same day, made $6,384 in net profit, and left a seller very relieved to get this property sold!

I’ll show you in a 6 step process exactly how it went down so that you can do the same!

Step1 – Where the deal came from: This lead came from probate marketing that we’ve been doing for the last 4 months or so.  You have 2 ways to get this list.  You can search online and pay for a list to mail to or you can go downtown to your local probate office and pull the records manually.  We were approaching the $700 mark in advertising costs for this type of marketing and I was getting ready to throw my hands up and say ‘screw it’ when this deal popped out.  Which leads me to this tip: stay consistent; hold the course. Anyone, and I mean anyone, can get frustrated after extended time with no results – beginners and veteran investors alike.  In the history of real estate, there have always been motivated sellers and good deals to be had.  Be patient.

Step2 – Doing my Homework: I got a call about the property from the executor.  I told her that before I would even come out and look at the property, they’d have to be willing to take in the range of $40k for it.  She said that seemed low and that she wanted to get a real estate agent’s opinion.  I encouraged her to do so.  She called me back 48 hours later and said that she was interested in my offer.  She had obviously talked with the real estate agent and he must have shared my opinion of a low value.  I told her I needed to look at the comps again before I was willing to go out and have a look and told her that my offer would actually have to be somewhere between $30-40k.  She wasn’t too happy about this but said ‘’come on.’’

So I met her at the property.  Nice lady.  You can gather a lot of information that can help you in a deal simply by being friendly.  Ask questions and shut up.  Listen.  People love to tell you about themselves and their situations.

I found out who the real estate agent was that valued the property.  I knew him — he mainly deals in high end properties and historic homes, not fixer-uppers.  I found out that the estate had to be closed in the next 4 months, and therefore the property sold.  I found out that 90% of the money was going to charity, and therefore the executor of the estate didn’t care as much about what the property was sold for.  I found out that she was just ready to be done with the whole thing.  Are you gathering what I learned from asking and listening?  I learned that she fit the bill of a motivated real estate seller.

Step3 – Locking up the Deal: I reviewed the property -took pictures, video, notes.  All I could think to myself was “this property isn’t in terrible condition and we can make this happen.”  I told her that I was thinking $34-35k and she winced.  I told her that I’d like to try to work with her and make it happen and that we could buy it or I may have an investor in my network that may be able to buy it.  She liked the effort that I was going to give to make it happen and we signed a purchase contract at a number that I knew would make her comfortable, $40k.  [I knew that I could always renegotiate our sales price if needed]

Step4 – Marketing the Deal: Before we are going to close and purchase a property, we market the crap out of it to see if we can wholesale it and get it sold. [We do this even if our intention is to renovate a property.  Why not sell for a quick profit if another investor wants to step in your shoes?  There are always more deals]  Usually, we do research, put out signs, send it out to our email list, and hustle the streets to get a property sold.  I just happened to call an investor in my network (*hint*) on my way home from signing the contract.  He was fresh on my mind because I had just shot the bull with him the day before to discuss our current market.  He said that he had 2 potential buyers for the deal.  He showed them both the next day.  One of them said that they would buy the property at $48k (we were asking $50k)

Step5 – Closing the Deal:  I called the seller back and told her that I had some good news.  I told her that we could buy her property and that we could close it fast.  But I said that in order to close quickly and pay cash we’d have to pay $38k.  She didn’t even flinch.  She just asked what she needed to bring to the closing.  I think we could have easily negotiated her to $35k or $36k, but hey, the money was going to a good cause so I didn’t push it.  She was happy to get it sold and we were happy to profit $6,384. We did a JV (joint venture) deal with the wholesaler that brought us the buyer and paid him a $3,000 portion of our profit.

Step6 – Rinse and Repeat: Many gurus make wholesaling seem easy.  Is it the fastest way to make a paycheck in real estate investing? Yes.  Does that make it easy? Not necessarily.  But, I want to earn your trust and share real life deals with you so that you know that I actively investing in the current real estate market.

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If you have a deal you’ve recently done or a tip that you can provide the community, please leave a comment below