If you’ve been on real estate websites, forums, and listening to podcasts recently, you hear more and more about doing real estate investing virtually. But, is it really possible to do a deal without ever even meeting the seller or going to the closing table? Read on!
In October, we received a form submitted from a lead that had visited our website. We will call this lead “Kevin.” Here is the information that Kevin provided us that popped into our inbox:
This is what is known in the biz as HOT LEAD.
Let me explain. First, when people go to the Take Flight Home Buyers website, they are invited to submit a form for a no-obligation cash offer on their property. The initial form is very short — just the property address and their email address. Once they submit that, they are invited to tell us more and complete a second form answering the questions above. When a home owner takes the time to submit the second form, it indicates that they are serious about selling their house.
But, there’s more …
The fact that the seller has owned the home for many years (and likely has equity), readily admits that the home is in “terrible” condition and that needs “extensive” renovation, is currently vacant (therefore, is not making them any income), and that they want to sell at a “fair price” are all indicators that this seller has reasonable expectations of what he is bringing to the table as far as a real estate transaction.
And … there is one more thing: he lives out of state.
How did Kevin find us?
It is always very important to us to understand how homeowners find out about us. After all, a lot of work went into that form being submitted and arriving into our inbox! We definitely want to know which of our marketing efforts are producing results. In this case, we had obtained a list of vacant properties (along with other criteria) in our market through our real estate software and sent out postcards to these homeowners. Here is the postcard that Kevin responded to:
A property owner that does not reside at the property address is known as an “absentee owner.” We find that these owners are generally more motivated to sell this “extra” property than the one that they are currently residing in as their primary address. Often, these are rental properties for the owner, but sometimes they are sitting vacant for a number of reasons. In some cases, the owners will sell properties that are actually occupied by paying tenants simply because they are tired of landlording. Whatever the motivation, we are happy to hear from these owners!
The fact that Kevin also lived many states away was an added layer of motivation.
I gave Kevin a call right away.
Kevin explained that he had not been to the property for years. He started renovations on it several years ago and then decided to invest in properties local to where he was now living. He didn’t want to deal with this property from a distance anymore and was looking to sell at fair market value. He explained that the house did need a lot of work — it was gutted (needed all appliances, cabinets, toilets, flooring), part of the ceiling had collapsed when the house was clipped by a tornado, and there was a mold issue due to a leaky hot water heater. It also needed a new roof, new HVAC system, and decking and outdoor stairs.
After going and taking a look at the property (the front door didn’t even latch), we made him an offer based on it’s current condition. We negotiated a little and came up with a number that worked for both of us. We emailed him the contract and went over it with him line by line over the phone. He was an investor himself, so this part was easy.
The contract was signed!
Sometimes we talk to more people that want to sell their house to us than we can handle. As much as we would like to buy every house that comes our way, it’s just not possible. In those cases, we team up with a number of investor partners that are also looking to buy houses to flip or hold as rentals. After signing a contract with the seller for the amount agreed upon, we reach out to our partners and they agree to buy the house for cash. To make our money, we charge our buyer (never the seller) a small fee to assign the contract to them. This process is known as “wholesaling.” We are always very up front with the homeowner that we may indeed do this, and the end result for them is the same: they are selling their property to a cash buyer. In Kevin’s situation, selling to a cash buyer would have been his only option given the state of disrepair the house was in. Conventional buyers that obtain a mortgage to buy a property are at the mercy of the bank’s and insurance company’s approval criteria and just having a roof that is older than 15 years in Florida is problematic for a buyer. And there were a lot more repairs that would have needed to be done on this property for a conventional loan to be approved.
Closing took place in less than 30 days from when Kevin submitted the form on our website. Neither of us needed to be present at the closing — it was all handled electronically through our title company. Piece of cake! The process was much easier than we had expected and, in these times of COVID-19, being able to conduct real estate transactions from a distance is a wonderful thing!