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I mean I'd do it and I can pay cash but I'm gonna I'm gonna need I can't pay 60 there's just no way it just needs way too much work welcome to another watch me video where you get to look over my shoulder and watch me wholesale houses live on today's video watch me negotiate directly with a private seller and this is the third video I've done about this particular deal if you've been following it's the marijuana house in Michigan that has fire damage never a dull moment in this business so watch me get on the phone and negotiate this deal coming up [Music] for a limited time you can get a free copy of Jerry Norton's QuickStart kit with everything you need to flip your first house in 30 days or less download it now at my quick start kit calm if you're new here to this channel I'm Jerry Norton with flipping master comm and this channel is all about ways to help you make money wholesaling and flipping houses so you can live your dream life be sure to subscribe to my channel and click the bell I kind of get notified when new videos are released recently I released a video where I showed you one of my favorite deal finding strategies where I call for rent post on Craigslist on that video I got on the phone and I talked to buying hold investors and you got to see me do it live and one of those investors had a fire damaged house that he wanted to sell for 60,000 then I did a follow up video on what transpired with that fire house and you have to watch over my shoulder as I got someone to go out and take pictures and video and how I analyzed the deal and I broke down all of the numbers by the way I'll put the links to both those videos in the description box below and I'll put all of the videos regarding this deal in a playlist so you can watch them but please don't leave comments asking me questions about how I got to this point without first watching those other two videos and yes I try to answer every question in the comments okay and so here we are on this video I want to show you how I negotiated and came to an agreement on price with the seller now I actually recorded three different calls with the seller and I'm gonna show the highlights with you in just a minute so keep watching now I wish this was a textbook example for you but rarely do deals go that way and this is no exception and I actually have a lot of reservations if I'll even make it to the finish line which brings me to a really important teaching point the I want to share with you every lead you get has to be carefully weighed in terms of the time spent on it one of the biggest mistake that investors make especially wholesalers is spending too much time on any one particular lead sometimes it's not worth the time energy and effort to continue pursuing a lead that has a very low chance of making it to the finish line you have to consider the opportunity cost with every lead you spend time on now think about it this way if you spend an hour talking to a seller who isn't really motivated and is a low quality lead that's an hour that you're not talking to a highly motivated seller than is a high quality lead and if I'm completely honest if I hadn't already made two videos about this particularly and if I wasn't using this deal as an example to show you hands on how to take a wholesale deal from start to finish I probably would have dropped this lead but there are some really good lessons that you can learn from this so I hope you appreciate me showing you the good and the bad about this business and for keeping it real if you do leave a comment and let me know the reason they've got reservations about this lead is since spending time analyzing the deal which I shared with you on video 2 I've done 3 calls with the seller and I spent over an hour on the phone just negotiating the price in terms with him now let me be clear I'm not necessarily saying it's bad to spend an hour on the phone with a seller but I'm having a hard time getting him to come my way so the question I have to ask is is this the best use of my time could I be spending my time instead working on other or better leads that's not always an easy question to answer but it should be considered with every lead you decide to go after ok back to our deal we left off on video 2 where I analyzed the deal and I determined that the after repair value or ARV is 225,000 and the estimated repair cost is 85 thousand and following the standard 70% fix and flip formula a local fix and flippers should pay 72,000 for this deal and the seller point-blank said he take 60 thousand for it listen what are you asking for I gotcha okay so that means if we got a contract for 60,000 and a cash buyer will pay seventy two thousand we would make a $12,000 wholesale profit now some of you are probably thinking take the 60,000 what's the problem but I'm not going to just take the 60,000 for three reasons reason number one why I want to pay less than 60,000 is this is not your typical distressed house this house has extensive fire damage which is going to limit the number of buyers that would be willing to take it on making it harder for me to wholesale and as such I'd like a bigger discount reason number two why I want a bigger spread on the deal is because of the extensive fire damage in video 2 I broke down how I came up with 85,000 for the rehab budget but that was going off of pictures and video it could be more or a cash buyer could think it's more in fact just to be safe when the seller asked how much I thought it was going to cost I told him at least a hundred thousand because they easily could be that much and that's what it would cost someone else not experienced with rehabbing and probably even much more and finally reason number three - I want a better deal is because sixty thousand was his initial asking price that he gave me when I first spoke to him which you can see on video one so I need to find out how low he'll go I call this finding the bottom now before we cut to the calls that I did with him and before you see my positioning and how I talk with him I do want to take a minute and point out that this seller as an investor not someone living in a house and there's a huge difference with an investor there's less emotion involved because it's not their primary home they live in as an investor this is a business decision and so I tend to be more bold and more direct now I don't want to be rude or a jerk but I can be more matter of a fact with investor sellers so please keep that in mind when you hear me on the phone so let's cut the call one I'm gonna pause and go back and forth and explain why I'm doing what I'm doing and what's happening my point with negotiation call number one is simply to find the bottom or the lowest he'll take for the property wow you weren't kidding fire damaged yeah yeah that thing is of the holy smokes like literally holy smokes I mean I do it and I can pay cash but I'm gonna I'm gonna need I can't pay 60 there's just no way it just needs way too much work I mean honestly probably 40 okay let me stop right there for a second first I tried to reset his expectations by focusing on how extensive the rehab was then I threw out 40 thousand to establish a really low base line with him and see what he would do and he immediately came back by saying I'm not gonna go a penny less than fifty five thousand so if I found the bottom sounds like it but let's just make sure back to the call it's got to be a bigger discount than fifty five you just cuz it I mean I can take I can take fifty five and go buy another deal that doesn't need a quarter of what that thing's gonna take it's just a huge project that's all like you said so I told him I need a bigger discount than fifty five thousand why to see if I really am at the bottom and he came back by seeing let me think about it which is like the kiss of death for sales so I think we've established his bottom really is fifty five thousand but you'll take fifty five cash right now so I point-blank asked if he'd take fifty five thousand right now and he said yes now normally I would go for the clothes and I just wrap it up and get it done for fifty five thousand I mean that now gives me an eighteen thousand spread on my wholesale which is much better but I decided in the moment to wait a day and call him the next day mostly because I know he's not talking to anyone else or actively trying to sell it let me pour over the numbers I mean let me see if I can make fifty five cash were close quickly so the next day I called him back to tell him I take it for fifty five thousand listen to the call alright well I've been crunching numbers I think I can make fifty five work okay okay and this is where things took a turn for the worse let me explain why there are two things I have to get him to agree to on the terms of the contract in order for this deal to work the first is I have to have an inspection contingency just in case I'm off on the numbers and need to renegotiate or back out of the contract so how will I know if I'm off on my numbers easy as soon as I send cash buyers to look at the property I'll know right away based on what they say they're willing to pay now the second thing that I need him to agree to in the terms of the contract is to give me unrestricted access to the property via a contractor lockbox that way I can send cash buyers to go look at it with any deal especially this one I have to get unrestricted access to the property or it's going to be nearly impossible for me to wholesale it and on this deal not only do I need access for cash buyers but those cash buyers are going to need access to the property to take their contractors so they can figure out their rehab number remember fire damage here's how I explained it to it so if we can do a contract I'm going to need like ten days or two weeks of a contingency so that just gives me that time to get some contractors over there I am gonna need you to let me put a lockbox on it and so that I can have some guys go in there I'll make sure we lock it up and that they're safe and stuff but I immediately after telling him I needed an inspection contingency and I needed him to let me have access to the property via a contractor's lockbox he shut right down he did not like that at all and I could not understand why here's how I tried to address it you don't have to do anything all that all it means is women understanding what you don't want to do I don't want to go through all that headache and an end of week or two week later you know you're not okay so let me explain you you're not doing anything I'm doing all of it you're just you're just all you're doing all you're doing is you're not even you're not even for sale right now so you're not you can't here's the thing you cannot sell that house to anybody unless they can unless they can go in there and get and figure all this out because there's it's you know what I mean okay what do you mean when you have to think about I have to think about what you told me over the contract just so we're clear what I'm asking for is a cut as a contract for fifty five thousand give me ten days so that I can get bids you don't have to do anything all I need to do is put a lockbox on there and I'll send my guys over there if after 10 days it's way higher than what I think it is then you're right back where you are right now today anyway so not you haven't lost anything if it if everything checks out then we can close a week later or whatever all right so even though I tried to explain to him that I needed to have access to the property he didn't want to do that so he left off with let me think about it now at this point I'm on the wrong end of the conversation instead of him convincing me why I should buy his house I'm now trying to convince him why he should sell me his house and that's not the position I want to be in because he needs me more than I need him but in the name of science I decided to keep it alive I waited a few days and I called him back are you ready to move forward and get something done I mean I'm not gonna I'm not gonna go through that headache you know a week or two weeks a headache and then end up you're gonna tell me this and that huh yeah I'm wondering if you're not quite understanding what I'm asking or what how it would work so you're gonna have contractors going in and other and stuff like that for like what two weeks until you figured out how much is gonna cost you and you're gonna come back and tell me I'm sorry I don't want to do it why would I go through that now clearly he's not motivated to sell this property so he next pulled out the classic take away on me and tried to say that he could easily sell it with an agent listen it's what I'll do I called my agent right now Dunham put it up for sale for $75,000 I'll give him the 3% 5% Commission to give him and then call it a day you know how many people gonna come see you I'm gonna have 15 showings a day I guarantee that there's no inspection I bought a house before that I bought a house in Hazel Park Oh crash offer deal no conventional no nothing huge it didn't have fire it didn't have fire damage no I didn't okay well that's all I mean there's only a handful of flippers that would even touch a fire damage house it's your more experienced investors most people are not gonna want to take that on so you're gonna be down to a handful of people anybody who's gonna buy a fire damage house is going to need to do due diligence on exactly what they're getting into they're not just going to buy it sight unseen without having contractors look at it so not only are you gonna have dozens of investors and buyers but they're all going to want to get in there with contractors so you're going to be dealing with me times ten instead of just me after explaining that I actually got him to come back around and he asked me how long I would need listen to how I respond give me one give me one week and I'll get a handful of people in there I don't need that many people why there's nothing in that what is in that house that's has any value whatsoever nothing nothing nothing in that I'm just like I said this is how I want to do it if you want you can say hey I got electrician coming there - oh God I mean about the man and leave so there's no way around it he is not going to let me have access to this property then when I explained that before I send anyone to meet him at the house we would first need to have a contract in place and he told me that just get all my numbers figured out first and then we can do a contract okay protip here sending contractors to properties is a cardinal sin for me I don't want to spend another minute on this deal without first having a contract listen to my response I I can't call up my contractors and say hey I need you to go over and give me a bid and look at this house if I don't have a contract at least with you because what if I do all of that and you say oh never mind Jerry I changed my mind I don't want to sell it to you so we sign a contract that says I'm gonna pay fifty five I put down earnest money I'll give you a $500 earnest money after the seven days if I find out it's way more than a hundred I get my earnest money back and you're you're right back where you are right now anyway what you're saying wait a week anyway so it's not like it's gonna be any different in a week if the rehab does come in at a hundred then we schedule a closing you know a week later or two weeks later or whatever and then I cast you out and you're done and then I'll fill that out I'll email it to you and then all you have to do is sign that you can do it right in your email because it's electronic signature then I'll get that over to the title company they'll start preparing title and doing all that work and then over the next seven days we'll be coordinating contractors to get in there and look at it okay sound good oh yeah okay so he finally agreed to do a contract for 55,000 with a seven-day inspection and a $500 earnest money so he left off with me agreeing to send him a contract for electronic signature which comes standard with my deal management system flipster it takes about five minutes to fill out then I just email it to him and he signs it electronically right on his smartphone and this is just one of dozens of tools that comes with flipster so if you're looking to do your first deal or level up and do more or bigger deals flipster can help you get there to check it out and see it in action just click the link in the description now here's the thing there is no way I'm gonna be able to wholesale this deal to a cash buyer without unrestricted access because I can't have cash buyers meet the seller at the house that just won't work out especially with this seller now there is another option I could get bids and really figure out the true rehab number then if the rehab is actually eighty five thousand like I budgeted and I feel really confident in that number I could go ahead and buy the house and then once I own it for fifty five thousand I could turn around now and resell it for 72,000 so what would you do I would love to hear your opinion do I let it die and move on or do I invest more time and getting contractors to meet the seller get hard bids on the property and try and buy it and then resell it of course I would do another video explaining how everything goes down so leave a comment and let me know what you think I should do and if you haven't yet be sure to subscribe to my channel nowhere will you find wholesaling and flipping houses explained in detail without the fluff and BS like you will hear on this channel so go do that now and I'll see you on the next video