Last time I took you down memory lane (about 13 years) and described in detail how I began securing MLS Houses for my investors, super cheap. House Flipping

If you have not read that post, click here first and then come back.

ADVERTISEMENT HERE

Fast forward to the present and here’s how things have changed.

#1 – I am the buyer on the contract:

ADVERTISEMENT HERE

I am still a licensed real estate agent, however I am doing very little brokering these days.

All offers are now written in my name (rather than my client’s) and once negotiated, I will assign the contract to another investor for a fee or simply close on it myself.

ADVERTISEMENT HERE

If I purchase the property then I’ll use one of two different exit strategies.

Wholetaling (buying the property at a wholesale price and immediately selling it for a price closer to retail value without doing any repairs) or Rehabbing (buying, fixing, marketing and selling the property at full retail value…typically to an owner occupant).

#2 – Automation:

I’ve outsourced and automated about as much of this process as I currently feel comfortable with.

My main Virtual Administrative Assistant pretty much handles the process from conception to a fully negotiated deal…at which point she will contact me to preview and ensure it is indeed a property we can flip for profit.

Here’s how it works from start to finish:

We’ve identified 6 different pockets or areas that yield the most cash sales within a 60 mile radius from where I live, we’ll call them ‘zones’.

Each zone has been put into a sequential order and we rotate through them, weekly.

We are essentially writing offers on each zone about every 6-7 weeks.

And yes, negotiations certainly do overlap week after week…as some deals take longer than others. And for this reason it’s important to have a very good follow up and tracking system, but we’ll come back to this shortly.

So let’s walk you through this process:

Every Tuesday my assistant will do an MLS search in the zone specified for that week.

She’s runs a broad query just like I described in last week’s post with exception of price. Some zones have a higher average sales price than others so we account for that.

Next she will quickly scan each listing looking for properties that look like there may be equity.

How do you know which properties may have equity? Good question…

She looks at several things that may provide clues: photos, remarks, listing history, tax data, days on market, last sale date, keywords, listing agent etc.

The objective is to find a minimum of 20 properties and as many as 35-40.

Once the search is complete she will do 2 things, save the property report to PDF and download the listing data from the MLS to a CSV file.

Here’s why.

On the PDF report she will take each listing and run it through a quick process to estimate it’s current ARV (after repaired value).

It’s not an exact science but for my market it is sufficient enough for what we need.

Wait, do you want to know that process?

Ok…She does a Google search for the property address…this will usually generate a link to that property’s Zillow page (a website that uses public data about recent sales to estimate value).

And sometimes that Google search may generate other interesting links about the property…

Over the years, Zillow has seemed to improve significantly in accuracy. On average providing a number that is within about 3-5% of the property’s true value…assuming it is in average to good condition of course.

But we don’t rely solely on this number.

Next she’ll do a public tax records search for this property to find out what the county’s current assessed value is.

Then we calculate the average of 3 things: the Zillow’s estimated value, the county’s tax assessed value and the current list price. Then that average becomes our estimated ARV.

Obviously if one of those numbers seems way off, we’ll look at it closer and adjust accordingly.

That ARV is now plugged into a formula which is specific for that price range…and for properties under $100k for example it is run through the same formula described in last week’s post.

Click Here to go directly to that section of the post for a quick refresher (clicking the link will open a new window so you don’t lose your spot here, you’re welcome ;) )

Once she runs the formula for each property, determining what our ‘Target Price’ is, she’ll note it on the property’s MLS printout (or PDF) next to the list price.

Oh, and why the CSV file?

Yes, it makes our lives much easier (well her’s really).

Having exported the data from the MLS, we can then easily upload the information to our transaction management and tracking software.

This eliminates having to manually input the data for each property which of course is excruciatingly tedious work.

And hey, check this out…the software…IT’S FREAKING FREE YO! ;) (but I’ll give you the name of it later so you don’t get side-tracked)

ok, just kidding….

It’s called Streak, a free Google Chrome plugin that works right inside of your Gmail account…and it’s super easy to use…but don’t go there yet.

After she uploads the data into or tracking system, she’ll add our target price for each listing.

The columns in this tracking system are pretty much the exact same columns I noted in last week’s post:

“MLS #”; “Agent Name”; “Agent Phone”; “Property Address”; “Target Price”; “1st Counter”; “2nd Counter”; and “Final Price”

Now that these properties are uploaded and we know what our target prices are it’s time to write some offers baby!

This process has also been innovated since it’s creation.

Rather than take a printed master copy of a purchase contract with my initials and signatures then photocopy it 30-40 times…it’s all done on the computer.

Here’s how we do it:

I’ve taken a blank purchase contract in PDF format and added my signatures to it. There are several ways you can do this but I’m not going to go into detail on it right now, if you have to…just find someone on Fiverr or Odesk to help you…really with any of this tech stuff.

Then I added ‘form fields’ to that contract so that it could be filled out with each property’s information and saved with a new name right to a folder on my computer.

Saving with a new name makes it so you always have the master, which can easily have all the fields erased and re-used for all the other offers.

Brilliant right!? I’m modest, can you tell ;p

Oh, but I forgot one thing.

Over the years I’ve discovered a new trick.

Remember how I’d mentioned in part one of this series how horribly some agents reacted to my low-ball offers?

Well there’s 2 things we’ve implemented to improve our success rate and soften the blow to unsuspecting agents.

Before we write the offers my assistant will contact the listing agent.

She’ll let them know we are in the middle of preparing an offer for their listing and as a courtesy we wanted to call first and discuss a couple things.

First, she’ll let the agent know that the offer is from a cash investor and more than likely will come in far less than expected.

However, it’s all cash, we can close quickly and no need to worry about repairs because all of the homes we buy are purchased ‘as-is’.

In the same breath, we let the agent know that we understand different sellers have different reactions to our lower offers…some favorably and some negatively.

And when they present the offer, if they sense it is a negative experience…it often can open the discussion for other topics, such as requesting a price reduction.

Or making improvements to attract stronger buyers etc.

This initial dialogue significantly reduces negative reactions from agents who are blind-sided with our offers.

Additionally, I’ve discovered one more thing to improve conversions.

Before she hangs up with the agent, she will ask if they would like to represent me as the buyer…and capture both sides of the commission if we’re able to put a deal together.

Since we’re already writing the offer, they don’t have to do any additional work than they already are in presenting it.

Interestingly, only about a third of the agents take us up on our offer to represent me and I strongly believe we close more deals now because of it.

OK, this post is getting really long and I still have a lot more to say…so guess what?

To be continued…

Plus, it’s a ton of information between last week’s post and this one.

You’ll probably need to go over both of them a couple more times to really get everything and have it really sink in.

Next week I’ll pick up right where I’m leaving off.

We’ll go over:

  • how my VA handles negotiations and processing the deal through to the end,
  • how I decide whether a property is worth moving forward on or not,
  • how I determine what my exit strategy will be
  • and finally, how I ultimately get paid on these deals

Related Posts