“Price, quality, and time. Those are the three variables in any deliverable- and in almost any product or service you can only get two of the three,” Dave provides this principle as a simple reason most people come to him. “My service allows people to have very flexible offers and get cash very quickly, and as a result I buy properties at a discount.”
“A lot of people just want to close as quickly as possible, because they never want to go in there again. I’ve gotten people whose parents have passed away in the house, and they don’t want to deal with the clean up. I’m always very empathetic with these types of sellers. If they don’t want to go in the house, I’ll clean it up for them- they don’t have to go through the painful process of making the house show ready.”
Dave describes convenience sellers as people who are usually capable of doing the repairs themselves, but simply don’t have the time or energy. “These sellers are less common, but they’re easy to be direct with. They want nothing to do with the sale of their house. One time I had a multi-millionaire come to me- he could afford to leave this small house he inherited on the market, but it was worth more to him to get it sold fast so he didn’t have to think about it.”
So how do investors make such quick offers? While admitting that investors vary on their exact equation, Dave says most will look at the after repair value, multiply by 70%, and back off repairs. “Some people get offended when I offer them lower offers on their house, but they have to understand this is what I do. I’m not looking to make a killing off of unfairly low offers. They go to work every morning, my job is to buy houses.” He explains that most sellers see the value in the trade off- “I’m taking on all of the risk. They could wait on the market for it to sell, and then end up lowering their asking price anyway. I’m a guarantee. I promise to close, and to close fast. For people who don’t bring home a ton of money every paycheck, the cash option is a huge selling point. They may get the entire value of the property in cash at one time- that could be as much as their yearly salary.”
He says another great incentive he offers are non contingent closes. “If you buy a house retail and later you find out there’s a major foundational problem you have some claim against the seller- there are some disclosure issues there. Generally, with investors there are no disclosure issues. If I don’t notice that the air conditioner doesn’t work when I walk around the house, that’s my loss. I am truly buying the house as is and I always tell sellers that unless they really like me, we never have to talk again after we sign the contract.”
As we talk, I notice the phrase “trade off” come up a lot, usually in reference to a discounted price and all the reasons a seller may choose to accept it. “As a seller, here’s what you have to decide. Realize that if you’re selling a house retail for $100,000, you’re really not getting $100,000. Usually because you hire a realtor, and must allow for miscellaneous fees, you’ll probably only be getting about 90% of that. It’ll cost you about $9,000 to sell the house anyway.” Although selling to an investor might cost you a little more than that, you don’t have to worry about miscellaneous fees. You know what you’re getting and in a lot of cases investors will even pay closing costs. “They have to decide, is selling to me today and getting money in two weeks, worth the trade off of having to sell at a discount? Sometimes I think the home is worth even more than the seller did, in which case the perceived discount is significantly less.”