//How To Make Offers On Real Estate for Investors & Flippers

How To Make Offers On Real Estate for Investors & Flippers

By |2018-08-23T12:56:45+00:00August 23rd, 2018|Categories: Real Estate Investing|Tags: , |Comments Off on How To Make Offers On Real Estate for Investors & Flippers

Stefan Aarnio: Okay, so mass offers. So one of the keys to success in real estate, keys to success in real estate, real estate investing, you’re buying buildings, buying houses. You need to have a lot of offers. So right here with the mass offers system, Brendan, there’s two ways to do it.

Stefan Aarnio: We’re either going to make the agent make the mass offers, so your main agent. Do you have a main agent right now?

Brendan: Yeah, two of them.

Stefan Aarnio: Okay, so you have two main agents. Well, you want to have one main agent because you can’t have two. You either got one main agent or none, so you got to decide who the main agent is and they’re going to do the offers. Or you go direct, so you go direct. Okay?

Stefan Aarnio: So mass offers, I think the goal should be 30 offers in 30 minutes. You want to write that down, Brendan. 30 offers in 30 minutes. And you can do this quickly with realtor.ca if you’re in Canada and if you’re in the States, you go realtor.com. Okay?

Stefan Aarnio: Now, what you want to do is you go on to your MLS system, so I actually want you to spin around. I’ll show you here too, Brendan. So how I do mass offers, you get on the computer, and you come over to … We got some deals we’re working on here.

Stefan Aarnio: So you go to realtor.ca and this is an MLS strategy, so you just go on MLS. You’re like, “Okay, man. I’m going to do this.” I’m letting it load up. What are you doing? Edmonton? Okay. So we’re going to go to Edmonton. We’re in Winnipeg today. It doesn’t really matter what city you’re in, so we’re going to go to Edmonton.

Stefan Aarnio: And we are going to … So, here’s the market. Look at the market. That’s like tons and tons of inventory. You got 925 properties here, 451, 720, so massive amounts of inventory in Edmonton. It’s a great place there’s lots of money.

Stefan Aarnio: So what I’m going to do here, I’m going to take out anything that isn’t a house. I just want houses only. So, push update, and suddenly cuts the houses down like crazy. So, Brendan, do you want to pick a neighborhood that you like? Is there a neighborhood.

Brendan: [inaudible 00:02:53].

Stefan Aarnio: Okay. So like close to down town. Okay. This zone here. Okay, so we’ll go like this. We’ll go into this zone. So we’re picking a zone, and we’re picking a map. This is a piece of the map. Let’s just say we’re going to work these two neighborhoods, okay. So now what the MLS will automatically, do, here’s the great thing. You can do this without having a realtor. You don’t even need a realtor to do this. You can just go ahead and do this.

Stefan Aarnio: Now, here you have your couple zones, and what the computer does automatically, it orders them from cheapest to most expensive. Which is really cool, because you can just start at the bottom and work your way up. So, here’s how I do it. I open this up, I look at it. It’s like playing cards.

Stefan Aarnio: Now this thing, I’m going to look at this house. It looks … I don’t know, what do you think, Brendan. Needs work or doesn’t need work?

Brendan: It definitely needs work.

Stefan Aarnio: Yeah, it’s not retail.

Brendan: It’s not terrible, but it’s definitely needs something.

Stefan Aarnio: Yeah, it’s kind of notsy bross. I don’t even see a kitchen shot. Oh, there’s a kitchen shot. So the kitchen sucks. So this property, what do you think the ARV would be? It’s, you know this market better than I do.

Brendan: After repair value, it could be in the 350 range.

Stefan Aarnio: 350. Okay. So you think it’s 350, and they’re asking 299. So these guys are way over booked. Land size. You guys got square meters. That’s annoying. Floor space.

Brendan: You can change that.

Stefan Aarnio: How do you change that?

Brendan: Scroll up. There’s a button for imperial.

Stefan Aarnio: Oh, right here. Okay. We’re going to go imperial. And it gives us metric. That’s weird. Wow. Look at that. 1100 square feet, or so. Okay, so why don’t we do this. So here’s what we do. Now we take that data, we put that in a spreadsheet. So here’s our spreadsheet. I’m just going to do it up here on the whiteboard. So what’s the address, Brendan?

Brendan: 9220 75 Street.

Stefan Aarnio: 9220 on 75 Street. And what’s the ask?

Brendan: 299.

Stefan Aarnio: 299, okay. And what do you think the ARV is? You think?

Brendan: I’d say 375.

Stefan Aarnio: ARV is 375. Okay. So ARV’s 375. So what do you think you’d have to buy that at, to make money? What’s our bid going to be? No, no, don’t get your calculator out. We’re not going to slow it down. It’s like cooking. You’re going to just, a pinch a salt …

Brendan: Like, 200, 220.

Stefan Aarnio: 220. I like that. We’ll with 220. Okay, so, that’s our first offer. This is not an educated offer. This isn’t a smart offer, it’s just a a blind offer. 220. Okay, we also need to call them here.

Stefan Aarnio: Actually, this would be called ARV question mark column. When we send it to our realtor, we want ARV fact column. What’s the actual ARV? And then we want another column for the counter. Okay. So we’re going to make this little spreadsheet here, just like this. Boom. Spreadsheet.

Stefan Aarnio: Okay, so now, let’s do another one. You want to pick it? Let’s pick another one. Go back to the computer. Now, when you’re efficient at this, you can do 30 offers in 30 minutes. When we’re not so efficient … here, we’ll do this. Actually I’ll just close that.

Stefan Aarnio: Okay, so the next one here on the list is this 324. So we’re starting with the cheapest and the zone. We’re in a neighborhood. Sort of the cheapest, crappiest home, and we’re going to move up to the second cheapest, crappiest home. So now we’re here in Edmonton. Whoa. Oh, wow. This looks really ugly. But it’s a nicer home than the last home. It’s got some 90s cabinets in there. Wow. This is like flip city. Blue rooms. I can smell this home. Look at this. You got the special shower head that the women like. The one you can take off and use. They like that.

Stefan Aarnio: Okay, so this thing’s a two story. That other one was a little bungalow. 1977 build. And we’re looking at, this one is how many square feet? 1200 square feet. So similar size. What do you think it’s worth? 399?

Brendan: ARV?

Stefan Aarnio: Yeah.

Brendan: With four and two, I would say maybe low fours.

Stefan Aarnio: Wow.

Brendan: I’d say 420.

Stefan Aarnio: 420 okay. So, what’s the address on this one?

Brendan: 5515 93 Ave.

Stefan Aarnio: 5515 93 Ave. Okay. So, the ask is what, Brendan?

Brendan: 324.

Stefan Aarnio: 324. Okay. And the ARV is, you think, four, four and a quarter?

Brendan: 415.

Stefan Aarnio: 415, okay. So we don’t know. These aren’t facts yet. So what do you want to bid?

Brendan: 415 …

Stefan Aarnio: 250?

Brendan: Yeah.

Stefan Aarnio: Okay. 250. A little bit of a better house. ARV we don’t know. Counter we don’t know. Okay, so Brendan, you understand the idea?

Brendan: Yes.

Stefan Aarnio: Okay, what we’re doing is we’re going through the neighborhood. We choose the neighborhood, we start at the cheapest and we work our way up to the most expensive. So, we just keep doing this, keep doing this, keep doing this. The next one in line here is 329. 329,000 they’re asking for this one.

Stefan Aarnio: Now, this one is a fricking disaster inside.

Brendan: Oh, nice.

Stefan Aarnio: Okay, look. So, we got three potential flips right here. Right. And it’s just all about negotiating. So come look at this one, Jeff. Look at this piece of crap house. Okay, so it looks okay from the front, but then you go in. They ripped the floors out. So obviously this house is a mess. This is like somebody has tried to renovate this, or they started but they didn’t finish. So it probably says something in the remarks … That basement needs paint. This is a real nice flip. So this one, 1400 square feet. So bigger house. And yeah, desirable area. So this one, let’s do this one too.

Stefan Aarnio: 329. So, 329, and Brendan, what’s the address?

Brendan: 7411 92 Ave.

Stefan Aarnio: 92 Ave. okay. Great. What’s the ARV?

Brendan: I’d say 475.

Stefan Aarnio: 475. Okay, do you see some spread in that one?

Brendan: Yeah. Attached garage.

Stefan Aarnio: Attached garage. Wow. The bid. What do you want to bid? 250?

Brendan: At 475, you don’t want to go high.

Stefan Aarnio: Let’s go 270. Let’s start at 270. Okay, so right there, dude, you see how we just got three offers there. Now, here’s the question. What are you doing with this information? One of two things is going to happen. You either do, let’s say we populate this with 30 offers. And you send it out to your main agent. Okay.

Stefan Aarnio: Only on TV. Broke the clock. All right. Great. We’re breaking stuff. That’s how you know it’s a great show.

Stefan Aarnio: So now you send it to your main agent. And you say, “hey, main agent.” Now, this is the script. You ready to write down the script? Here’s the script for the main agent. Just write it down. It’s short. It’s super short.

Brendan: Hey, main agent.

Stefan Aarnio: Main agent calls these agents. And says, “Hey, I have an out of town buyer. They want to offer X dollars on X address. Should I bother writing it up?”

Stefan Aarnio: Now, here’s what’s cool about this. This script protects your main agent from them, because if they say, “No, that’s full of shit. I don’t want that offer. Tell your buyer to fuck himself.” They can say, “Oh, well, dude, he’s an out of town guy, no problem. He’s obviously cooked. Hey no big deal.” Right. But you can say, “hey, by the way, do you have a counter for me? Where do you think your guy would be at? Let’s see if we can do something here.”

Stefan Aarnio: So now you’re fishing for a counter. Now what’s going to happen, Brendan, when you get your main agent to do the 10, 20, 30 offers, you’re going to have the ARVs, the actual ARVs come back, and your going to have all the counters. Okay. Now let’s just play out the scenario. Let’s play out the scenario a little more.

Stefan Aarnio: So I got a green marker, I got a red marker, I’m going to get an orange marker here too. So I got a couple different markers. So, let’s say, this thing comes back from your agent now. So let’s say it takes a day or two. It’s going to come back. So let’s say it comes back and this deal here, the first one we looked at, the ARV is only like, let’s say this ARV comes back at like 350. So it’s not as high as we thought. Okay. And let’s say the counter comes back at, they’re asking 299, let’s say they come back at 289 is the counter.

Stefan Aarnio: Is this a green, yellow, red? Do you want to spend more time on it, is green. Go see it. Orange is you don’t know. And red is no way is this a deal.

Brendan: Probably a red.

Stefan Aarnio: Probably a red. And why would you say it’s red?

Brendan: Because there’s no [inaudible 00:13:07].

Stefan Aarnio: Right. So you take your spreadsheet, and you flag it. Because there’s not spread. So you flag it. It’s a red deal. Don’t spend anymore time on it. Okay. So now it’s out of the gene pool, and that’s because this number here, the ask, they’re not coming very much. The ARV is lower than you thought. Kind of a waste of time. We’re not going to look at it again.

Stefan Aarnio: Now this one. Let’s say this one comes back, and let’s say this ARV’s actually 425. A little higher than you thought. My black marker is not working that well. So 425. Okay. 425, black. So it’s got a little more spread, and let’s say this guy counters, he’s asking 324, you came at 250. Let’s say he comes at 290. Comes back to you. Green, yellow, red? You going to spend more time on it, not sure, or done?

Brendan: I would say yellow.

Stefan Aarnio: I would flag this green. I’d say this is a green. And the reason why I’d say it’s a green, is because he’s coming down from 324 to 290, there’s some motivation there. You see what I’m saying? So green means go see it. Get in the car, start getting your estimates, start working this deal. You want to work that deal.

Stefan Aarnio: Now, let’s say this guy, 7411 Ave, this guy, his ask is 329, his ARV is 475, and we bid 270. Let’s say he comes back at like, 320. He comes back at 320. So he’s coming down 10 grand. There’s still some spread. What do you say? Green, yellow, red? 320, or sorry the ARV, what’d we say the ARV was? 475? But what did it actually come back at from the agent? Let’s say we’re correct at 475. Okay. And let’s say he’s willing to come down 10 grand at 320. Okay, so the counter’s at 320, the ARV is 475, are you going to get in the car and see this thing?

Stefan Aarnio: I think that’d be a green, too. Okay. So, other than this, let’s say we did three offers, we got three greens. Green, green, green.

Brendan: Yeah.

Stefan Aarnio: Okay. So we got one red, we’re not going to spend time on it, there’s no motivation, the other two, let’s say there’s motivation, there’s spread. Does that make sense?

Brendan: Yes.

Stefan Aarnio: Okay. Now the other way … okay, so this is the main agent way. The main agent is doing the work, and the main agent’s going to get the deal, and the main agent’s going to get the retail listing. So they’re going to get a commission on the front, and maybe one are two commissions on the back. Now, the other way you do this, is you do this yourself.

Stefan Aarnio: So, you make the list, and you call and you do the offers direct. Now why would you maybe want to do this direct? I’m going to get out maybe the purple marker over here. We got a purple. I’m knocking down clocks, and smashing. Damn. Okay.

Stefan Aarnio: So, coming over here, why would we want to go direct? Why would you ever want to do this direct? And use your time?

Brendan: Because you’re going to save a buck on the realtor.

Stefan Aarnio: Okay. So you can save maybe a commission. You can save a percentage point or two on the buy, maybe. There’s another reason that’s more valuable, though.

Brendan: You’re going to get the story.

Stefan Aarnio: You got the story from the horse’s mouth. You still missed it though. There’s another reason why. This is the big money reason. Big money reason why you want to do this direct, if you have the time. If you don’t have time, do it like this. Do it like I’m showing you if you don’t have time. If you have the time, do it direct, because when you go direct and you talk to the guy direct, you get the relationship.

Brendan: You talking about the seller or the realtor?

Stefan Aarnio: Realtor.

Brendan: Okay.

Stefan Aarnio: You got the relationship with 50 realtors or 30 realtors and you get referrals and you can get pocket listings. So if you have the time, like I say 50 and 10, this is your 50 and 10. Go do 50 of these, and 10 of them are going to get offers. Or you can 50 and 50. You can 50 analysis and 50 offers. And you send it out there, and if you want to do it direct, you can do it direct. I think doing direct is great, because then you got two lists.

Stefan Aarnio: You got, I’m just going to draw a list over here. You got two lists to manage. You got your realtor list. Of people who have supply. And then you got, this is your deal list. This is your deal slash offers list. And this is going to be a running tab that just goes forever. It goes forever and ever. And I advise you to not put more information on this than you need. This is all the information. Don’t put anything more.

Stefan Aarnio: Because what some guys will do is they’ll add more columns and they’ll add more things, and they just spend all their time collecting information. But what you need is the ask, the ARV, the bid, the real ARV, and the counter. And then green, yellow, red.

Stefan Aarnio: And then what happens … Let’s say you do this for six months, Brendan. And you got a running tab of deals that you bid on, you go back, and you update it. Some of them are sold. What do we flag them now?

Brendan: Red.

Stefan Aarnio: Red. Some of the yellows, maybe the prices have changed. Revisit. Some of the greens, might still be sitting there. Re offer. You see what I’m saying? So your list over time.

Brendan: You should probably put the date.

Stefan Aarnio: No, I don’t care about the date. It doesn’t really matter. It doesn’t really matter. It’s Jesus a running tab. So the top of your list should all be red, because these are all the old, gone deals, and then there might be a couple oranges kicking around in there. And then there might be one old green that’s salty and just sitting there and waiting forever, and they’re just holding out for that last 10 grand. And maybe there’s another green. And then the further down your list goes, it’s going to be more orange, the newer stuff is going to be mostly orange. And you’re going to have a couple reds in there because the ARVs are wrong, right? You’re going to to have a couple reds kicking around. And then you’re going to have maybe like one green, two green, three green. So that’s what your list is going to look like over time.

Stefan Aarnio: It’s going to be, some green, some reds, some yellows, and you just keep working the colors. Working the colors, working the colors. Until you got the deals. Does that make sense?

Brendan: That makes sense.

Stefan Aarnio: Okay, so I think you want to set the goal here, if you’re going to do 30 offers in 30 minutes, I want all your stuff, your 50 and 10, so your 50 calls and 10 offers, this should be done in four hours. You see how you can do that in four hours now?

Brendan: Yes.

Stefan Aarnio: Right. Because you can send it to the main agent, or you can do it direct. Which do you think you’re going to start doing?

Brendan: I’m going to start calling the agent.

Stefan Aarnio: Main agent. Okay, so you can get the main agent to do it. Or the other thing you can do, Brendan, is you can do a portion to the main agent, and a portion you. Now heres the problem that happens with this. Sometimes you give it to the agent, he doesn’t work it. So sometimes, big surprise. Agents can be lazy. So you send it to your main agent, he doesn’t work it. He sends you some pathetic thing back with this not really filled out. Then you know he’s not working it. What are you going to do then?

Brendan: Call them directly.

Stefan Aarnio: Get a new main agent. And so the kind of guy you want doing this, there are two types of guys who will do this of you. I found only two types. Two types of people who will do this. One is your young hungry agents who have nothing to do. They have no deals, they have no client base. They’re brand new, they’re young and they’re hungry. And they’ll just pound pavement. And the other one is your seasoned veterans. So these are your guys that are usually in their 50s or their 60s, and they’ve seen all the battles, and they do not give a shit. They don’t care if people yell at them. They don’t care if people are mean. They don’t care if people are insulted. They’re experienced negotiators and they don’t care.

Stefan Aarnio: So I’ve had most success with these seasoned veterans negotiating. The young hungrys are good, but one of two things happen with the young hungrys. They either burn out, and they maybe aren’t so good. Or they end up getting a client base, and they just move on. They think they’re too good. They get into the retail business because a lot of agents make money in the retail business. They don’t make so much money doing this. This is quite a lot of work for somebody, for an agent it’s a lot of work. And a lot of them want to make money being a listing agent and retail agents. Okay.

Stefan Aarnio: Did I answer all the questions about mass offers then?

Brendan: I got a question for you.

Stefan Aarnio: Yeah, go ahead.

Brendan: What if the seller says, or the realtor says, “I’m not going to bring this offer to my seller unless it’s written?”

Stefan Aarnio: Then we’ll write it up. Let’s write it up. So then you want to give … Okay, so let’s take that to the next level. So they say, I don’t want a sight unseen offer. I don’t want a non written offer. Okay, fine. So you give your agent a pre signed offer. Okay. And he can just photocopy it. So you give him a pre signed offer with your terms, your subject to, your deposit upon removal of conditions, all your things are in that offer pre signed. And your agent has like, 100 copies of that, and he’ll just write the address in there. And he’ll write the price and he’ll just send it out.

Stefan Aarnio: So then you don’t even need to see it. And then when he says we got a fish on the hook, now you come and see the fish. Right. So you don’t need to be a part of that, they just bring you the paper and you’re done.

Stefan Aarnio: Now, imagine this, Brendan. Imagine you have a couple of these guys, like four or five of these guys, doing this. They’ve got pre signed offers, they got bullets in the gun, they can go and just start shooting, and they just bring the paper. That’s you get a lot of deal. Any more questions about that?

Brendan: No.

Stefan Aarnio: Okay, awesome. So this, ladies and gentlemen, is mass offers. Main agent, or you go direct system. We covered all the general idea around it. It does take some skill, it does take some time, does take some effort. But if you do this. Great way to get a lot of offers out in the market.

Stefan Aarnio: I’m Stefan Aarnio. I want to hear what you think about mass offers in comment below. Don’t tell me it doesn’t work. It totally does work. But the question is, do you work. Respect the grind. We’ll see you on the next video.