I found a condo today that is in preforeclosure and is only about 3.5 miles from my office. I spoke with the agent and was able to go over to check it out during lunch. The owner was there, so I got to speak with him for a bit.
On the way to my car, I suddenly realized that the property was about $30,000 over of my price range! Oops.. Well, I decided to go ahead with the meeting anyway, if nothing else to get some experience talking with owners. The property is a condo and, as stated in the listing, it was a bit of a fixer-upper. The listing said they were pricing it about $10,000 below market value to accommodate the repairs. After going through the place and tallying up what I saw, I'd say about $10,000 is what it would take to fix the place up. But of course, I can't pay full price for a property, so I'd need to get it for even less than that.
The owner was nice. I tried to establish some rapport with him by commenting on the drafting table and computer plotter he had. I stated out my professional career as an electrical engineering doing some mechanical drafting, so I had some experience with both of those items. Turns out, the owner is a graphic artist, but I did feel please when he asked for my name again when I left. I didn't mention the impending foreclosure, but I did ask how soon he needed to move out. He said the title paperwork had already been started at the escrow company and he was told it would take about 30 days. I asked if moving out sooner would be a problem. His eyes lit up a bit and said no, that would be fine. There's one plus in my favor.
A strike against me, however, is the fact that the agent said she was expecting another offer on the property by the end of the day today. Now, she could be blowing smoke, but I don't think so. Condos in this development sell rather quickly.
After visiting the place, I came back to my office and crunched some numbers. The agent told me the seller, who is asking $198,000, wouldn't go much below $195,000. My best offer would be in the $160,000 range. Because the discrepancy was so great and because she was expecting another offer, I didn't bother writing up a formal offer. However, I did want to call her and explain my position. Unfortunately, I only got her voicemail, so I left a message explaining that, in order for the deal to work for me, I wouldn't be able to offer much more than $160,000. Because of that, I wasn't going to waste both of our time with writing a formal offer, but I suggested that she talk about my offer with the seller to see if he was interested. I stressed I would be making an all-cash, as-is offer and it would be a sure thing - no falling out of escrow. I also pointed out the seller was in a preforeclosure situation and I could close in a week, if needed. I said if those pluses could overcome the lower price, to give me a call and I would write up a formal offer and otherwise, I thanked her for her time.
I don't expect to get this property, but I do feel I gained some lessons in people skills, which is always useful.
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