Breaking into Luxury Real Estate
This is not a criticism against any of you who are new to the business, but as of late, there have been a lot of fake “investors” floating about. I am not sure whether it’s because the moon is in a different phase or if it’s simply that time of year, but more and more “investors” are starting to make their way through the woodwork. Or maybe it has to do with all of those seminars I keep hearing on the radio. Whatever the case, for those of us who actually do this for a living, it can be a frustrating experience. These fake investors are coming along and making promises that they cannot fulfill. I am not sure if it out of ignorance or just trying to string the seller along.
Again, this is not a dig at anyone new here — especially not against wholesalers, who seem to receive a lot of hate for some reason. This definitely does not apply if you are new and have all intentions to build your business on the foundations of honesty and integrity. Just wanted to put in that disclaimer before I proceed.
Related: How to Set Your Sights for a Bigger, Better Real Estate Year in 2015
This problem first started appearing a few months ago. As I was going on appointments, either at the appointment or after the fact, the seller would open up to me and feed me information on my competition.
For instance, how many other people have been by to look at the house, what price range their offer was in, and so on. And I started noticing a trend — more people are starting to show up at these houses and making offers at prices that just don’t make even the slightest bit of sense. That’s saying something because in the real estate market, inventory is very low. I know people who work for hedge funds that will buy in the area at 90% ARV or even higher, but their criteria is usually a little more strict. To give you an idea, I was hearing about offers on houses at 90% of ARV, and that’s not even factoring in the 20k in structural work and cosmetics the house will need. Yeah, something is not quite right.
The seller who had called me off contacted me based on one of the post cards that I had sent him. On the phone he mentioned that he had received “many” other cards in the mail and was probably going to be meeting with a few other investors as well. I told him, “No problem, take your time, ” and we scheduled a time to get together.
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