Some months ago, I purchased a house with no money down as a wholesale house deal from the wife who lived in Nevada but whose husband lived over seas in Venezuela. In investor slang, we call it missing or absentee seller. I have been in real estate investing for years but this was a new twist even for me. However, it turned out to be similar to working with a standard out of state seller in the U.S.

In order to close on the deal, the documents were notarized by a notary who would be recognized in the U.S. Therefore, the husband had to travel to the U.S. Embassy in Venezuela. This absentee seller traveled some 250 miles over rugged terrain which took him a full day and a half. Unfortunately for him, he failed to get one document signed and thus had to travel back to the same U.S. Embassy over there to get the missing document notarized. And if that were not enough, the notary was only available two days a week. Prolonging the closing and the seller from getting their much needed monies.

If that was not enough, Venezuela of course is on a different time zone than the U.S. These obstacles made the wholesale flipping house deal a bit difficult to close in my advertised 48 hour closing time frame. Now a day’s I tell folks it will take 5-7 business days to close, just for that reason. I think it took about 30 days to close that particular wholesale flip or ugly house deal if you will.

With out-of-town and motivated sellers, I go through the same basic line of questioning and listening as if the seller were local. The difference is that I take more time on the phone to develop a more in-depth rapport. Rapport is important because the motivated seller may be unaware of what repairs are needed, what the possible ugly house looks like, the current market conditions in your (the investor’s) area. Often these sellers do not know what a real estate investor actually does. Therefore, trust is the main ingredient in getting a signed contract for a wholesale house deal.

Typically I like to wait 48-72 hours before I fax the agreement to the motivated seller, in which time I negotiate and discuss the property on two or three separate occasions. If, as an investor, you are in a hurry, the seller may interpret this to mean, “He is going too quickly, something must be wrong.” and back off from the deal. Remember, they are out-of-town sellers, and thus may be leery of the process. You will become the seller’s eyes and ears while rapport increases. He, unconsciously, needs this time to establish trust in you and your title company.

References and testimonials of your title company and a list of former sellers in which you have purchased houses add credibility to your person. What is great about having a solid real estate investor’s website is the ability to put testimonials on it.

I usually tell the seller at some point during the conversation that (insert your title company’s name) is the title company which my partner and I have used for over seven years. Encourage the seller to call the title company and give them their contact info so they can get acquainted with the title company. “Call Ms. Green and she will explain that we close with all cash on all of our deals within 5-7 business days.” I do not say she will verify who we (the investors) are. You don’t need verification, so avoid planting that seed!

Then I ask if the seller has had a chance to visit our real estate investor website and read the testimonials from other happy sellers. I leave it at that. One must be careful to not make it a game of convincing the seller of your credibility.

Here is a word about the sellers attorney. I have dealt with out-of-town attorneys who were managing the seller’s transaction who require time to study the deal; allow them this time. They will typically go with the investor they feel most comfortable with. Attorneys are skeptical professionals when working with investors who are flipping houses. They likely can tell by our level of education as an investor if we are qualified buyers or not. As an investor, it is extremely important to speak with confidence about all of the transactions being dealt with.

Then fax the completed agreement to the seller. The cardinal rule is never to sign the contract first. Allow the seller to sign, then he can fax it back to you and then you can sign and fax or mail him a copy. Simply remember that trust takes time. If the seller says he will get back to you, thus putting me off, I am very casual and reply “Sounds fine.”

Once the contract is faxed, I call the seller immediately to ensure he received the faxed agreement. I say: Question: “John calling to see if you got the fax?” Yes I did. “Fine, (calmly) I wanted to make sure it did not go to the same place as the other sock does that always gets lost in the dryer!”

Humor and a jovial tone can go a long way in establishing trust and close your wholesale deal. Then usually within two to three days a signed contract should come over your fax. Wait until the third day and if you have not received the fax, then call the seller and inquire to its status. The reason the seller may wait to call you is that usually he needs to talk it over with the spouse and also to check your website testimonials and title company out.

If you have stayed in touch and kept a great report with him, he typically will not entertain another investor’s phone calls. Because being out of state he is at the mercy of the investor, sellers need to have total trust in the investor, and you have already established that trust with well thought out and placed questions.

I hope this helps you in clearing up some misconceptions of working with out of state and out of town sellers.

Happy Trails,
Bill Guerra

Tags: , , , , ,