So check it out. We get this question from this young man that basically said,
"alright dude, I've been reading your books, you guys have been educating me, so
I'm ready to go to town." By the way, good job! Good on you. I love it. But
you're out there on Zillow and you're like I found this house, it's in Spokane
Washington. Is it a good deal?
So this what we're going to do. Steven and I we're just going to actually hop in. We're
going to take a look. We're going to crunch some numbers and then we're going to kind
of give you an idea of whether what you might be looking at. Here is a good deal.
I got my calculator. Boom! And pull out your own calculator and do the math
along with us. And so we're looking at a home here it's at 14517
East, Broadway Avenue, Spokane Valley Washington. It's a four-bedroom
two-bath 2,400 square feet. So we're talking about a really basic home here.
And it's really interesting because in the description they say Great Valley
Rancher, three bedrooms, two baths. I'm like, "oh fourth bedroom non-conforming
under space for a fifth one below." Great Valley Rancher that gets me hungry. Oh yeah.
Makes me think of Hidden Valley Ranch and my grand cherry beans. Okay, so it's easy to look at something
like this. We can check out some of the pictures and it's like, okay the only
picture. Let me see there's more here. Check this out. Oh yeah huh, blue walls.
Check that out someone likes blue into hand and turquoise chairs. I
would only do the deal if the chair comes with it. The green walls, we got a lot of
colors in here. This is great. This is why you're getting it for a discount. No
everyone's it's just pink dude. They're
missing a light bulb right? I mean this is a super basic home right? You got
standard cabinets, everything's oak.
Yeah, it's linoleum. Looks like that's probably the linoleum right there.
Yeah. Moving along here, I think they used a wide angle lens to make everything
look bigger. Yeah. That space is probably forth.
Now, you got your backyard grass. I got everything. So really good basic house
and for a friend that's asking... Probably really good rental. Yeah absolutely. And
the question is, is this a good deal? So let's look at the numbers. Yep. Okay, so
first of all, it's for sale for a $185,900
and Zillow has a Zestimate of $208,468.
So what we're going to do is we're actually going to take the
price that it's for sale. We're going to divide it by what Zillow is saying it's
worth and we're just going to say well based on Zillow does it look like there
could be some equity? And so if you punch in the numbers, a $185,900
and then divide that by what you think
it's worth, $208,468. It actually ends up saying
show me. 89%. So that .89, you
could multiply that by 100 and then it would basically say we're at 89.2%.
Now, if you subtract 89 from one, it's really going
to reveal that you have around 11%.
equity if Zillow is accurate and their estimate here and their zestimate.
So before we actually talk about that part, what I want to tell you is that,
yeah, it doesn't look like... if that were a true zestimate, that we are at 11%
equity then you'd say? Yeah, that's a decent equity. Yeah, so you're
talking about what is that? $20,000, like $22-23,000
Yeah. And by the way, if you then go and make an offer
saying, "you know I'm really trying to get to 15% equity like we
talk about the book." Then all I need to do like for example take $208,468
you too, $208,468. Yep. And we're going to multiply that by 0.85
and if we're 85% of value, that tells us that we would need
to get the home for $177,000. So that's only $7 or $8,000
dollars off if you want a 15% equity position. So I might come
in on this deal and say you know what, we're going to offer $170,000. 15
grand below, it is a little bit of a lowball offer. It's not necessarily
disrespectful, it's not $20,000 below, 30,000 below. I would put
that offer out there. See I have a different opinion on this. A little
bit which is offer whatever you want to offer. I mean there's people
out there that get offended or they want to get offended at your offer but
honestly, I have also known people that have made massive lowball offers and
just said, "look, I'm not trying to offend you. Here's my offer. If you can take it,
great! If not, that's fine." It never hurts. Put the offer out. Yeah. It never hurts.
So put it out there. Yeah. Like Kris said, if you want to offer a
$170,000, Make the offer. The very worst thing that
will happen is they'll say, "forget you." right? The best thing that could happen
is they'll say, oh, I like that offer, yeah, we'll do that" But chances are something
in between what happened. Where they'll come back in the go she ate a little bit
and say, "you know, would you do 180? " You'll say, "well, I could do 175."
Well, what about 182, I can do 177." You know and you'll land right
there around your 15% probably. Now just two things that you need to
know about this. The first one is when you negotiate, try to do as much of it
verbally as possible, if you can. Because you can write up an offer, send it to
them and say, "you've got 48 hours to respond." And then they're like, "well, I'll
meet you in the middle, you got 48 hours to respond." And then weeks gone by and
someone else bought the house because they did this really cool thing called
telephone. And they actually say, "hey how are you doing? Good. I see you have a
house for sale? I do." "Listen, it's a little crazy but I got a client that
they're qualified and they really just want to pay that 170 mark." "Be honest.
If we submit that offer, do you think we got a shot? I think it's worth putting
the offer in. Really? Yeah. Do you think they're going to counter? They might.
Come on dude, what are the numbers? What do you think they're really needing
to be at? Just get real with me. Let's save some time. Yeah I can't
tell you exactly what they're looking for. Of course you couldn't. But
you could probably put that offer in and they make counter with
a little bit. They make counter with a little bit. Sure. Awesome! Hey, we're going to
get your offer, thanks. Okay, sounds good." Click. What do I know right now? That
they're going to counter a little bit. And so by the way... Or you could put it a
little bit higher offer in. Thank you. So instead I might say well I could even be
on that phone call be like, "so I'm just saying let's just say that we submitted
for 173, do you think that there would still be a counter? You could try that.
Okay, awesome!. Thank you. We'll see your offer shortly.
Okay. Okay." What we're doing right here is... Listen, videos not even supposed to be on
negotiating this. Dude, this is how actually you get in on some of the
really great deals without needing to waste a lot of time messing around. But
anyway, that wasn't what we want to show. This is what I would really want to talk
about. The question is, is this thing really worth? Does it have 11% equity.
Is it worth $208,000 and would I ever trust Zillow? Steven, do you trust Zillow?
I don't trust Zillow. With your life bet? I don't. What if you had to put all
your children on it, would you bet on it? Some of them. No I'm just kidding. No.
Okay, so here's the deal guys, Zillow, this whole ideas estimate, I'm glad they gave
it that name because estimate means pile of crap. It might be right on, but it might
be 20% high, it might be 20% low. Because here's the deal, the only way to know what something's
worth is what someone's willing to buy but dang it! You're the buyer. You
don't know if you really came across a really good deal here. So what you need
to do is get with a competent realtor and actually get him to do a CMA.
Comparable market analysis and say, "hey, find me a half a dozen or three other
comparables. Things that have sold. That are closest similar nature just like it
watch your other video on CMA, we talked about this. And if it comes back and
they're like, "actually, we did to see men and it came back at not too away to came
back at 2:11." "Oh Zillow may have been actually short by
three grand." or that happens sometimes. Zillow fluctuates right? Anyway..Yeah or
it could go the other way. And it could be like, "Oh actually we're showing that
this home is worth 187. You're like, "hah! Zillow almost snagged me there. This
thing's got 1,100 of equity not 11% of equity
right? So, you got to get that CMA so that you can put in an offer based on where
you want to end up. And we hope this video has been useful for you and just
saying wow! when you think picture... And by the way, how easy was it? Dude, you all can
go onto Zillow, you can all go to your local MLS and start you know screwing
around with some of the information we give you. You can get out there and start
learning how to crunch... Do you see how simple it was to crunch those numbers?
You also see the thought process. So I'm really appreciated this video because I
think it's a good example for all of you to know what happens in an investor's
mind and you're actually looking at doing some like this.
you