We use the Make Offer Checklist when we are presenting our offers to the seller.
Typically we would prepare a number of offers to make to the seller with the Structuring Offers Checklist to guide us in the process.
Once we have the offers structured, we would then schedule a time to meet the seller to present the offer. Face to face presentation is preferred, but when dealing with sellers that are not in your local market we have an additional Making Offers via the Telephone checklist that we will use to remind us of the best practices for presenting offers over the phone.
Of course part of presenting offers is being able to handle objections. The Real Estate Investor Wiki has some great additional resources for How to Handle Objections and specifically How to Handle Seller Objections.
The meat of this checklist though is the Making Offers Checklist which consists primarily of our 49 page Seller Presentation that we go through with each seller in person.
The Seller Presentation is critical to us presenting offers since we use it build trust, credibility and use it a sales tool for talking about the various ways that we buy properties before presenting the specific offers to the seller. A downloadable copy of our Seller Presentation is available for our Real Estate Investor Bronze Members.
Until my next post,
James
I’ve been working on updating some of the checklists that we use for buying properties (the link is for exclusive resources for our Real Estate Investor Bronze Members). This process reminds me just why it is so important to use checklists when looking at and buying properties.
If I told you that committing know to using a checklist could save you, at a minimum, $10,000 would you do it? I hope so and it can save you at least that much and probably much more.
Think about it: don’t most of the life critical or extremely expensive processes you know of use checklists to make sure they are doing everything right, consistently every time? Think about your medical procedures or airplane systems. By following a well documented system and meticulously following the steps you significantly cut down on mistakes.
Plus, by taking the time to think through the entire process before hand (and improving it as you use it and make better distinctions) you can protect yourself from known dangers and cut out emotion in the buying process. Remember, you want to buy logically and sell with emotion and checklists allow you to do that.
Until my next post,
James
So, you’ve put out some Bandit Signs that focus on finding motivated sellers with Ugly Houses (links are resources for our logged in Real Estate Investor Bronze Members). A seller has called and you’re at the point in your real estate investing buying system where you are structuring your offers that you will make the seller to buy the property.
So, how do you actually determine what you will offer as your all cash offer to buy this particular property? Well, that is where the Ugly House Maximum Allowable Offer Formula comes in.
This very simple formula allows you to take some very basic information about the property and determine, very quickly, what the absolute most you should be offering to purchase this house if you were paying all cash. In fact, if you plan to use a Hard Money Lender to lend you money on the property, this formula actually already takes that into account. Just make sure your formula includes the exact limits that your specific Hard Money Lender has given you for their lending requirements.
Also, the Ugly House Maximum Allowable Offer Formula can easily be used if you plan on putting the house under contract and then wholesaling it to another investor as well. Just be sure to add in your wholesale fee when you calculate the offer and put the house under contract.
So, check out the formula and use it whenever you make an offer to buy an ugly house.
Until my next post,
James
In my last few articles, I discussed how buying a house subject to the existing financing is similar yet different from leasing a house with an option to buy. I talked about how one is not necessarily better than another, but that each has its advantages and disadvantages depending on what you are trying to accomplish.
Now, I will share with you a strategy for making an offer to buy a house subject to the existing financing where the similarities between “subject to” and “lease options” are used to make a stronger, more understandable offer to a seller.
First, you might suggest in a trail close something like this: “I’m not sure if I can buy your house for that price, but would it help you at all if you did not have to worry about making the payments any more?” Motivated sellers usually reply, “yes, that would really help.” If you don’t get that type of response you might not be dealing with a motivated seller.
If they ask you what you mean you might say, “well, I could make payments to you for the amount of your loan while I am selling the property if I decide to purchase the property from you. Might that work for you?”
So far, you could be talking about either a lease option or buying the house subject to in the example. How you actually structure it can be discussed on the paperwork. In a future article, I will be discussing some strategies on what to do if you present an offer to buy the house “subject to” and, after discussing it, they do not feel comfortable with it.
Until my next post,
James
P.S. Upgrade to our premiere Real Estate Investor Bronze Membership today and get access to a wealth of additional resources, training and consulting.
You’ve probably heard it before, but everything is negotiable. As someone who has dealt with literally hundreds of real estate agents in markets all across the country as well as thousands of real estate investors, I see and hear many strange things.
It amazes me what some investors think they can do and it amazes me even more what real estate agents and brokers don’t think can be done.
Let’s talk about Earnest Money as an example. I’ve talked to a handful of real estate agents that believe you can never put a house under contract with just $20 in earnest money. Not true.
I’ve done it. Dozens of people I personally know have done it. Can it be done via the Multiple Listing Service (MLS) when working with real estate agents? Not usually. However, earnest money is completely negotiable and can be used to show that you are either a weak or a strong buyer.
If you go to a real estate agent to write an offer to buy a house and you tell them that you want to put up $20 (or some other ridiculously low amount) as earnest money, I would not be surprised if they told you to work with someone else. If you were my client, I would not want you wasting my time–especially at $4 per gallon for gas–taking you to see properties only to have you show the seller you’re really not serious when making an offer to buy.
Putting up a fair amount in earnest money can show that you are a serious buyer. If you are presenting a similar offer to another buyer with a larger earnest money deposit, you have a better chance of getting your contract accepted and buying that property.
Does that mean that you need to put the money up when you write the contract? Not necessarily. Talk to your agent or broker and find out if you can write the offer and have the earnest money due within a few days of having the offer actually accepted.
If you are actively investing and making multiple offers, it really helps to conserve your cash and only pay earnest money after a contract is accepted. I recommend this to investors that write contracts with me in my market. This is especially true with short sales and bank owned (REO) properties because it can take weeks, or even months, to find out if a contract has been accepted.
So, while you may be able to put a house under contract with very little in earnest money, it is NOT the norm when buying through the MLS and shows that you are not serious about buying. Rely on the experience and knowledge of your local real estate agent to discuss the benefits and downsides associated with the amount and timing of earnest money in your particular market.
Until my next post,
James
P.S. For our Real Estate Investor Bronze Members where I teach strategies for buying properties outside the MLS by using marketing it is a very different situation and relatively low earnest money is the norm not the exception. Sign up for Real Estate Investor Bronze Membership to access our extensive training collection of over 100 topic specific real estate courses plus on-going training and consulting sessions.
Some time ago I met with a couple of clients of mine to write an offer on an investment property. This was their first investment property and they were a little nervous to write the offer, excited, but a little nervous.
There were dozens of questions running through their heads: Would the offer be accepted? Would the seller get mad at how low the offer was, compared to what they were asking? Would they counter? What would they counter for? Should we ask the seller to pay closing costs? How much earnest money should we use? These questions and more needed to be addressed.
It’s OK to be nervous when you write an offer, but don’t let that stop you from writing the offers. We found out the next morning that the seller could not accept their offer, but they submitted a counter offer. If the sellers had accepted the offer my clients wrote, my clients would have been very happy. They had done their homework on the deal. They knew what they could rent it for. They knew what repairs it needed and had gotten reasonable estimates to get those repairs done. They knew what they could sell it for and they knew about their financing situation. They were prepared, and even though this offer wasn’t accepted, it was a necessary first step. This was the first of many offers that they’ve written.
As they made more and more offers, I suspect they were less nervous since they’ve gone through it all before. With each offer they become even more comfortable. It gets progressively easier each time. I have a saying: “The first is the worst.” I usually use it when I am talking about why you should just do something to have it done and accomplished. I use it as a battle cry to destroy procrastination caused by wanting to have everything perfect, but it is appropriate here too. Writing your first deal is usually the most uncomfortable because much of the process and outcome is unknown to you. So, go out there and make an offer where the deal will work for you if it is accepted. Get over the fear earlier rather than later. I think you’ll be glad you did.
Until my next post,
James
P.S. One of the biggest advantages of having a consultant or coach is that they help push you to do more for yourself than you might otherwise do on your own. By signing up for our Real Estate Investor Bronze Membership you not only get access to what I believe is the absolute best training materials available anywhere on investing in real estate but you also get on-going live training, consulting and support in your own real estate investing business. If by having consulting it helps you do just one more wholesale deal for an extra $10,000 wouldn’t it be worth it? Sign up today for Real Estate Investor Bronze Membership and let’s work on getting your real estate investing business to the next level.
