5 Strategies To Make Your Offer Stand Out From The Competition
By Paul Esajian on May 19, 2017
With increased popularity there is increased competition. The real estate investing business has grown by leaps and bounds in recent years. There are more people interested in real estate than ever before. It is not enough to simply know the business you need to stand out from the crowd. How you present your offer can help get you an extra handful of deals every year. In the past if you waved a proof of funds letter your offer was put to the top of the list. While paying for a property in cash helps it does not guarantee it will be accepted. It is often the little things you do in the offer that can have the greatest impact. The actions you take building a relationship or thinking about how the contract is worded can give you the inside track on a new deal. Here are five tips to help make your offer stand out from your competition.
- Understand Seller Motivation. It is important to know where you stand in every negotiation. When making an offer the better you understand the seller the more likely your offer will hit the mark. In some cases, they will come right out and tell you they are selling to avoid foreclosure or due to a recent divorce. Other times you should dig a little deeper to find out if they are looking to net the highest price or if a quick transaction is more advantageous. All sellers want to sell for as much as they can but there are often other mitigating factors. Look for clues on the MLS listing or ask your real estate agent to see what the story is from the case manager at the bank. Not only does finding motivation help get your offer accepted it can also help in finding the right number to offer.
- First And Best. Negotiation is an essential part of being a real estate investor. However, there are times when you should look at the big picture. As we stated every seller is motivated by something. It is up to you to do your homework prior to making an offer. You should be able to get a sense of the competition. If you feel the property is in high demand you shouldn’t mess around with an offer you feel will get countered. Of course, every dollar is important but on some properties, you may only get one chance to make the right offer. By submitting a lowball offer the seller may feel insulted and decide it is not worth a counter. They may not even consider another offer from you down the road. If you see value in a property you should come up with a number you are comfortable with. This should be your first offer. On some deals, you may overpay slightly but you will also get more deals closed and ultimately realize a stronger bottom line. If you really want the property your offer should reflect it.
- Close Quickly. Regardless of your goals a quick sale puts the seller at ease. Even though the loan approval process has improved in recent years there is always a sense of gloom with a 45-day closing. The farthest you should go out with any offer is 30 days maximum. There are currently loan programs that allow you to submit all your personal information while you are searching for a property. As soon as you find a deal you update the address and get started. Doing this makes is realistic to close within thirty days. You should also be able to perform your due diligence with the property as quickly as possible. The inspection time should be within the first 48 hours after the offer is accepted. Anything longer may be a potential red flag for the seller. Even if the seller doesn’t decide to close quickly having it as an option only strengthens your offer.
- Never Show Desperation. It is important never to fall in love with a property. As most people are painfully aware love makes us do things we normally wouldn’t do. If you love a property you may even be willing to overpay for it, even if you are bidding against yourself. As a rule of thumb your offer should be strong enough that there is no reason to counter. If your real estate agent insists you should only have one counter offer. The more times you counter the more desperate you appear to be. The seller will pick up and this and squeeze every dollar they can from you.
- Make It As Easy As Possible. You want to make it difficult for a seller to reject your offer. Aside from blowing the seller away with the price there are things you can do to make your offer attractive. Closing quickly helps but you should also waive all contingencies except for the inspection. Don’t ever look for any concessions for closing costs or ask the seller for something to be repaired or replaced. If you do use lender financing your pre-qualification letter should be as updated and intricate as possible. You need the strength of your loan approval to be clear as day. It is also a good idea to put down a sizable enough deposit. If the seller sees that you have a significant amount of skin in the game they will know you are serious.
Get more offers accepted isn’t about increasing the dollar amount of your offer it is about looking at the little things that sellers find appealing.