The key to making money is making offers, right? While that’s certainly part of it, getting offers accepted is what causes the cash to flow! And flow it will if you follow a few simple steps.
1. Whenever possible deal directly with a property owner. Dealing with principals will make for better and more effective negotiations and provide a basis for creating a synergistic solution. This will result in the other party having greater buy-in and increasing the probability they will see the transaction through to the end.
2. Be sure to learn their motivation…”Why are they selling?” your offer(s) must solve this issue. To often investors fail to understand what the other party’s problem is and attempt to solve something the other party may not even consider an issue. People like to do business with someone they trust. In order to do this you need to build rapport and focus on their problem.
3. Whether you’re working with a real estate agent or direct with a home seller you need to be the one making the offer(s) and be present. This provides you an opportunity to explain, clarify or modify your offer
4. Never present a single offer. If you’re a one-trick pony; you know what I mean 70% minus repairs (the MAO formula) or 65% minus repairs (the wholesale MAO formula) you’ll have a tough time closing deals where the debt on the property exceeds your offer. This is not a one-size fits all business. Learn how to become a transaction engineer.
5. Make multiple offers, one all cash, one some cash now and some cash later, and no cash now and more later. Give your seller a choice and let them know you want them to accept the offer that best meets their needs.
6. Be prepared to help the seller understand your offers. You can remind them that you are running a business and that if you cannot make a profit you cannot stay n business (though that’s not their problem).
7. Let them know that you can close quickly (or on a schedule that meets their needs) and you are willing to buy their house “as-is” and they won’t have to do any repairs.
8. Your lowest offer will be your all cash offer because with banks not lending, cash is expensive to come by and therefore a greater discount is required.
9. Upon presenting your offer(s) sit quietly for a moment or two and allow them to process the information. If they ask questions, provide answers. If they don’t ask questions, you can ask them which offer do they find most appealing? It will give you an insight into which type of offer might work.
10. Ask them what they plan to do if you don’t buy their house? If you don’t close on the spot, you can always remind them that they might want to consider you Plan B because everyone’s situation will change with time and circumstance.
Do you want to learn how to come up with strategies like this on your own? If you’re like most investors today, you’re facing no money, no credit, and no idea where to start. That’s where the right instruction can come in! Join us on April 2-3, 2011 at the REI Rainmaker Retreat in Orlando, Florida for two days filled with quality instruction on how to profit in today’s real estate market. From freeing up your time, to finding properties that your competition is missing, to running your business on free tools that you can use from anywhere…we’ve got all the bases covered. Tickets for both days are on sale right now for just $197 is you use the code “CREIG” at checkout.