Real estate is typically referred to as a numbers game. The more leads you get, the more deals you can close. While the concept makes sense in theory, you need to be able to convert opportunities when they come your way. One of the ways to convert more deals is to improve the offers you make, or at least how you make them. There are many investors who still think they can submit an offer, wait for a counter offer, and close somewhere in the middle. In today’s market, unless your initial offer is attractive, you may not even get a counter offer. More offers are lost with the initial offer than anything else you can do. If you are going to make an offer, make it one that you think will get accepted. Here are a few ways to make the right offer, and give you the best chance of acceptance:
1. Put The Seller Ahead Of Yourself: Instead of thinking that you can steal a deal with your low-ball price, consider the seller’s perspective. The best negotiations are the ones where both parties feel happy with the outcome. Before you submit your offer, ask yourself why the seller would accept it. Sending over a low-ball offer just because the house needs work will probably not get the job done. If you do make a low-ball offer, it needs to be accompanied by a realistic list of repairs, or similarly priced comparable sales. Without this, you run the risk of angering or insulting the seller to the point that they may not even counter. Always think about what number you are submitting your offer for, and if you think the seller really would accept it. If not, don’t even send the offer. You never know what a particular seller will take, but unless you can justify your offer you may be doing more harm than good.
2. Be Sure To Grab Their Attention: Even though you may be in a buyer’s market, a seller doesn’t have to accept any offer. Before you even submit an offer, you should know something about the seller’s situation. Are they facing foreclosure? Is the property already banked-owned? What is this lender’s track record with short sales? How long has it been on the market? The more information you get, the better position you will be in to make an offer. Your first offer is the first impression they will have of you. By making a fair and firm offer, you set a precedent for the rest of the negotiation. Whatever you send, make sure you have plenty of information to back it up. You also want to make sure that everything on the contract is attractive to the seller. If you want to get your price, you need to make some concessions. You had better be willing to close quickly, waive certain contingencies, and have a large down payment on the contract. These are items that will make your offer stand out, and greatly increase the odds of acceptance.
3. Be The Path Of Least Resistance: The reason that lenders are willing to accept reduced cash offers is because of the ease in which they can close. If all other things were equal, they would certainly accept the higher offer. When submitting offers, you want to make everything as easy as possible for the seller. This starts with the submission of the contract you send. Make sure everything is clean, legible and signed in all necessary places. If you are paying cash, be ready to close in seven to fourteen days. Anything longer gives the lender reason to look elsewhere. The down payment you put down shows that you are willing to have some skin in the game. This is especially the case on lower priced properties. If you have the cash to pay for a $70,000 property, you should put at least $5,000 on the contract as a down payment. The easier you make it for a seller to accept your offer, the more likely they will.
4. Be Decisive: In a perfect world, the seller will accept your deal and close in two weeks. This is the exception, however, rather than the norm. In most cases, there is some negotiation room. The first thing you need to do is follow up with the seller or their agent within 24 hours of submitting your offer. Don’t press for an answer. Simply make sure they received it, and if they have any questions. If and when you get a response, you need to be prepared to follow up. Have a number in your mind that you are willing to pay for the property. If you already hit it with your first offer, than walk away from the deal and monitor it from the sidelines. If there is a price reduction or the house is still on the market in 30 days, you can revisit the deal. If you want to make a counter offer, you should make it at your walk away number as your last and final offer. This puts some pressure on the seller to make a decision. Some do not like their feet being put to the fire, but others need this finality to make a decision. Whatever you decide to do, you should have it mapped out before you submit your initial offer.
Getting more offers accepted is about doing the little things right. By concentrating on the seller, the contract, and where you may counter, you are doing the little things that are really important. These little things will help you get more offers accepted.