One of the most important things you can do as an investor, or in any business for that matter, is to spend your time wisely. If you are spending half your day talking to people that do nothing to forward your business or buyers that are not serious about buying, you will quickly lose days that will turn into weeks. You need to be able to make quick decisions and work only with people that you know are serious about the business. If you are selling any properties or working to grow your buyers list, you know the importance of being able to act quickly. Working with a buyer that drags their feet or does not have all their ducks in a row will cause delays that will slow the process and ultimately waste your time. Before you get involved with any buyer, you need to know just how serious they are. Learn how to tell which buyer will be best for you to work with.
The first measure of seriousness, regarding buyers to work with, is based on what kind of funds they have available. There are very few exceptions where a buyer can act quickly closing only with mortgage money. If your buyer has access to capital, they would be prepared to provide you with a proof of funds letter or a letter of intent as soon as they found a property they want to make an offer on. If this letter is not updated or the funds just recently added, it can be a bit of a red flag – but far from a deal breaker. If they take a few days to get you something in writing, it could be a sign of things to come throughout the process. Never assume that a buyer has funds to make an offer without seeing them. If they question why you are insisting to see it, tell them it is just a personal policy. Asking to produce the source of funds they are buying from should not be difficult for them to do. If they are serious, such a request should not catch them off guard.
Many buyers try to get discounts with the promise of future business. This may come, but should never be guaranteed from the first deal. If your buyer is looking to get your property at a steep discount largely because they are making a cash offer, they may not be what they seem. There is one thing for negotiating and trying to get the best deal possible, but when you make a low-ball offer on an already discounted property, they may be trying to test your moxie. For some buyers, this approach works. However, if you are an experienced investor and seller, this proves to do nothing more than waste everyone’s time.
In addition to having the ability to procure cash, a real buyer will also be ready to close in a short amount of time. A real buyer will mind their due diligence with all inspections in as short as a week or two. If they drag their feet or come back asking for concessions or credits, view their inquiry as a red flag. Every buyer will try to get the best deal possible, but real investors know that “as is” means “as is,” and won’t even bother negotiating. The same goes for the amount of time on any purchase they make. They should be able to get the title and inspection back in as little as five days and make a firm decision by 10. It you are still waiting for a closing date after two weeks, you need to take the bull by the horns and give a definite decision date before the process drags on any further.
Finally, a real buyer will be comfortable putting some money down for an earnest money deposit. This number can be as little as a few thousand dollars or less, but they should have some skin in the game. Putting down a few hundred dollars or nothing at all should not instill much confidence in you. This really isn’t about the money, but rather a sign that they know the process and are willing to accept a small amount of risk. If your buyer has skin in the game, they will be much less likely to walk away from the deal at some point.
There are several smaller signs that will tell you if a buyer is serious or not. If they answer your calls or respond quickly to your texts and emails, you may be in good hands. If someone really thinks they are getting a good deal and wants your property, they will make themselves available and respond in a short amount of time. Secondly, they will want to work with you to make the transaction as smooth as possible. This means being flexible with dates and knowing what needs to be done before it has to be done. If you can find something that does what they say, you may have found a buyer that you can do business with for many years down the road. But, as they say, actions always speak louder than words. Don’t go making any promises until the deal is actually closed.
Finding a good buyer that you can develop a relationship is a wonderful thing for your business. This usually takes time and plenty of trial and error. If you feel your buyer isn’t serious, don’t waste any more time and move on to the next one. That is time you will never get back.