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How To Make A Real Estate Offer: The Ultimate Beginner’s Guide

Published on Friday - December 12, 2014

One of the defining characteristics of a real estate investor is their ability to not only generate leads, but close them. For beginner investors, the biggest question that arises when starting out is, ‘how to make a real estate offer.’

The ability to negotiate for what you want is one of the greatest qualities a business owner can have, and it’s a key aspect to understanding how to make a real estate offer. Whether asking your boss for a raise or trying to get a bargain at a local home sale, negotiating is a major component to success in business, especially in real estate. That said, how to make a real estate offer essentially comes down to understanding both the property details and the seller.

But how can investors go about trying to get what they want? Too many beginner investors are caught up with what they should offer, instead of what they think they can get the property for. As the old adage goes: you never know what you can get unless you ask. If you negotiate as hard as you work other aspects of your business, you will find that you will end up with better deals and more profitable properties. Moreover, understanding how to negotiate is the first step in learning how to make a real estate offer.

Beginner’s Guide: How To Make A Real Estate Offer

Real estate offer

What do you really want?

The first step in any successful negotiation is to ask for what you want. This is especially important for those wondering how to make a real estate offer, as you will be surprised by how many times you get what you want if you ask for it. Once you declare your intentions, it is too late to deviate. Essentially, if your first real estate offer is too high, there is no way you will be able to go lower. You will have put yourself in a corner that will be very difficult to get out of. You need to start the process by shooting for a number that you really want, regardless of how outlandish it may seem. Of course, the offer needs to be founded in data, but go for what you feel is right. As long as you know the situation, you should be confident in asking for what you really want to get.

Let fear of negotiating go

The reason that most investors, and people, fail to ask for what they really want is either fear of rejection or fear of confrontation. By asking for a contingency on the contract or a reduced purchase price, they assume that the other party will quickly say no and question their sanity. This may happen on the occasional deal, but more often than not, they will simply counter your request. As long as you have firm data and numbers to support your offer, you should feel free to ask for whatever you like. If you are paying cash and there is work that needs to be done on the property, you are taking on a certain amount of risk. The level of risk can be debated, but you are supporting your offer with facts. The selling or negotiating party may not like it, but they should acknowledge where you are coming from. There may be some frustration from the other side, but this is just part of negotiation, and certainly part of how to make a real estate offer.

Have a number in mind

Just like most people have a magic number that will get them to sell, when negotiating, you should have a walk away number. If you are disciplined enough to walk away when you see that the tables have been tilted, you will only get involved in deals you really want. If you are truly willing to walk away when the seller becomes too difficult or the price gets too high, you get the best of every deal. The best negotiation practices requires some give and take, but you need to know what is really important to you and when you should walk away. This isn’t always easy to do, especially if you have invested a significant amount of time. If you get a property at a price you don’t really want, it will set the tone for everything else you do with it.

The best negotiations are the ones where both parties feel they got what they wanted. This means trying to find what it is most important to the seller or the negotiating party. This typically refers to the price, but it can also mean time, convenience or just being easy to work with. If you can give the other side what they want, you should be able to score points in other areas that you can be comfortable with.  Know where you stand firm, but also know where you can bend a little to get the deal done.

Bottom line…

The questions, ‘how to make a real estate offer,’ will comes down to an assortment of things, but none more than how you negotiate. This process is a delicate dance between getting what you really want while providing the other party with something of value. The best investors do this successfully on every deal. Getting to this level requires taking some lumps and learning some things along the way. Negotiating isn’t easy, but if you can do it well it is like closing an extra deal or two every year.

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