At one point or another, investors need to face the facts: not every offer they make will be accepted. As much as you may want a property, it is up to the seller to move forward. To that end, you can spend weeks negotiating, only to have a deal fall through at the last minute for reasons that are out of your control. There are really any number of reasons your deal may not get accepted. When you are confronted with such a scenario, it can be crippling — if you let it. Instead of getting angry and blaming the seller, you should take a step back and see if you could have done anything differently. Whether you know it or not, the little things you did throughout the process could have had the biggest impact. Reflect on your actions, and try to learn how you can improve your next offer.
1. Price: All sellers have their motivation, and it is up to you to determine what is driving their decision. All things equal, however, money will ultimately be the deciding factor. Pay attention to what a property sells for when you loose out on a deal. Take note of how it compares to the one you made. On one hand, you should never bid against yourself, but on the other, you need to know when to increase your offer. You need to know how your offer stacks up to other comparable homes in the area. As long as you can justify your price, high or low, you can live with whatever happens. If you like a property and see value, you should make a strong offer that catches the seller’s eye.
2. Failure to find motivation: Regardless of who your seller is, you need to find their motivation. Motivation is what drives sellers to either accept or deny offers. Instead of wasting time in the early stages of the process, you should do everything to find out exactly why they are selling and what they want out of it. In some cases, such as dealing with banks, they are motivated to get the highest price with the safest closing. Other times, like dealing with a homeowner in foreclosure, they are just looking to get out of the property as quickly as possible. Whatever the motivation is, you need to find it and use it to your advantage. If a seller wants a quick closing, you should offer cash and be ready to close as quickly as possible. If they are interested in the highest price, your first offer should be your best one. Take the time to ask plenty of questions, and listen to the answers. Failure to do so will cause you to lose deals that you should be closing on.
3. Sell the seller: A huge part of getting offers accepted is understanding and recognizing your competition. There are times when submitting a strong offer is not enough. You need to back that offer up with data, as to get the seller to see things your way. If you are making an offer on a bank owned property, include comps that are in line with your price. If the property needs work, don’t hesitate to account for the cost of repairs and a work estimate. There is nothing saying that you can’t do the same thing with traditional sellers. When you start making multiple offers a week, you will find that it is the little things that can swing things in your favor. A couple of accurate comparable listings or work estimates can place you ahead of the pack.
4. Follow up/lack of negotiation: We are currently in a sellers’ market — at least for the most part. This means that they have the upper hand in most negotiations. No longer can you start with a low offer, wait for a counter, and meet somewhere in the middle. You need to make every offer a strong one, and expect that there will be competition. Yes, it is important to save money wherever you can, but you also need to look at the big picture. Don’t waste anyone’s time by making a minimal price increase when they counter your original offer. When a seller makes a counter offer, they are serious about selling, and selling to you. Recognize this, and make your next offer one they will accept.
If you like a property, don’t wait to take action. Every day you wait leaves the door open for someone else to swoop in and take the deal. If you lose a deal, follow up in a few weeks. You can probably get a handful of deals just by following up and being in the right place at the right time. A rejected offer doesn’t mean it is lost forever. Learn from it, and take your lessons into the next deal you are looking to acquire.