While the market may be a little tighter right now it is also more crucial than ever for real estate investing companies and individual investors to be even more careful about the offers the accept.
If you are flipping houses the last thing you want is to get stuck in a contract that drags on or doesn’t go through. This could not only add a lot of holding costs to your deal and dig into your profits but could cause you to lose the deal altogether if you are wholesaling and even losing any deposit you made.
So how do you choose the best offer? Those with the most experience in flipping real estate will tell you that it is definitely not always the highest offer! You should definitely look at the net proceeds to you as the seller, however speed and being confident that the deal is going to go through is often much more important.
Obviously cash buyers are much preferred when flipping houses and perhaps even necessary. However you also need to be sure that you are dealing with a REAL cash buyer. Buyers know that they can normally get a much better deal if they say they are paying cash, so this often leads to ‘cash’ offers that end up with the buyer trying to get financing. You can definitely request ‘proof of funds’ from potential buyers whether they are individuals looking for a new residence or other real estate investing companies. However these are also easy to fake and if you have any doubts if may well be worth making a call to verify the letter. Also pay attention to how much deposit the buyer is willing to make. If they don’t even want to put down $500 the odds are that they are not that flush with cash.
For those newer to real estate investing you also need to make sure that you watch out for any contingency clauses that could give the buyer an out with their deposit. If you are still wary of the deal then make sure you reserve the right to continue to market and show the property until it is closed so you can take back up offers.