Making an Offer

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MAKING AN OFFER

You can contact directly to the owner by mail, phone or in person. Objective of your conversation with the owner is to find out what situation they are in. How fast do they want to sell? Is the term important or is price important? Why are they selling? You want to find out if the seller is motivated to sell and how fast they want to sell. If you understand where the owner is coming from, then you can ask yourself where you fit in all this. How will your deal solve their problem? How fast can you close? Can you offer alternatives so that both party win?

If you are interested in purchasing a property, you have to do homework before making an offer. You want to make sure the title is free and clear when you buy the property. Liens and mortgage on the property and ownership of the property should be checked. You may also want to drive by and see the property yourself. You may want to research the neibourhood. You can also talk to neighbors or contact the local real estate agent to inquire selling price of similar houses sold recently in that area. There are some websites that offer such information as well. You may hire professional appraisal service to appraise the property or inspector to find out if the house needs any repairs. The more you know, the less risky the investment is. Make your analysis. See if there is any unpaid debt or tax, zoning restrictions, how much cash flow it generates and what the return on investment is.

All of the above will give you pretty good idea what your buying price would be. Investors make profit when they buy, not when they sell. You don't just buy the property and hope it will appreciate. Expenses such as repair costs, your expected discount (say 20% if you will flip to another investor), holding fee (if it's a rehab), your minimum profit should be deducted from sale price.

Make lots of offer. Counteroffer and counteroffer the counteroffer. Ask the seller what their offer is. In negotiating, you lay out what benefits the seller will gain by selling it to you and what risks they have if they don't. Offering fast closing can be very attractive to motivated sellers who want to sell the house as quickly as they can. Investor really have to be creative and bargain the deal. Do not agree or offer something unless they give something in return.

When you make an offer, the offer should include your name and contact number, address of the property, the price and financing for the property, deposit, closing date, contingencies on a deal. You may give them earnest money or promissory note as deposit to show that you are serious about purchasing the property.

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