Are Sellers Rejecting All Of Your Offers?

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One of the key skills you’ll need to learn as an investor is how to structure deals. When you get really good at this, you’ll be able to pull some real magic tricks out of your hat and profit from deals that other investors wouldn’t touch because they can’t figure out how to make it work. I’m not there yet…I’m definitely still in the learning stages.  I spent my first year in real estate investing only making offers on bank owned properties, but  once you deal with private sellers it is an entirely different ball game.  In fact, I’ve dealt with lots of rejected offers from private sellers over the past several months.  Sure, sometimes the sellers simply aren’t motivated enough, but I also have to consider how I can structure and present my offers in such a way that I can increase my number of accepted offers.

In case you’re in a similar boat, I thought I would share a few tips that I’m putting into practice that I’ve received from my mentor as well as fellow investors with several more years of experience under their belts working directly with home owners:

#1: Always provide a written offer

It’s easy to think that you’re saving time by giving sellers verbal offers, but frankly everyone likes to “see it in writing.”  Regardless of whether you think your offer will be accepted or not, put the offer in writing and allow the seller a chance to review it and give it due consideration.

#2: Remember cash isn’t always king – give options!

In the beginning, all I would make are low cash offers thinking “Cash is king, right?”  Well, yes and no.  It can be king for some sellers, but not for others because it really depends on the seller’s situation.  Be sure to give the sellers options.  If you ask the seller some key questions (e.g. how much is owed on the property, why they are looking to sell, what they plan to do with the money after they sell) you will be able to determine what types of deal structures could possibly work. For example, your written offer can include a few different options:

  • Cash
  • “Subject to” (liens remain in place and you take over the payments)
  • Seller financing
  • Combination of  “Subject to” and seller financing

#3 Consider an option contract

If your intent is to assign the contract and the seller just doesn’t seem to want to meet you at a number you’re 100% confident with, consider an option contract at the sellers price and just go out there and see if you can find a buyer within the option period (get at least 90 days).  There’s no risk!  If the seller’s price is completely unreasonable, you don’t need to waste your time….but if its just a little bit too high for your comfort level, go ahead and get that option agreement signed and see what you can do with it.

#4 Consider a partnership

My mentor gave me an example of a deal he did where there was substantial equity in the property but the home needed a lot of work.  After a rehab, it was going to be an excellent home to sell to a retail buyer. What he did was set up a contract with the seller and they agreed to rehab the property, market it, sell it, and split the profits.  The seller paid the mortgage and carrying costs while the rehab was completed and they both made a nice profit when the property was sold. A win-win for everyone.

#5 Always follow up

Persistence pays.  Even if the offer is rejected now, the seller may have a change of heart later. Be sure to follow up a few months after you’ve made the offer and check in to see how things are going.  I’m currently working on a deal with a seller I made an offer to back in November! This is more common than you’d think.  Don’t miss out on deals because of a lack of follow up.

I hope these ideas are helpful. If you have others, please do share in the comments below!

Image credit: Icky Pic

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About Author

Shae Bynes is a real estate investor in Sunny South Florida. On her blog, GoodFaithInvesting.com, she provides helpful tips and an inside look at her real estate investing adventures -- obstacles, failures, & successes!

13 Comments

  1. Thanks for this article Shae. It’s a good reminder that there’s not just one way to structure your offers.
    I have a question… Where do you look for private sellers on the internet? I’ve been trolling through craigslist, backpages and I just started using olx, but I’m looking for some other sources.
    Thanks again for the information in the article!

  2. Hey Stephanie, I actually haven’t been using the internet to find sellers. I use the internet to find buyers, but I focus on direct mail and other more traditional marketing strategies (door hangers, flyers) with sellers.

    That being said, I do know people who have used Craigslist successfully plus there are certainly those who use lead capture methods such as article marketing, blogging, social media,and pay per click to direct sellers to their seller squeeze pages. I know these strategies work, but I can’t speak to any personal successes with those strategies.

  3. You’ve demonstrated the key to being a successful investor – being creative, and using the knowledge you gain from the other party to get an advantageous position over other competitors.

  4. Hi Shae!

    I am not sure if you guys use ‘Kijiji’ in the US. However, this is a very popular website in which you can find buyers and sellers. In the past I have found tenants through this website, and I have friends who have found sellers through this site, which is similar to Craigslist.

    Again, not sure if you guys use use this website as well, but it is in fact super popular in Canada!

    :)

  5. Thanks Linda and Neil!

    Thanks for the suggestion to use Kijiji, Neil. I haven’t used it but I’m familiar with it. I’ve only used Backpage and Craigslist….and Craigslist is getting tougher and diversifying but posting on multiple sites is a great way to go. It’s free after all! :-)

  6. Joe Ziolkowski on

    Hi Shae,
    This is a fantastic article! I definitely agree with the follow-up. It’s so easy to forget that a lot of people don’t do it. I’m about to re-submit an offer that I made in November as well. Keep up the great work!

  7. Shae,

    You mentioned using Option Contracts with at least a 90 day period. Are the sellers allowing you to tie up their properties for that long or are you using flex option to purchase agreements that allow that seller to cancel at any time. I’m not finding sellers that want to tie up their property if I’m not the end buyer.

    Thanks.

    Demos

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