Piecing together a killer offer that sellers accept at first glance is critical to my house flipping business – especially in today’s super competitive real estate market. If you flip houses, then you know that the best deals go quickly.
The key to success is to craft a real estate offer that stands out from the crowd. The goal is to have the seller take one look at your offer and say yes! As with anything else in this business, there are some secrets to making offers that stick.
First and foremost you must know your particular situation inside and out. Each house on today’s market has a story, and a reason why it is being sold. Each seller or bank is different, and is going to operate differently too. If you structure your offer the same way, each and every time, you are going to miss out on a lot of good deals.
The best offers are the ones that are catered to specific situations. This means that you may feel like a detective at times, hunting down key information from your broker and/or the listing broker. The more information you can learn about the potential deal, the better.
Consider integrating the following 5 secrets into your next offer. Remember, not all of these strategies will apply to your particular situation. Do some digging around, and then determine which of the below makes the most sense to include in your offer. Doing so will help your offer be the one that gets accepted.
1) Submit an offer that is higher than the asking price
Recently I was watching a particular property for a few months. I felt like the original asking price was just too high, so I figured I would be patient.
Low and behold the bank eventually lowered the asking price by $40,000. My eyes lit up as I instantly knew that this particular property was now a great deal. Of course the bank did this to create a bidding war of sorts.
Knowing this I placed my first offer 20% above the new asking price of $99,000. In this particular situation, I knew it was worth the extra 20%, so placing my first offer well above asking price made plenty of sense. The bank must have thought so too, because they accepted my offer over any others.
2) If You Can, Put in Cash
This is true whether it is your cash, or a lender’s. From the bank’s perspective, by placing a cash offer they view you as not subject to financing. Cash offers are extra appealing to banks in particular, if they have been previously dealing with offers that involve financing.
3) Wave Inspections
This can be a little scary, but it’s a lethal way to structure a killer offer. I wave inspections quite a bit now, unless I feel like there is no one else putting offers in on a specific property. Of course you really need to rely on your broker to help you determine whether or not this is the case.
I recently waved inspections on an offer I placed on a house that I knew was receiving a half dozen or more other offers. Fortunately my offer was the one that got accepted. Who knows if waving inspections sealed the deal for me or not – but I like to think it at least helped.
4) Say You Can Close in 2 Weeks or Less
We all know that banks are not going to close in 2 weeks or less. However when the bank sees that you are willing and able to close in 2 weeks, it makes your offer stand out. Of course only include this if you are actually able to close in such a short period of time.
5) Know Who the Seller Is
Identify whether you are working with a bank owned property, for sale by owner, short sale or wholesaler and really try to understand the situation from the seller’s point of view. You need to cater your offer differently to each seller, and structure your offer in a way that will appeal to your particular seller.
This is by far the most important tip I can provide. Remember that you are working with people, even if you are dealing with a bank. There is always another person at the end of the line, reviewing your offer.
What can you do to make that person get excited about your offer? How can you make your offer stand out among the crowd?
When it comes to making offers, the above 5 secrets are really just the tip of the iceberg. As with anything else in life, you will learn the most from getting out there and placing your own offers.
Expect to succeed, but don’t become discouraged if you miss out on a few deals – especially if you are just starting out in the house flipping business. Remember to stick to your MAO (maximum allowed offer) and be sure to not let your emotions get the best of you.
Believe me; I remember very well how nerve wrecking this process can be, especially if it is your first time!
What are some of your secrets for making offers?