Do you make your offer right away?
Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
I was wondering how you go about making your offers. What I mean is, when you first go out to see a home, do you make an offer on the spot? Or do you go home and think about it and call them back with an offer?
Do you ever make offers on the phone or strictly in person?
Do you mention on the phone or by email when you're setting up your appointment that you're an investor and your offer may be low?
Would love to hear any words of wisdom on this as I'm considering making several offers this weekend. Well, I mean I have several homes I'm considering making offers on. If one is accepted, I will probably finish that deal before making more offers, since I have a very small amount of cash.
Marilyn,
A couple of suggestions. First full disclosure: I don’t and have not ever bought a mobile home but to me RE is RE. I always make an offer on every property I look at or talk to on the phone. They may not like the offer but I always make them. Remember, your job is not to judge or decide what they are willing to take. You job is to find the facts of the deal and make an offer that makes sense to you as an investor and meets their needs. Give them options. Find out what they NEED not what they WANT. You don’t buy if you can’t find a way to make money. Period. You can’t and won’t make their problem your problem. Be honest and fair and you will have little problem. The most important criteria is their motivation level. If they are not motivated, you are 99.9% wasting your time. Why? If they are not motivated for some reason, then why would they sell it for less than it is worth or on good terms or both? Answer: They won’t. Remember that.
Don’t make it more complicated than it is. After motivation, all you need to find out is what they owe, what it is worth, the repairs and what they will take. That is it. Your fear of making offers will go away as you make more of them so don’t worry about it. If they are motivated, they will be looking for reasons to do a deal and not the other way around. It seems counterintuitive but you will see this in time. Negotiating is the best part because you never know what will happen or what they may take. If it looks like a deal, put it under contract because I guarantee that if I find a deal, I will immediately so if you wait you could lose a good one. A simple one-page contract that allows you to gracefully bow out if it doesn’t meet your needs is all you need. After it is under contract, verify all the facts of the deal. This should take no more than a day or two. DO NOT put it under contract and sit on it for weeks. If it takes you more than a few days to week at most to do your due diligence, you shouldn’t be buying anything yet. As you gain experience you will rarely not take a deal because of your mistake. It will more than likely be due to something they did: i.e. additional liens, value not there (again I know squat about mobile homes), too many repairs, or other things they didn’t tell you like not owning it, etc. As long as your contract has an inspection clause or approval of a partner you can get out of any mistakes you made in your initial assumptions if the deal doesn’t make sense for some reason. Learn from it and move on.
When asked about your experience, you have two choices. Option one; say you belong to a real estate investment group that buys up to a home a week (true if you belong to the local real estate association). Option two is come clean and admit that you are just getting started and have just finished some rather intensive training from a mentor or whatever. Which is better depends on the person. Some would rather be dealing with someone with more experience and some like a newbie because they feel they are less likely to get ripped off. Truthfully, it doesn’t matter. If they are motivated, they won’t care if you don’t get every detail correct.
Don’t let the fear of the unknown stop you. Make offers and it gets easier. Find a local mentor if you can to bounce ideas off of or review your paperwork (along with your attorney). I also recommend writing a script for you to follow in the beginning, even if in outline form. You will develop your own style as you gain experience but if you have something to follow you won’t forget something you need and you will be less nervous. If you ever get flustered because you can’t answer a question, put them on hold after saying you have another call and think about it. If you don’t know the answer tell hem you don’t know but will find out. If you totally panic and freeze, just tell them you will find out the answers to their questions, run the deal by your “partners†and call them back. No big deal.
You can also make what if offers as well. Like instead of saying I will give you X for the home you say something like "What if my partners and I were able to offer this amount and these terms, is that something you would consider or not?" Keep probing and soon they will tell you exactly what they need to make the deal. You are not making "real firm offers" just asking what if type probing questions. It may make you more comfortable in the beginning.
Best of luck to you. Make offers and you will be ok. Sooner or later someone will say yes.
Mike C
Marc,
thank you for your advice. Would love to have you here for a week, too!!
I'm having a hard time finding this buyers market you're talking about, but I'm going to keep looking and trying until I succeed.
Oh, and making offers!
Depends on the property. But if everything looks good and makes financial sense we'll put in an offer on the spot. 3 of the 4 we have now were foreclosures. The other an estate home. With the REO's, most don't last too long so waiting can cost us an opportunity to get the house. If my husband is not available I'll just sign his name on the offer contracts (:
The best ones to make offers on are vacant FSBO's because you know if they are paying lot rent and are not living in the home that they are motivated or will soon become motivated!!!
1. Always ask if the home is vacant. look for and key in on vacant FSBO's when driving the speed bumps.
2. Ask how long the home has been for sale for and how much the lot rent is.
3. Find out if they still owe money on the home. If they owe money it is usually to much. Find out how much they owe.
Get them to realize that they are just throwing money away every month when they pay lot rent and that the end result is less and less each month they keep paying.
4. Ask them (with 100% confidence) what it would be worth to make it go away???? That's right folks-look them dead in the eye and ask them. True story-I asked the question about 100 times and got hung up on 99 times until the 100th person said, "I would be willing to write a check for $20k to get rid of this dead weight." You have to kiss a lot of frogs to make this business work. The key to working with PEOPLE is (both buyers and sellers) is to ask questions, listen and figure out the best way to get the people what they need regardless of what it is they say they want. Take the stance that if they are selling-they are selling for a reason. Find out exactly what that reason is....
what is your best "Lonnie" book recommendation for mobile homes?
The first rule of negotiation is the first person to mention a number loses. Let the other person set a number - you ask if that is the best they can do? Usually they will come down several times since they are motivated sellers without you having to even name a price. Once you have all the info on the home and have seen it take a day to examine it and get back with them as to your decision. explain that you are in the business to make a profit so if you pay too much, you will not make any money. If you feel your price is low - send a letter of justification along with your offer explaining just how you reached the max price you can pay for the home. Good luck on your investing - be sure to post about your successes as well as about your "lessons learned"!
Realtyman is right. I usually do this process over the phone as most folks have an asking price in mind. I ask questions like, "how much is the lot rent? Are the taxes up to date?" to make folks realize that as every month goes by the cost of the mobile home goes up to them because of the holding costs. I narrow down the price as much as possible by asking,"is that the best you can do all cash?" I do this several times in the conversation BEFORE making my offer which is most likely still way less than the best price the sellers have mentioned so far.