I'm a newbie investor and ready to make an offer on my first deal. I found the property on Trulia and the selling real estate agent said to submit an offer. Is this as simple as sending an email to the effect of "I would like to submit an offer for $XXX,XXX for the property at 123 Main St", or is there a more formal process?
I would Follow the lead of the agent. They should have the correct paperwork for you to use. Ask a LOT of questions on how the process works. Be honest with them and they will walk you through it.
@Scott Michael I'm assuming you don't have a real estate agent to represent you? I would just send them an email saying the terms of your offer and let them know you don't have an agent and that you would be happy to sign a contract with those terms if they put it together to be submitted to the seller.
I usually e-mail the LA a letter of intent (LOI). Dear Mr. Seller and Agent, I would like to express my sincere interest in purchasing your home under one of the following 3 scenarios: Cash/bank financing, or carry at higher price with x% down, or lease with option to buy at an even higher price.
Jack and Jill homeowner don't really ever do options 2 or 3, but at least it will get you in the habit of offering with and thinking about different scenarios. 2 and 3 is best for tired landlords, off-market.
If the seller picks an option, ask for the LAs assistance or google up a standard PSA for your state. Will probably be the same format. Good luck @scott michael!
Here are your best two options so your offer and possibly the transaction goes smooth :
1) get your own Agent and ask him to submit an offer for you. The key here is to find an agent that will do a due diligence for you .... provide you with comps, reach out to the Listening Agent to see if they already have any other offers, get a feel if there is any room for negotiation, submit an offer on CAR forms, explain how to read all the disclosures ...
2) Reach out to the Listening Agent and let him know that you do not have an agent and you would like him to represent you as well. In this case you may have a small room for the negotiations as well since the listening agent will receive commission for both sides. He will also guide you thru the process and submit an offer for you using CAR forms
I'm an agent in SoCal. You would need to submit an offer using an RPA (Residential Purchase Agreement) and a few disclosures. In this hot market you'd also submit proof of funds (Can be Bank Statements, assets, etc) and your preapproval (If applicable).
Many agents will give you back a part of the commission as well.
I wouldn't recommend having the listing agent represent you, just have an agent give you a part of the commission back and that would have your full interest in mind in case you need to back out of the contract later or need repairs/ credit request/ etc.
Not sure about the laws in your state, but typically the listing agent represents the seller only and has a fiduciary responsibility to the seller only. If you plan to do any negotiating you should hire an agent to represent you, otherwise the agent is working for the seller only. An example of how this can work against you- if you say to the agent something like “well I want to offer $xxxx but I’ll go as high as $xxxxx” the seller’s agent typically does not owe you any discretion and can go right to the seller with that info. Could be different in your state, but from what I’m currently learning in my real estate licensing course, you want to have your own representation who has a fiduciary responsibility to only you. Especially for a newbie (I’m one myself, currently in the process of buying my first investment property), I think it’s worth paying someone commission to be sure that the paperwork is done correctly, you’re not being mislead, etc. in the beginning until you get a few deals under your belt and learn the tricks of the trade. Good luck!
Thanks everybody for your answers! I decided not to make an offer on this one, it is an out of state market and I just didn't feel comfortable enough yet that the expenses in my analysis were correct. The answers were hugely helpful though and I know how to make an offer for next time, and to engage with a realtor that has a fiduciary duty to me to handle the transaction and offer process.
Personally when I am making an offer on a house that will go fast and I am using the listing agent, I try and personally meet with them, have a proof of funds on me (cash buyer so this is easier than a pre-qual) and earnest money check ready to go if need be. I then would want to be there as the offer is written up (if the "offer" ends up being the contract as it does in some states) and make certain to question anything that doesn't sound right to me.
The As Is offer is the best tool for one who has the confidence and the competence to use it. Only the most experienced investors can compete on this level where the property may have issues that would scare regular buyers away. The best commercial property I ever bought had a Phase II environmental study presented with it disclosing the underground storage tanks and after researching it I found it was able to be registered for superfund payouts and the epa authority involved would be very unlikely to require cleanup in this instance. It was a former gas station in the center of a new and booming arts district, but even if they did the owners liability was 10k with the likely possibility of a windfall in the form of remediation management (sort of like insurance in the event of worst case). The property was still available for several weeks and the owner financed it.
Sorry I thought I was posting on a different thread about inspections
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