How quickly can you pull a deal together?

Question

As in from the time they call, how fast can you have them an offer, do you leave contingencies, and how long from then can you close?
I ask because although I have some experience, it still takes me a little bit of time. Probably about a day or two so to know exactly what I'm dealing with. That includes running the comps, seeing the property, getting a budget together. I probably go a little too conservative cause I dont wanna get burned. Furthermore I'm not a true cash buyer as I'll be using hard money or private money for at least acquisition, which is fast, but not as fast as ok - I'll cut you a check after I run the title.
I think if I had it all worked out, I'd be in a position to walk in, make an offer, sign and close next week, but I'm not yet. 
To those more experienced, how efficiently do you run this process, and how long did it take you to get to that point?

Mike Mitchell · Answer

Minna,
I'm with the others, you have to know your market.  It's not just what would 
an investor pay for a house but what will the house sell for in the next two weeks.  I felt really comfortable after about a year and a half of looking at deals, running numbers, etc..  I get a kick out of trying to find a way to milk the max out of every deal that I look at.  After 2 years in the business, I finally found a house for zero down, just like the infomercials say are everywhere.  Within a week I found a seller who would carry 75% of the price at 6%.  Hang in there, learn your numbers, analyze lots of deals and you'll get fast and comfortable with it.  My inspection of a house is very fast.  
I go in the house for a very fast inspection before I whip out a contract, ask for a signature and hit the road!  Good luck to you.

Timothy W. · Answer

I did one where I found the house, put it under contract and wholesaled the contract in 3 days.  The closing occurred 11 days later.  So I guess the answer is either 3 days or 11 if you wait for the title company to finish their crap.

The way I did this was I knew the market intimately, I know how to analyze cashflow, I knew how this property was going to be presented to the buyer, I knew the buyer, I knew the management company that could manage the company.  Everything I knew took me about a year and a half of work.

So....I guess if you include the whole process - a year and a half and 11 days.

There's no magic to this.  You find an area, you learn the area and then you look for deals in that area EVERY DAY!  If you do that, you will become an expert in your area and deals are easy to do.

Tim

Lynn Z · Answer

When things are competitive (not the case right now) we look at the house, call the lender (commercial), ask if he'll cover the price (cross collateralize the down of 20%).

Sometimes he rides by the property but usually says yes or no on the phone.  Then you're free to low ball or offer whatever with no contingencies.   Home inspection is written into all contracts in this state so you can always have an exit if you need it during that period of time.

Negotiate out the home inspection findings and the deal can close in 2 weeks.  We prefer to just say on or before 30 days to give everyone time to breathe.

This has been a successful formula the past several years.  Drives agents a little crazy but then their input is minimal anyhow.

We have bought houses in great areas sight unseen, subject to walk through later.  That works if you have experience.

Charles Whitaker · Answer

Even with using a HML, our closings are usually no longer than 5 days. A few minutes to research the comps or look over the averages for the area, run and look at the house and make an offer. Don't leave home without a contract. 
It's funny, though. Seems like all of the local investors flock to the same deals daily, like following bread crumbs.

Mr. Webber here had a house that he offered at the local REI meeting. The meeting ended around 9:00 p.m., dark outside, of course. I ran some quick numbers, drove by the house and decided that it was a great deal. I knew other investors would be itchy for it so I sent Ryan a text at 2 in the morning saying that I would buy it sight unseen. 
I did buy it, turned out to be the easiest and one of the most profitable rehabs that I have done. Thanks Ryan

Michael Rossi · Answer

That just comes with experience.  Once you've dealt with a title company or lawyer for a period of time, you'll know that it takes them a certain amount of time to get the title search done.  If you're a regular customer, they will put a priority of doing things for you.

If you're new, then talk to the SUCCESSFUL investors in your area and determine which title companies they use.  Call these companies and determine how long it takes them to get a title search done.  Give yourself a little extra time on your first deal or two, until you're comfortable with the process.  For example, if the title company says it typically takes 2 days to do a title search, then you might want to make the closing 5, 6, or a week later.

Good Luck,

Mike

Tony Schober · Answer

So how long does a title company need to run the title search?

I was looking over Mike's purchase contract and noticed that you put the closing date on the contract. How do you know how soon you can close before even speaking w/ the title co?

I just want to make sure I have the process  right. Lets say that you and the seller sign the contract on the 1st and put on the contract that you will close on or before the 7th:

-Is this amount of time going to be OK w/out speaking w/ the title co first? Could you do it even earlier?

-After the contract is signed, do you just take it over to the title co/fax it to them?

-Who actually contacts the seller once the time/date is set for the closing? (me or title co)

Thanks

Ryan Webber · Answer

It took me about two years of chasing my own tail before I figured out how to put a deal together quickly.

I personally make an offer before I walk out the door about 95% of the time.  If I don't feel comfortable with something then I will go back to the office and do some more research before I will commit to an offer.  I have no contingencies in my offers and I typically set a closing for 7-14 days.  This lets my title agent breathe a little.  Now I have no problem closing in 2 or 3 days if need be and I've done a couple next day closings, but my title agent really doesn't appreciate those.

Now my main exit strategy is wholesaling, and I always love doing the 2 or 3 day close and still getting it flipped.  A couple weeks ago a lady called on Tuesday, and we were looking at her house about a half hour after she called.  We walked through it, made an offer with a closing on that Friday (3 days later), she accepted, and we signed the contract on the spot.  We made about a dozen or so phone calls offering the property under the terms that they couldn't see the inside and they needed to close on Friday.  I had an investor come in to sign a contract first thing Wednesday morning to double close on Friday.  After lunch we had to turn another investor away who wanted to buy it also.

Within an hour of her calling we had a contract on the property, and within 12 hours I had a contract to sell it 3 days later.  I wish they were all that easy.

Frank Adams · Answer

It sounds like you're "broadcasting" to a pretty wide audience, if so you're likely crossing "natural" price defining boundaries. If so it can take a bit to gather comps. Within my neighborhood prices vary from about $80/sq ft (20 year old, not updated) to $110/ft (older but updated) $120 (newer, lots of bells and whistes) to $220/ft (lakeside).

Within our zip code it's almost as wide a variation too! When I lived in Houston I only "farmed" within a 2 1/2 mile X 3 mile area, and 75% of the houses were in only 2 developments. In that case I made offers, and in one case CLOSED without ever going inside the house!

Try to "narrowcast" a bit, don't get "paralysis by analysis", don't put in so many contingencies that you're going back and forth with 7 counter-offers (two round trips is all any Purchase Offer should ever make) and make 3 day closing" (cash) or "2 week closing" (loan) a part of every offer.

People in "trouble" (motivated sellers) like to see a definite plan to end their pain. Too much "could have, would have, should have" and they don't need to look hard for a reason to reject.

My last deal I offered on Thursay, closed the next Wednesday (title company average speed-no existing loan, cash purchase). Closing took 5 minutes. When I sold we signed the contract on Saturday, I prepared the documents on Monday and we closed on Wednesday. Could have closed on Monday but Wednesday worked best for buyer's schedule.

all cash

Michael Rossi · Answer

Minna,

I usually spend about 15-20 minutes looking at the house before making the offer and writing the contract (right there on the spot).  I don't usually include any contingencies.  Obviously, the purchase contract specifies that they provide a deed that is free of liens, so I'm not considering that a contingency.

I can do that because I don't have to ask someone for comps or search for comps.  I have done the hard work and I KNOW my market.

I can close in 2 or 3 days if it's a cash deal, as soon as the title search is done.  If I'm getting a loan for the property, then I can close in about two weeks (after the bank gets its appraisal).  The last two houses that I purchased in May took exactly 2 weeks with a loan from a small local bank.

Mike

Account Closed · Answer

How fast is fast?

I would not expect that you can go much faster if you want to do the homework prior to making an offer. Some are set up to quickly pull the info or they have staff who pre-screen deals.

The work is the work. You can make offers with no homework if you put in enough contingencies so you can do the work after the offer is accepted.

I would not worry about the speed to much. If most deals you are interested  are still there when you ready to make an offer you are doing fine. If you find that almost all the deals are gone because someone else made an offer before you then consider what is going on. It might be they are making bad offers or you might be too slow. It is hard to tell from the post. Too many details.

You need to move quickly but not too quickly. You do not need all deals to succeed so it is not about being the fastest in every situation. It is about doing good deals that work for you.

John Corey