Real estate is an exciting and interesting field to work in. Sometimes the deals quickly fall into your lap. That’s exciting! Other times the deal is not made right away. It can take months, even a year or more to get the deal worked out. That’s when it can get interesting. For example, I recently purchased two small apartment buildings which took me over a year of working with the owner to get closed. I am glad I persisted as these properties are great additions to my portfolio.
Often these deals that take a bit of time to put together are the result of an uneducated owner. The owner may still have those 2007 values in their head and need to be educated on current values. They may not realize the conditions of their properties and may need to be educated on the costs and time involved to bring things up to current standards. Or there could be a whole host of other variables. Whatever the cause, what the seller needs is time; time for him to become educated on the current market conditions.
Here are some pointers on taking time to deal with an uneducated seller.
- Always be nice and considerate. Never be rude, condescending or disrespectful.
- Make an offer based on numbers that work for you and submit it. If rejected at first, let the sellers know they can contact you at a later date if they wish.
- Check back with the seller (or their agent) every few months or so if the property continues to sit on the market. Let them know your offer is still valid.
- If you can, be open and meet with the seller and show him how you have arrived at your offer price. Describe for him the anticipated rents, repair costs and the costs of money. Sometimes seeing the numbers is the best education.
- If the sellers are firm on a number, perhaps you can work the deal another way, through soft terms. Perhaps the sellers would hold a second mortgage with a nominal interest rate. This strategy has worked for me in the past.
- Do not lose the deal over a few thousand dollars. If the seller does come down close to what you are asking, but will not budge anymore, you have to ask yourself if it worth it to lose the deal for a few thousand dollars. Can you make it up in cash flow later?
- Above all do what you say you will do and remember my first point. If you make them mad or insult them, they may never call you back.
At some point however if the seller refuses to budge you must move on. You cannot tie up your money and resources forever, and there will always be another deal out there. When should that point be? It depends on you, the seller and the particular circumstances of the deal. Trust me you will know when it is time to move on.
Until next time, hopefully not too long, happy investing!