When it comes to submitting offers on distressed properties, a lot of both new and seasoned investors can sometimes get stuck feeling guilty about their offer. But by being genuine with people and truly caring about their situations, over time you will be able to build trust and generate more business while simultaneously providing help to others.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
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You Are the Solution to the Seller’s Problem
Begin to think of yourself and the deals you make as a solution to the seller’s problem.
Sure, they might be able to get a bit more money if they were to list the property on the MLS; however, considering we are typically dealing with motivated sellers, it is usually within their best interest to work with us as investors. Oftentimes we can be the best solution by closing on a timeline others would simply be unable to perform on, without any strings attached by buying the property as is.
You don’t have to be a vulture to succeed in this business.
Put Forth FAIR Offers
Now, I’m not suggesting you go around low balling for the sake of low balling. I don’t try to make a year’s worth of living off one house. I have my margins that I have to work off just like everyone else; for instance, using the 70% rule in some neighborhoods.
But I always try to put my best foot forward and make them a fair offer with a little bit of wiggle room that is within my margins without trying to take advantage of anyone. Rather than take on the persona of a used car salesman, I try and educate all my clients, whether they choose to work with me or not.
Let me bring these statements to life with a story.
Once I had a seller I met on an appointment. I was the 8th investor he had seen all day, and the seller was just becoming exhausted and frustrated with dealing with investors.
When I arrived I took the time to walk him through the comps to determine what his house was worth both in its current condition and if he fixed it up. I showed him how much the house needed in repairs, and I showed him on my Excel worksheet how much money he himself could net if he were to put in all the work that I was going to do on the property and list it on the MLS.
No fudging numbers; just the truth. He was so gracious and expressed that I was the only investor who had the patience and concern to look him the eye and shoot straight with him. A lot of the other investors tried to hassle him and force him to sign a contract on the spot (something that I never do, by the way) or beat him up on the price or didn’t even explain why their offer was what it was.
Well, the 9th investor who came in after me had a higher offer, and I was unable to match it. And to be honest, the seller needed the money. He called me up and asked if I could meet him in the middle or match what the previous investor had offered. In my opinion there was not enough equity. I tried to put my best foot forward and came in close to my maximum buy price. But this investor went in way over it by about 15k — sometimes bidding wars are like that, especially since inventory is only at about 3 months’ of supply here in the Dallas Fort Worth area.
He was sad that we couldn’t do business. I told him that if the other buyer fell through to give me a call, and in the meantime, I told him to feel free to contact me about any questions that he might have. He had a lot of trust in the offer I put forth since I took the time to explain contract jargon to him. And before I left, I showed him things to look out for (weasel clauses from other buyers) and how to make sure anyone who came in after me was able to show proof of funds of some sort and wasn’t some fly-by-night wholesaler fresh out of a guru seminar.
He had a lot of hesitations over the other investor’s contract and ended up giving me a call when he was at the closing table with another investor to ask for my advice and asked what a certain paragraph of the contract meant to make sure he wasn’t getting screwed.
Maybe I lost the deal, but I was able to help someone. But remember when I said earlier about how running a trustworthy business will net you more business? Guess what — I got a referral out of the deal several weeks after that appointment from the seller, and that property just closed two weeks ago simply because I was honest and genuinely cared about the seller and his situation.
My close rate for referral leads is nearly 100% when I show up, and whether there is one other investor or 10, it’s usually not a fair fight. I’m playing on home field, so to speak.
The More Options You Can Offer the Seller, the Better
If you are a licensed agent and an investor, I feel that your licensing only works in your interest when it comes to buying homes. By being licensed you have the ability to offer your clients additional options, and they always appreciate that.
For listings that maybe don’t make the most sense from an investment standpoint, it might work better as a traditional listing. When you operate your business showing care and integrity, people will take notice, and it becomes even easier to separate yourself from the competition.
If you take the time to actually help people in this business and genuinely care about the deals you’re making, you will build a lead pipeline full of referrals, which is one of the most powerful leads you can ever have — plus you will feel good about yourself at the end of the day.
So take the time to nurture your business and to do things right, and you will reap the rewards.
What do you do to set yourself apart from other investors? What’s stories do you have about helping out sellers?
Leave your comments & stories below!